Accessible financing for the family agricultural sector and MSMEs

agriculture financing

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Accessible financing for the family agricultural sector and MSMEs
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Financials
Corporate and Retail Banking
Business Model Description

Enhance the financial support for family-owned farms and small to medium-sized enterprises (SMEs) by employing Business-to-Consumer (B2C) strategies, where companies offer products or services directly to customers. This involves utilizing mobile and online platforms for extending credit, such as: Digital Credit Services, Peer-to-Peer (P2P) Lending and other potential fintech methodologies.

Expected Impact

Increase financing alternatives to improve agricultural outputs, reduce poverty and ensure food security

Indicative ReturnDescribes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in IRR)
Investment TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market SizeDescribes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
30% MSMEs are formalized (263,106)
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) Industry, Innovation and Infrastructure (SDG 9) Decent Work and Economic Growth (SDG 8)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
Reduced Inequalities (SDG 10) Responsible Consumption and Production (SDG 12) Life on Land (SDG 15)
Sector Sources
  • (I) CAF - Banco de desarrollo de Latinoamérica. 2021. Capacidades, inclusión y vulnerabilidad financieras en Paraguay. https://scioteca.caf.com/bitstream/handle/123456789/1871/Capacidades_inclusi%C3%B3n%20y%20vulnerabilidad%20financieras%20en%20Paraguay.pdf?sequence=4&isAllowed=y (II) Gobierno del Paraguay. 2014. Estrategia Nacional de Inclusión Financiera. https://enif.paraguay.gov.py/storage/app/uploads/public/59e/10f/126/59e10f12678f7631648286.pdf (III) Datos Macro. 2020. La brecha de género se estrecha en Paraguay. https://datosmacro.expansion.com/demografia/indice-brecha-genero-global/paraguay?anio=2020 (IV) Ministerio de Industria y Comercio. 2019. Plan Estratégico de Promoción y Formalización para la Competitividad y Desarrollo de las MIPYMES 2018 – 2023. https://www.mipymes.gov.py/wp-content/uploads/2020/05/PLAN-NACIONAL-DE-MIPYMES.pdf.pdf (V) Alliance for Financial Inclusion. 2023. Women’s Financial Inclusion, Digital Financial Services, and COVID-19 Policy Response: Case of Paraguay. https://www.afi-global.org/wp-content/uploads/2023/03/Womens-Financial-Inclusion-Digital-Financial-Services-and-COVID-19-Policy-Response-Case-of-Paraguay.pdf (VI) International Trade Administration U.S. Department of Commerce. 2022. Paraguay - Country Commercial Guide. https://www.trade.gov/country-commercial-guides/paraguay-trade-financing (VII) Alliance for Financial Inclusion. 2017. The Paraguayan experience with digital financial services. https://www.afi-global.org/newsroom/blogs/the-paraguayan-experience-with-digital-financial-services/
IOA Sources
  • (1) Market Data. 2021. Solo el 26% de las Mipymes están formalizadas, según el MIC. https://marketdata.com.py/noticias/nacionales/solo-el-26-de-las-mipymes-estan-formalizadas-segun-el-mic-54264/ (2) Ministerio de Industria y Comercio. 2019. MIC Y CAH firman convenio con miras a potenciar a las MIPYMES, con producto financiero para el sector. https://www.mic.gov.py/mic/w/contenido.php?pagina=1&id=1102 (3) Aswath Damodaran. 2021. Current Data. https://pages.stern.nyu.edu/~adamodar/ (4) FOGAPY. 2021. (5) CAF - Banco de desarrollo de Latinoamérica. 2021. Capacidades, inclusión y vulnerabilidad financieras en Paraguay. https://scioteca.caf.com/bitstream/handle/123456789/1871/Capacidades_inclusi%C3%B3n%20y%20vulnerabilidad%20financieras%20en%20Paraguay.pdf?sequence=4&isAllowed=y (6) Ministerio de Industria y Comercio. 2019. Plan Estratégico de Promoción y Formalización para la Competitividad y Desarrollo de las MIPYMES 2018 – 2023. https://www.mipymes.gov.py/wp-content/uploads/2020/05/PLAN-NACIONAL-DE-MIPYMES.pdf.pdf (7) Ministerio de Agricultura y Ganadería. 2010. Marco Estratégico Agrario: Directrices Básicas 2009 – 2018. https://faolex.fao.org/docs/pdf/par144609.pdf (8) ONU. 2020. Examen Periódico Universal – Tercer Ciclo - Paraguay. https://uprdoc.ohchr.org/uprweb/downloadfile.aspx?filename=8456&file=SpanishTranslation (9) FAO, 2019. Erradicar la pobreza rural en la región es posible con nuevos enfoques en las políticas y estrategias nacionales. https://www.fao.org/paraguay/noticias/detail-events/es/c/1235196/ (10) Jessica Schicks and Richard Rosenberg. 2011. Too Much Microcredit? A Survey of the Evidence on Over-Indebtedness. https://documents1.worldbank.org/curated/zh/553421468148522571/pdf/649800NWP00PUBLIC00Box361550B0OP19.pdf (11) Gobierno del Paraguay. 2014. Plan Nacional de Desarrollo Paraguay 2030. https://www.stp.gov.py/pnd/wp-content/uploads/2014/12/pnd2030.pdf (12) Ministerio de Agricultura y Ganadería. 2013. Marco Estratégico Agrario. https://faolex.fao.org/docs/pdf/par179001.pdf (13) Gobierno del Paraguay. 2014. Estrategia Nacional de Inclusión Financiera. https://enif.paraguay.gov.py/storage/app/uploads/public/59e/10f/126/59e10f12678f7631648286.pdf (14) Congreso de la nación paraguaya. 2012. Ley No. 4457. https://www.bacn.gov.py/leyes-paraguayas/8272/ley-n-4457-para-las-micro-pequenas-y-medianas-empresas-mipymes#:~:text=La%20presente%20Ley%20tiene%20por,servicios%2C%20y%20darles%20identidad%20jur%C3%ADdica. (15) Congreso de la nación paraguaya. 2016. Ley No. 5628. https://www.bacn.gov.py/leyes-paraguayas/5146/ley-n-5628-crea-el-fondo-de-garantia-para-las-micro-pequenas-y-medianas-empresas (16) Congreso de la nación paraguaya. 2016. Ley No. 5669. https://www.bacn.gov.py/leyes-paraguayas/5239/de-fomento-de-la-cultura-emprendedora#:~:text=Fomentar%20el%20esp%C3%ADritu%20y%20la,de%20apoyo%2C%20econ%C3%B3micas%20y%20financieras. (17) Agencia Financiera de Desarrollo. S.F. Acerca de la AFD. https://www.afd.gov.py/que-es-la-afd