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Executive Summary

Value chain finance is when financing is provided to or by a value chain actor to increase value-chain growth and competitiveness. This paper discusses the concept of value chain finance and its relevance to value chain development today. The paper suggests that whether the finance is provided by a bank, buyer or an input supplier, value chain financing allows a company to function well. Simultaneously, a firm with value chain finance is able to transact with others as well as upgrade. The important thing is that value chain finance is neither a separate subset of finance, with unique or distinct products, nor is it a complex new field. Value chain finance is defined and used in many ways. It is a constant point of discussion and it therefore referenced in countless articles. This paper has been created to clarify the term for practitioners, implementers and donors. It deals with four primary questions on value chain finance: What is value chain finance? Why does it matter? What is its relevance to value chain development? What are recommended good practices when designing value chain finance interventions? There are different opportunities that require various types of financing (or none at all). There are a range of actors who can deliver this financing. This paper discusses the actors and looks at it from within or outside the chain.

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