value chain financing in africa, asia pacific and the caribbean facilitating african msmes into...
TRANSCRIPT
VALUE CHAIN FINANCING IN AFRICA, ASIA PACIFIC AND THE
CARIBBEAN
Facilitating African MSMEs into Regional and Global Markets
ITC’s Experience
13 -16 November 2012 – South AfricaInternational Trade Centre (ITC)
MSME as an Engine for Economic Development
• MSMEs play a major role in economic development, particularly in developing countries.
• Studies by the World Bank indicate that formal MSMEs contribute up to 45% of employment and up to 33% of GDP;
• If MSMEs are to play any meaningful role in regional and global markets, they have to be put on a footing similar to their competitors;
• Yet to put them on such a footing requires nurturing them and providing support in strategic areas.
Business and Trade PolicyTrade Support Institution
StrengtheningExporter Competitiveness
Export Strategy Trade Intelligence
Trade Policy
Build capacity for trade negotiations
Establish an adequate institutional framework
Develop and implement strategies
Enterprises
Conclude commercial transactions
Prepare for exports
Formulate strategies for exports
Trade Support Institutions
Advise policymakers
Strengthen SME capacities
following ITC criteria
Improve networks
ITC Builds SME capacities on three levels
From July 2010 to May 2012, ITC implemented a project that was aimed to help organise the pineapple value chain and assist MSMEs and cooperatives export to neighbouring countries (such as Burkina Faso and Niger), Maghreb and Turkey through:
•improved appropriate financing and
•access to market information using mobile phones and a website.
MSMEs in Benin have increased Sales of Pineapples to West African countries and Maghreb
• More than 150 MSMEs and cooperatives, involving more than 50% of women, benefited from the trade related technical assistance and many of them are now exporting to Burkina Faso, Niger, Senegal, Morocco, Algeria and Turkey,
• An umbrella Cooperative was created as a result of the value chain mapping,
• The national trade promotion organisation (ABEPEC) could build its capacity to better support exporting and export-ready MSMEs in the pineapple sector.
MSMEs in Benin have increased Sales of Pineapples to West African countries and Maghreb
The NTF II, the joint ITC - CBI initiative supports sector development, primarily in agro-produce, by strengthening institutions and enhancing effectiveness of the sector value chain in Senegal and Uganda.Since 2011, the National Union of Coffee Agribusinesses and Farm Enterprises (NUCAFE) and 100 of its member farmer associations (FAs) in Uganda are benefitting from technical assistance (TA) in quality, business management and access to finance.
This TA improve the quantity and quality of their exports to Europe.
ITC joins forces with CBI to help create competitive and sustainable value chains for Ugandan coffee
exports to Europe
Since 2011, more than 50 MSMEs and cooperatives in Mango value chain through the horticulture association (CFAHS) in Senegal are receiving technical backstopping on quality, contractual negotiations and access to finance;
This assistance aims to boost their exports to European markets.
ITC joins forces with CBI to help create competitive and sustainable value chains for Senegalese mango
exports to Europe
Access to Finance for MSMEs Triangular Approach
Regional & International
Financial Organizations
Commercial Banks & Micro
Financial Institutions
Trade-Related Technical Assistance Services
& Finance
Credit & Guarantee Lines
MSMEsMSMEs
ITC
MSME Financing
Private Sector Development
LOANCOM & other tools
MSME Competence
Building
ITC’s A2F in Asia and the Pacific
ASIA-PACIFIC REGIONAL FINANCE CENTRE
A proposed ITC-ADFIAP partnership
Delivery Modalities
The Regional Centre will rely on a hub-and-spokes model (see figure on the right) with an e-platform to deliver training, coaching and technical assistance in the four pilot countries.
Project Cost
•Budget to be mobilized: US$ 2.3 million (covers capacity-building activities, networking events, training materials and publications, software, communications and the e-platform) •Duration: 3 years (2013-2016).
ITC’s A2F in Asia and the Pacific
ASIA-PACIFIC REGIONAL FINANCE CENTRE
Next Steps
ITC, with the support of ADFIAP, is looking for interested donors to partner with to take this initiative forward, implement planned activities and achieve key results.
Expected Results
• Over 700 exporting SMEs improve financial management skills with bankable business plans
• At least 12 TSIs are equipped to train and coach SMEs and other TSIs in financial management
ITC’s A2F in Asia and the Pacific
ASIA-PACIFIC REGIONAL FINANCE CENTRE (APRFC)
• For a better access to finance for MSMEs, information on the various regional institutions providing financial assistance to MSMEs needs to be more widely disseminated to the MSME community and needs to be made more user friendly;
• In order to ease the financing problems of MSMEs, a new structure should be set up at the national development banks of African countries, which would regroup all credit lines from donor agencies, and lend on conditions acceptable to MSMEs;
• Recipient governments of grants from donor agencies targeted at the development of MSMEs, need to properly negotiate the conditions of the grant agreement.
Better Management of Lines of Credit, Grants and Guarantee Funds From DFIs
• Financial institutions dedicated to serving MSMEs should be set up and government should subsidize some of the loans to support MSMEs with potential for growth. The funds could be mobilized from domestic as well as international NGOs, governments and
possibly some banks;
• Efforts should be made to set up a stock market for MSMEs provided the macro-economic conditions permit;
• Governments should assist in strengthening institutions engaged in credit delivery;
Governments to Put in Place a Better Financial System
•Governments should assist in strengthening institutions engaged in credit delivery;
•Possibilities for linking formal and informal financing institutions should be explored in order to enlarge the resource base which MSMEs can access;
•The feasibility of tapping into long term deposits such as pension funds, social security, insurance funds, etc. as a way of augmenting the resources that MSMEs can access should be explored;
Governments to Put in Place a Better Financial System
• Guarantee facilities should be put in place to encourage banks to lend money to MSMEs. Particularly such guarantee can facilitate the smooth involvement of exporting and export-ready MSMEs by removing trade risks;
• Governments should encourage the private sector to be involved in the creation of venture capital for use by MSMEs;
• Strengthen the judiciary capacity to enforce commercial contracts expeditiously.
Governments to Put in Place a Better Financial System