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|Month, Year© 2016 Council on Smallholder Agricultural Finance
LEGAL DISCLAIMERThis presentation discusses general industry and sector trends; lending activity; and broad economic, market, and policy conditions as perceived by the authors. It is not research or investment advice. This document has been prepared solely for informational purposes. Although the authors of this presentation made a reasonable attempt to obtain information from sources that they believe to be reliable, they do not guarantee its accuracy or completeness, and the authors undertake no responsibility to update this report for information that may have changed after it was obtained by the authors. The historical performance presented in this presentation is based on unaudited data reported independently by each financial institution and is not representative of future performance.
Agenda
Data and insights on the evolving credit market for agricultural SMEs
• Overview Brian MilderExecutive Vice President, Root Capital (Representing CSAF)
• 2015 Performance & Growth Trends Blaine StephensChief Operating Officer, MIX (Data Partner)
• Market Outlook and Recommendations - Carina TorresAgriculture Technical Advisor, Oikocredit (Representing CSAF)
• Dan ZookDirector of Investments, Initiative for Smallholder Finance (Knowledge Partner)
• Q&A
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CSAF Members & Affiliates
Data & Knowledge Partners
• To facilitate market entry and increase lending in the
• To focus the agriculture finance sector on reaching and supporting
million small-scale farmers
• To promote responsible lending principles
CSAF envisions a thriving, sustainableand transparent financial market that generates long-term economic, social and environmental benefits by meeting the financing needs of agricultural businesses that aggregate smallholder farmers in developing countries worldwide.
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Mission Vision
• Market Growth to meet a greater share of the vast financing need of the
• Responsible Lending Principles promoting market growth that contributes to positive impact on agricultural businesses, the smallholder farmers they aggregate, and long-term sustainability of the sector.
• Social & Environmental Impact for farm households, their communities, and the ecosystems on which we all depend.
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Our Focus
2015 At A Glance
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$597MDISBURSED
to
672BUSINESSES
sourcingfrom
2.1MFARMERS
(34% WOMEN)
across
66COUNTRIES
earning$$3.7B
COMBINED REVENUE
$345
$566 $597
2013 2014 2015
Figure 1: Annual Disbursements
MM
M
Annual Disbursements
64%growth
5%growth
1. Commodity price volatility
2.Crop failure due to diseases and extreme weather events
3. Currency volatility
4.Limited managerial capacity among borrowers
5. Weak capitalization among borrowers
Top Risk Factors
Growth Slows, Risk Increases
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Industry Trends
Blaine Stephens, MIX
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Increasing Impact
$597MDISBURSED
to
672BUSINESSES
sourcingfrom
2.1MFARMERS
(34% WOMEN)
across
66COUNTRIES
earning$$3.7B
COMBINED REVENUE
$597MDISBURSED
to
672BUSINESSES
sourcingfrom
2.1MFARMERS
(34% WOMEN)
across
66COUNTRIES
earning$$3.7B
COMBINED REVENUE
66%PRODUCER
ORGANIZATIONS
33%PRIVATE
AGRI-SMEs
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0% 20% 40% 60% 80% 100%
26%
< $250K
22%
$250K to
$500K
45%
$500K to $2M
7%
>$2M
Loan Amounts
Borrower TypeGrowth in Total Borrowers
Understanding CSAF Borrowers
$597MDISBURSED
to
672BUSINESSES
sourcingfrom
2.1MFARMERS
(34% WOMEN)
across
66COUNTRIES
earning$$3.7B
COMBINED REVENUE
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39%24%
20%
11%
6%
Figure 2: Disbursements By Region
South America
Central America*
Sub-Saharan Africa
South & East Asia
Other
2014 2015 Change
South America $209M (37%) $229M (39%) +9%
Central America $167M (29%) $143M (24%) -17%
Sub-Saharan Africa $109M (19%) $120M (20%) +9%
South & East Asia $36M (6%) $67M (11%) +46%
Other $46M (8%) $38M (6%) -20%
Total $567M (100%) $597M (100%) +5%
Disbursements By Region
Working Across 66 Countries
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Global Coffee Lending Declines by 12%
$185
$310 $272
2013 2014 2015
M
MM54%
55% 46%
Coffee Lending By CountryGlobal Coffee Disbursements and Concentration
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Cocoa Lending Rises 14%
Cocoa Lending By CountryGlobal Cocoa Disbursements and Borrowers
27
46
56
$27
$59
$67
2013 2014 2015
Borrowers Disbursements
M
M
M
A Perspective From Peru& CSAF Market Outlook
Carina Torres, Oikocredit
Market Outlook & Recommendations
6% to 10% Estimated market growth in 2016 according to a survey of CSAF members
to grow this market?
Supply
Demand
Enabling Environment
• Risk-tolerant capital• Loan guarantees• Currency reserves
• Financial management training• Governance support• Agronomic assistance• Market linkages
• Contract enforcement• Quality data and market information• Consistent legal and regulatory frameworks
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What do we mean?
The Industry Context
Dan Zook, Initiative for Smallholder Finance
What is ISF?
ISF is a multi-donor and investor platform for the development of financial services serving the smallholder farmer market
• The goal of the Initiative for Smallholder Finance (ISF) is marked progress toward closing the gap between the +$200 billion in smallholder financing demand and the current $50-60 billion supply
• ISF engagement is most useful in developing high-potential yet nascent financial structures that lack
• deep research into critical issues affecting smallholder finance
www.initiativeforsmallholderfinance.org
An initiative of the Global Development Incubator
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Inflection Point: The Era of Farmer Finance
• The financing needs of smallholder farmers in Latin America, sub-Saharan Africa, and South and Southeast Asia exceed $200 billion, of which less than $60 billion is available, much of which is provided through informal sources
• Current growth of formal finance providers—projected at approximately 7% per year—will not go far enough to cut into this gap within the next five years
• The industry can accelerate growth through concerted action around:
o Smart subsidy that unlocks new and better-matched sources of capital
o Progressive partnerships that increase risk-adjusted business model returns
o Customer centric product design that drives demand and usage
Key Messages
For more information:
www.initiativeforsmallholderfinance.org
www.raflearning.org
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[email protected] ChatQuestions?