Research & Analysis

Smallholder Households: Understanding Demand, Driving Innovation

While there has been renewed appreciation for how reaching smallholder households could drive financial inclusion, little is known about this unique, yet massive client group. Even data on the very number of smallholder households worldwide are fraught with caveats and nuance. Information about how they manage their financial lives and the tools they want and need to do so is even more difficult to find, and this search for information is further complicated by the many different ways of defining who a smallholder is.

This Working Paper draws on existing literature and recent developments in both financial inclusion generally and smallholder finance specifically. It is intended to place the CGAP Smallholder Diaries and national surveys of the smallholder sector, as well as other demand-side research with this client group, within the larger ecosystem and long history of related research and experience. 

This paper serves as background for the CGAP Smallholder Diaries and national surveys of the smallholder sector. It highlights the prevalence of smallholders among the world’s poor, and the substantial reliance on agriculture in low-income countries, hence the importance of increased productivity of small farms. The paper also reviews the many factors that influence rural poverty and the wellbeing of smallholder households, and their connection with demand for financial tools of various kinds. The shortcomings of rural financial markets to serve smallholders over time are examined along with the promise of digital financial services, and other innovative mechanisms, to expedite the alleviation of those limitations.

Related Resources


CGAP's Smallholder Diaries explores the financial lives of farming families in Mozambique, Tanzania and Pakistan.