Perspective: "Now is the time to reflect on the past and future of rural finance," G. Coetzee, CGAP

Perspectives is a series that highlights emerging issues in the area of agri-SME and smallholder finance from the perspective of practitioners and thought leaders within and outside the SAFIN network. In this interview, Gerhard Coetzee, Customer Value Lead at CGAP, reflects on the evolution of the knowledge base in rural and agricultural finance, and shares insights for the way forward in a post COVID world.


©IFAD/ Barbara Gravelli

Please tell us about yourself and your role at CGAP.

I joined CGAP in November 2013, responsible for our customer-focused work. I lead the customer value team at CGAP, and our work spans customer segments and insights, protection and value, and evidence and insights. I am also responsible for Gateway Academy, a digital learning platform. I support the development finance unit at the University of Stellenbosch Business School as an Extraordinary Professor. Before CGAP, I was Head of Inclusive Banking at Absa Bank (South Africa) responsible for its branchless banking proposition, founder and Director of the Centre for Inclusive Banking in Africa, Professor in Agricultural Economics at the University of Pretoria, technical lead and CEO of a consulting firm (owned by DAI). I had several senior roles at the Development Bank of Southern Africa. My specialization areas are development finance broadly, financial inclusion, and rural and agricultural finance.

How has the research agenda of CGAP evolved in recent times, and where do you see it likely to focus in the near future?

I see the work of CGAP in three phases. CGAP started in 1995, focusing on building the microfinance sector. Our work contributed to all aspects that would drive access to financial services through MFIs [microfinance institutions] and spanned strategy, governance, business models, and much more. In the 2005 book, Access for All, we asked two critical strategic questions. How can we decrease the cost to serve poor customers, and how can we scale outreach to the excluded and vulnerable?


In the second phase, we turned our attention to technology and specific digital finance services in our quest to solve these two challenges. We contributed work on innovative business models focused on digital finance, on how to create an enabling digital finance infrastructure, and the regulatory enablers required to make digital finance work better. Also, we focused on why and how customer-centric business models can play a role in the process anchoring DFS [digital financial services] in customer-centric approaches. We asked ourselves recently where to now, or in short, finance for what? Since we have seen much progress on access to financial services internationally, is it not the right time to again turn to the reason for using financial services?


In this third phase, we are continuing with our work on business models, digital infrastructure, and enabling policy and regulation. Still, now we filter our work in what it could mean for the customer. We argue that it could contribute to three areas of importance for poor people, namely income generation, access to essential services, and protecting standards of living. Our quest is to find ways in which we can contribute to the ability of poor people to capture opportunities and build resilience, using and leveraging financial services.

Are there themes or issues in rural finance where our collective knowledge base has improved in recent years?

We have much more focus on rural livelihoods, recognizing that agriculture is one aspect of rural livelihoods and should not be the only focus. We also succeeded in segmenting the rural poor, and in building pathways that provided better insights to focus rural and agricultural development efforts. This was helped by smallholder family-focused research in the form of national surveys and financial diaries that provided deep insights and, in the case of the nationally representative household surveys, also allowed us to do granular segmentation. Some of the insights emphasized what we knew, and some insights shined a light on areas we had not given adequate attention. An example of the latter is the vital role that rural traders play in the input supply system for smallholder families. In some areas, these traders are the only service providers who purchase produce and provide inputs. We should indeed look at the opportunities this reality brings in terms of distribution and ancillary services.


There is a general acknowledgment that agriculture is a crucial sector in creating opportunities and improving resilience. The rural development community has acknowledged this for a long time. Recently, we see much more integration in thinking and activity between the financial inclusion and agricultural development communities. This brings an opportunity for more innovation.


Solving rural and agricultural development challenges cannot be achieved by single focus efforts, e.g. only on finance, or only on production. We have to recognize the multi-faceted partnership-based efforts we require. We must tackle access to resources like land and water together with improved production, extension, and mechanization where needed, marketing and financial services, research, and enabling policy and regulation. We see several institutions and partnerships combining forces and delivering this collection of farmer support services. We need more of the same!

What are the issues or themes where practitioners and researchers in the field are still struggling the most with evidence gaps?