a global expert meeting on agriculture and agro-industries ... · 1 a global expert meeting on...
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A Global Expert Meeting on Agriculture and Agro-industries
Development towards Sustainable and Resilient Food Systems
Plenary panel III: Leveraging public and private funding for an
inclusive agriculture and agro-industry development.
Victoria Falls, Zimbabwe
April 2017
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Outline
❖ Introduction
❖ Agriculture Investment Challenges/ Risks
❖ Interventions for Overcoming Investment Challenges
❖ Examples of Impactful Interventions/ Experience
❖ Awards & Accolades
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Introduction
Our purpose
We exist to transform the lives and livelihoods of our people socially and
economically by availing to them modern, inclusive financial services .
Our Vision
To be the champion of the social-economic prosperity of the people of Africa
Our mission
We offer inclusive, customer focused financial services that socially and economically empower our clients and other stakeholders
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Introduction ….
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Agriculture Investment Challenges/ Risks
Production risks linked to natural hazards (such as droughts, floods and pests)
Many agricultural activities are subject to seasonality and gestation periods
Market uncertainty and fluctuating prices
Limited collateral – farmers generally lack the collateral traditionally required by banks to secure loans.
Land use management/ land ownerships -Women who are majority players in the sector lack traditional collateral to access credit
Regulatory Environment
Contracts that are not enforceable
Agriculture is a sensitive sector prone to policy issues.
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Agriculture Investment Challenges/ Risks….
Poor infrastructure in rural areas — for example, poor roads, erratic electricity provision, and lack of communications systems —this impedes effective outreach to customers
High transaction and logistical costs – customer visits/follow ups
Increasing climate variability and rampant land degradation –result to low and unreliable production
Over reliance of rain fed agriculture and low adoption of technology
Low financial literacy rates
majority of rural farmers lack basic business and financial management skills and a limited understanding of traditional banking requirements
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Opportunity In Agriculture Financing
The value chain approach provides many opportunities for financing various players from production to processing and distribution
Growing middle income population / Change in dietary habits – higher demand for processed/niche food
Commercialization of agriculture has attracted many players – opportunity for partnerships
Climate change - Financing is needed for investments in sustainable production systems and climate adaptation technologies
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Financing Agriculture – Equity Bank Approach
Innovative Financing Models
• Deposit Mobilization supported lending
• Partnerships – Risk sharing/credit guarantee funds
• Contracts – WFP, EABL, etc
• WRS – post harvest management
• Crop/livestock insurance
• Social Payments – KCEP / HSNP
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Interventions to Overcome Risks
❖ Established strong partnerships and alliances to promote investment in Agriculture
❖ Through partnerships the bank offers market linkages to smallholders e.g. WFP, EABL
❖ Deployment of high end technology to enhance efficiency and convenience of access –
❖ Agency banking model brings financial services to farmers’ doorstep thus encourage clients to
develop a saving culture
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Interventions to Overcome Risks
❖ Staff training– The bank has a pool of agribusiness staff who offer training to farmers and advice
them on how to undertake farming as profitable businesses
❖ Agricultural customized loan products that are relevant to farmers needs - this has enabled
farmers to borrow and repay loans successfully
❖ De-risking through financial and entrepreneurship education
❖ Offers indemnity (Multi peril), Index based and crop yield based Insurance
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Examples of Impactful Interventions/ Experience
Documented success stories may also be accessed at
https://www.youtube.com/user/AfricasFarmers
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Strategic Partnership
Solution
Result
• Agriculture value chains – Input finance to market linkages
• Staff trained in agriculture – Offering technical training to farmers.
• Kilimo Biashara loans - New credit product design and roll out
• 10% risk sharing fund
• 78,772 Households since the year 2008
• Over US$ 70 Million in loans to smallholder farmers, agro input suppliers e.t.c
Kilimo Biashara – Farming as a Business
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Partnerships with World Food Programme
Cash Transfers
• Agency Banking Model – Payments of cash in remote areas and opening accounts by
phone (Hapo Hapo)
• EGF – FiKa – Financial literacy training to beneficiaries
• Food aid beneficiaries receive cash and not physical food items
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Western Region
Partnership with KFS & Food and Agriculture Organisation
(FAO)
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Apparel and Clothing Industry
Cotton Value Chain
• Loans to cotton farmer
• Agriculture value chains integration – input supply to market
linkages
• Rural extension services and financial literacy training
• Loans disbursed KES 300 million
• Cotton farmer earnings rose from 23M (US$270,600) in 2012 to KES 300M (US$ 3.5M) p.a.
• High yield – Targeted 20 tonnes of cotton from 800 kgs
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Warehouse Receipt Financing
Post Harvest Management
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Other Examples of Impactful Interventions
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Driven by Technology - Farm Input Subsidies Disbursement
• Real time settlement of input suppliers as farmers collect input
• Farmers contribution trigger the Government subsidy amount
Kenya Cereal Enhancement Programme
Innovative Farm Inputs Electronic Voucher
Scheme
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Unlocking Agriculture Potential through Medium Size Farms
Integrated Extension Delivery Ecosystem
The program has developed an agriculture ecosystem to deliver services and link farmers to an integrated supply chain
2000 selected Medium size farms in this program are used as model/demonstration farms, to small scale farmers in the respective localities
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Awards and Accolades
October 2016, Equity Bank Awarded Best Commercial Bank during Nairobi International Trade fair
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Way Forward / Recommendations
• To ensure sustainability PPPs for UN Agency agriculture projects – the projects should be implemented for at least 5 years to provide adequate time for preparations, implementation and evaluation
• Impactful agricultural projects are those that are market led ( demand driven by agro-industries) and are multi stakeholder and multi dimensional
• Partnerships to promote value chain financing concept will greatly attract investment in agriculture
• Agriculture financing is more than offering credit facilities – holistic approach is required to achieve the desired impact ( financial inclusion)
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• Investment in technology can result in reduced costs of doing business in agriculture-agency banking, Equitel–mobile/digital banking platform
• Regulatory Framework - improve land ownership, registration and security of tenure this will streamline the process of using land as collateral for agricultural lending.
• There is also need to improve legal contract enforcement to improve quality of contacts both for farmers and buyers of agricultural products
