F4A V0.45 Presentation

farming means business

Bridging the Gapin Agricultural Finance

farming means business 2

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World Population Forecast

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Diminishing Arable Land

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Global Challenges


Dutch Government

Private SectorPPP

Objective: To increase lending from financial institutions

to Agribusiness SMEs and POs

Innovative products / risk mitigation

Agri-finance know how and expertise

Active pipeline building

Agribusiness Graduation programs

Coordination, transparency, sharing

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Finance 4 Agriculture

farming means businessPage 4

Data supplied by the Kenya Bankers Association

Agr

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re

Agr

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Agricultural Finance Gap

Very low


Why Banks do not like Agriculture

To entice banks to lend morewe have to address theirspecific risk issues and costconcerns.


Bridging the GAP

The 12 F4A projects are strongly interrelated and designed to leverage off each otherand work towards a common goal: BRIDGING THE GAP in agricultural finance.

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F4A = 12 interlinked projects


Bridging the GapSupply side Demand side

Strategy: “A coordinated approach around a common language”

Mission:

“To increase lending from financial institutions to agribusiness SMEs and POs”

Barriers

Capacity Building individual FI’s

Agri-Finance Training

Agri Credit Scoring tools

Guarantees & Insurance solutions

New FinanceCompany

Supply Chain finance

Assessments

AgriPortal

Basic Agribusiness Graduation

Advanced Agribusiness Graduation

ATICMulti-

stakeholder

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…. Integrated Approach


…. Tangible solutions for real problems


Includes

Hands-on l/t technical assistance at selected partner Banks,

MFIs and/or SACCOs;

Up to 50% grant money available on a matching fund basis.

2. Agri-Finance training & community building

3. Credit scoring

4. Guarantees & insurance

6. Supply Chain Finance

7. Assessments of Agribusinesses

Objective

To professionalize the capacity of financial institutions (FIs) in

providing financial services to the agricultural sector, in a

responsible & sustainable manner.

Main correlation with other

F4A Projects

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1. Capacity Building (Financial Institutions)

Execution Partner: Financial Access



F4A Projects

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2. Agri-Finance Training + Community Building

Objective

To enhance and exchange knowledge and experience through-

out the Agri-Finance banking community.

Includes

Workshops, trainings, seminars and presentations on new

developments in Agri-Finance;

Social media community building, bringing together

Financiers, Investors, F&A stakeholders, NGOs, and key

government representatives.

1. Capacity building (financial institutions)

6. Supply Chain Finance


10. Advanced Agribusiness Graduation

11. Multi-stakeholder Alignment



F4A Projects

Includes

Improving/streamlining workflow and processes of credit

underwriting;

Improving credit scoring on the basis of analysis of the

existing loans and past loan portfolio of the FIs;

Bringing down the overall cost of credit delivery.

Objective

To introduce a credit scoring tool to allow FIs to lend to

smallholders with lower internal credit assessment and

processing costs per loan.



5. NBFI (New Finance Company)



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3. Credit Scoring + Workflow




F4A Projects

Includes

Bridging knowledge gaps at the F4A participating FIs

regarding agricultural risk mitigation instruments like

guarantees, insurance and hedging instruments;

Increase the general awareness and knowledge of these

instruments via a dedicated resource center;






Objective

To establish a broker function between providers of guarantees

and insurance and the F4A participating financial institutions

active in agricultural finance.

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4. Guarantees & Insurance




F4A Projects

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Includes

Greenfield non-deposit taking financing vehicle targeting

the Missing Middle in agriculture;

Client target includes emerging farmers and POs in need

of mechanization and scaling-up;

Project entails all scoping and set-up costs associated

with starting a new NBFI.

3. Credit scoring

4. Guarantees and Insurance


8. Agri-Portal


Objective

A USD 25 million financing vehicle, ready to start operations in

2015, with the objective to have executed 250 agricultural

loans in 36 months after inception.

5. New Finance Company (Missing Middle)




F4A Projects

Includes

Setting up an automated environment to enable FIs to

conduct very high volume invoice discounting transactions

(a.k.a. reverse factoring);

Liquidity is injected into Agri- and SME sectors with

corresponding credit risk shifting to corporate Chain

Captains as ultimate off-takers.


2. Agri-Finance training

3. Guarantees & insurance



Objective

Introducing ‘early payment solutions’ to commercial banks and

financial institutions, which will be benefitting Kenyan

suppliers (SMEs) and piloting a Supply Chain transaction

platform that provides execution and marketing services.

6. Supply Chain Finance - Platform




F4A Projects

Includes

Conducting 500 assessments on POs on their level of

professionalism and creditworthiness

The assessment profiles are uploaded onto the AgriPortal

to broker businesses deals.


2. Agri-Finance training and community building


8. Agri-Portal


Objective

Bridging the information gap between financial institutions and

the agricultural sector through agricultural credit ratings,

based on SCOPEinsight’s Scoring of Organizational Performance

(SCOPE) methodology.

7. Assessment of Agribusinesses

Execution Partner: SCOPEinsight



F4A Projects

Includes

Brokerage function between agribusinesses, financial

institutions and BDS provider and input suppliers through

SCOPE rating profiles

A library function with Kenya specific information about

agricultural value chains and other relevant best practice

agri-finance information.



4. Guarantees and Insurance



Objective

The development of a digital platform that functions as an

online market place and one-stop shop for agricultural finance.

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8. On-line Portal




F4A Projects

Includes

The development of a BDS curriculum that is based on the

9 SCOPE score chapters and that can be offered to POs on

the basis of their capacity building needs.






Objective

To establish aligned capacity building programs that are based

on the SCOPEinsight rating methodology, that can deliver a

pipeline of professional and bankable POs in a shorter period of

time, against lower costs and with a natural TA exit.

9. Basic Agri-business Graduation




F4A Projects

Includes

Creation of an infrastructure and establishment of a

standardized process to facilitate advanced graduation.

A mapping of BDS providers (experts and consultants) able

to execute such business transformation services in the

agricultural sector.





9. Basic Agribusiness Graduation

Objective

To ensure that almost bankable POs (with a score ≥ 4 in the

SCOPE assessment) and that have a financing need, are

supported (against a fee) with their last steps towards

bankability by BDS experts or consultants.





F4A Projects

Includes

Following the F4A project, several concrete challenges

and topics will be identified that require multi-

stakeholder agreement to move further, which will be

discussed during Steering- and Working Groups.




8. Agri-Portal

12. ATIC

Objective

To derive at a set of agreed and practical solutions for

identified barriers in the agricultural finance sector in Kenya

by key stakeholders in the F4A project (financial institutions,

NGOs, donors, POs and governmental organizations).

11. Multi-stakeholder Platform




F4A Projects

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Includes

ATIC is a proposed one-stop rural farm centre concept

hosting agro-dealers, equipment traders, financial

services, hardware stores, extension services etc.

Training services, demonstration plots, warehousing

facilities and collateral management services.


5. NBFI (New Finance company)

8. Agri-Portal



Objective

Development of a concept proposal and resource mobilization

for proposed chain of one-stop agri-malls (ATIC) which provides

a physical infrastructure for stakeholders in agriculture to

conduct business and will function as a physical marketplace.

12. ATIC : Agricultural Trade & Innovation Centre



Contact

Please contact us for more information:

Financial AccessMaarten SusanProgramme [email protected]

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mailto:[email protected]

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F4A V0.45 Presentation