In Honduras’ Dry Corridor, small-scale producers are on the front lines of a changing climate, yet many struggle to access the financing they need to invest, adapt and grow. In La Paz and Choluteca, a Joint SDG Fund-supported programme is working to change this by developing financial solutions around the realities of rural communities. Cooperatives, rural savings groups, and women’s and youth organizations are taking part in a technical and financial assessment to identify their capacities, financing gaps and opportunities for technical assistance.
The Local Financial Innovation for the Resilient Transformation of Food Systems in the Honduran Dry Corridor programme is implemented by the United Nations Development Programme (UNDP) and the Food and Agriculture Organization of the United Nations (FAO), with support from the Joint SDG Fund. Local partners include the Association of Municipalities of Northern Choluteca (MANORCHO) and the Association of Municipalities of Central La Paz (MANCEPAZ), alongside national institutions, producers and communities.
La Paz and Choluteca are highly vulnerable to climate change, where prolonged droughts and intense rains affect agricultural production and the livelihoods of thousands of small-scale producers. Financial exclusion adds another challenge, particularly for women, young people and Indigenous communities, who often have limited access to financial products suited to their needs. Rural businesses also have different production and income cycles, meaning conventional financial products may not provide the flexibility they need to invest and grow.
Based on the findings of the assessment, UNDP and FAO will work with local and national partners to develop tailored financial solutions that respond to the needs identified in each territory. The aim is not simply to expand access to finance, but to make financing more responsive to how rural producers live, work and build their businesses.
Financing designed around local needs
For producers in the Dry Corridor, access to the right kind of finance can determine whether a small business is able to grow. In northern Choluteca, the experience of José Adolfo Nuñes Lagos and his family-owned tilapia farm shows what this can mean in practice. Support through a local Financial Centre for Development (CFD) helped him purchase the first batch of fish eggs that started the operation. The farm now supplies local markets and larger retailers, but further growth would require investments such as cold storage and renewable energy to power the pumps that aerate the fish tanks.
Experiences like José’s illustrate why rural producers need financial products that reflect their production cycles, cash flow and investment needs. The programme will activate instruments including a unified territorial fund, seed capital and solidarity and reciprocal guarantee mechanisms, accompanied by technical assistance. Together, these measures are designed to expand access to finance for women, young people and small-scale producers while helping rural businesses become more resilient.
The initiative is expected to directly benefit 2,000 families in La Paz and Choluteca. It will also strengthen the network of Financial Centres for Development, building their technical, digital, institutional and governance capacities so they can serve as a permanent platform for territorial financing and support producers adapting to climate change. Linked to associations of municipalities, the centres bring together local actors and help connect small-scale rural producers with financial services adapted to their needs.
“This programme will focus on the CFDs in La Paz and Choluteca due to their high levels of financial exclusion, climate vulnerability and strong agricultural potential. At the same time, technical, financial and organizational training will be provided to around 200 cooperatives, rural savings groups and producer organizations. These processes will address areas such as agricultural risk analysis, agribusiness planning, inclusive finance, territorial governance and climate change adaptation.”
Paola San Martín | Project Coordinator, UNDP Honduras
The financial solutions developed through the programme will initially be implemented in MANORCHO and MANCEPAZ, with the potential to inform approaches in other associations of municipalities across Honduras. By building on existing local structures and knowledge, the programme aims to create financial solutions that can respond to the different realities of producers and communities.
Building resilient rural economies
Access to finance is only one part of the approach. The programme will combine financing with technical assistance and organizational support to help rural families strengthen their livelihoods and businesses. It will also support strategic value chains in the region, including coffee, honey and vegetables, by promoting productive systems that are profitable, resilient and environmentally sustainable.
Technical assistance and financing are designed to encourage a transition towards more efficient and lower-impact production while strengthening local supply chains. This includes promoting locally available inputs that can help reduce costs and improve the sustainability of production systems, while supporting producers to better respond to climate and economic pressures.
“The next steps will focus on translating the findings of the assessment into concrete solutions. A stronger technical assistance programme will be established, adapted to the productive, financial and organizational conditions identified in each territory. This work will be carried out together with UNDP and FAO, whose technical support will be fundamental in strengthening priority value chains and promoting more climate-resilient production practices.”
Sofía Méndez | Assistant Programme Representative, FAO
The programme is expected to contribute to higher incomes for rural families through greater access to financing, technical assistance and stronger local organizations. By connecting these elements, it aims to strengthen local economies while helping producers adapt their businesses and livelihoods to the impacts of climate change.
Originally published by UNDP Honduras.
Note:
All Joint SDG Fund programmes are led by UN Resident Coordinators and implemented by agencies, funds and programmes of the United Nations development system. The Joint SDG Fund gratefully acknowledges contributions from the European Union and the Governments of Belgium, Denmark, Germany, Ireland, Italy, Luxembourg, Monaco, the Kingdom of the Netherlands, Norway, Poland, Portugal, the Republic of Korea, the Kingdom of Saudi Arabia, Spain, Sweden, Switzerland and the Arab Gulf Programme for Development.
