This component builds on the experience of some EU-TACIS projects and its aim is to increase and diversify accessof low-income groups and individuals to financing.

The Component: a) strengthens the capacity of existing microfinance institutions to provide financial services to beneficiaries and b) support to the development of farmers (dehkan enterprises) and self-employment by providing practical assistance in organization of production and business.

"Strengthening the capacity of microfinance institutions" means supporting one to two local institutions in developing their business strategies, basic operation systems, providing them with training when necessary, and supporting the expansion of their operations. It also implies providing additional capital grants.

The component assesses the capacity of the existing local microfinance organizations and select two base organizations, which are supported in expansion of their services, increasing and diversification of access of the low-income families and individuals to financing.

Activities "on the support of farmers and self-employment" support selected dehkan enterprises in improving cropping methods, develop cattle-breeding, and organize production and business.

The component provides initial start up support and specialized training to five small enterprises (one in each geographic area of intervention). This support includes provision of extension services and study tours at all levels to learn from and share concrete experience of community supported small farmer enterprises in other parts of the country or abroad.

The component also combines technica1 support and advisory services from international and national ago-specialists. Ultimately, by focusing on dehkans' enterprise development, the component will assist existing small scale agricultural producers to achieve greater economies of scale through collective purchasing, production and marketing arrangements, thus ensuring that a greater share of total profits generated in agricultural supply chains accrued to producers. This will in turn facilitate increased investment in 'off-farm' businesses such as food processing, packaging, transportation and storing of agricultural products.

At the end of the project, the following results are expected: