Exploring Financial Inclusion for Smallholders: Promoting the Sustainable Development of Smallholder Aquaculture in Developing Countries

Thesis (Master's)--University of Washington, 2016-08

Aquaculture is the fastest growing food producing sector in the world. It currently supplies over half of all food fish consumed globally, and this number is expected to reach two thirds by 2030 in order to meet an increasingly wealthy and populous world’s demand for fish and seafood products. The majority of aquaculture output is produced in Asia, and the largest producer segment by number is rural smallholders. As production is set to increase, more attention must be paid to these important and numerous consumers, both in terms of development and environmental outcomes. Smallholder aquaculture farmers must invest in their farming activities in order to grow output sustainably and increase their income, however these same farmers are, due to various barriers, locked out of formal financing options and left to source investment capital informally, often at usury rates. There is a growing body of evidence that supports the financial inclusion of smallholders to provide this access to credit from formal intermediaries, to achieve development and environmental outcomes. This thesis explores financial inclusion and presents a conceptual framework, based on evidence from agriculture, through which to consider financial inclusion interventions to assist smallholders in aquaculture. Two solutions, value chain finance and mobile phone finance, are then evaluated against the key barriers to financial access smallholders in aquaculture face, to determine their suitability in this sector. A case study analysis of a smallholder shrimp cooperative in Aceh, Indonesia is then explored using the framework to consider potential solutions to scale these farmers sustainably.