stg. partnership for finance

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Equity Bank
PRESENTATION DURING
3RD AFRACA AGRIBANKS
FORUM
OCTOBER 16-19 2007 NAIROBI
- KENYA
Equity Bank Overall
Performance
Growth in Loan Portfolio
16,551
Millions
11,428
5,885
3,099
20
06
A
ug
'0
7
20
05
20
04
1,734
20
03
20
02
20
01
450
20
00
327
99
98
195 230
97
122
96
97
95
94
35
860 1,189
Growth in Profit
1,362
KES 547
Millions
1,103
501
218
7
94
9
95
12
11
18
96
97
98
25
99
35
2000
55
2001
111
2002
142
2003
2004
2005
2006
Aug'07
Total Assets
32,996
KES 547
Millions
20,024
11,456
6,707
3,924
487
709
1,260
98
99
2000
1,881
2001
2,576
2002
2003
2004
2005
2006 Aug'07
Share Holders Funds
3,110
KES 547
Millions
2,201
1,594
1,271
478
20
06
A
ug
'0
7
20
05
20
04
20
03
20
02
227 324
20
01
66
20
00
47
99
23
98
23
97
96
-19
95
94
13
195
STRATEGIC PARTNERSHIP
FOR FINANCING
AGRICULTURE IN THE VALUE
CHAIN
INTRODUCTION
• According to the 8th MDG, Development of global partnership is
one of the key factors that will enhance sustainable growth.
some of critical factors to be considered are:-.
– Establishing an open trading and financial system that is rulebased, predictable and non-discriminatory, commitment to good
governance and poverty reduction globally.
– In cooperation with the private sector, make available the benefits
of new technologies and develop decent and productive work for
youth.[1]
The development of emerging markets in creating and linking players
is the best vehicle to drive this MDG.
[1] http://www.un.org/millenniumgoals/
Cont…
• This assertion is not only true for the global
market but it is very practical in our local
market situation particularly in Africa where the
development of the agriculture sector is
hampered by a myriad of challenges.
• Strategic partnerships for financing become not
only a necessity but a crucial method to be
adopted by players in the value chain.
EQUITY BANK BUSINESS
APPROACH
Market-led & Customer focused
Self
Actualization
Esteem
Belonging
Social & Security
Basic Needs
INTERVENTIONS IN
AGRICULTURE
To facilitate the financing of agricultural activities, the bank has adopted a number of
interventions that connect the Bank with the wide clientele today standing at well over
1.6million. These include:
•
Participation in all agriculture shows and exhibitions.
•
Attending all farmers field days along with other stakeholders.
•
Introduction of award schemes for best farming practice to motivate farmers
•
Organizing free financial literacy days.
•
Introduction of mobile village banking
•
Introduction of a farmer friendly remittance account with features like no ledger fees
and no minimum balance
Village Mobile Banking
Taking banking services to the people
Village mobile banks (rural focus)
WHY VALUE CHAIN
FINANCING?
• Value chain financing is occasioned by the
need to meet market demand for product
and services at cost effective and efficient
production and marketing processes.
• Strategic partnership becomes the game
plan to facilitate the process of value chain
financing to reach the bottom of the
pyramid.
Value Chain Approach
Farmers and farmer
groups
Input suppliers: Agrodealers – Wholesalers &
retailers
9
10
Extension: Private
sector
13
11
12
8
Agro-processors
4
5
6
Input Manufacturer
/Importers: Seeds,
Chemicals, fertilizers
3
7
Buyers: Exporters,
Institutions etc
2
1
Development partners: Donors,
NGOs, Research institutions, Govt.
extension
REQUIREMENTS
• For effective value chain strategic
partnership to work there must be clear
need of financing that should be well spelt
out.
• It is indeed a process with many steps as
follows:-
Financial need analysis:
•
This is a product of research and development
which is carried out from time to time among the
farmers in different geographical areas.
•
The need is based on agricultural activities
taking place in a particular locality. The product
in question should have a specific market and a
clear production cycle
Market assessment
•
SWOT analysis to establish the strengths
and weaknesses, threats and opportunities
surrounding the market.
Identifying and selecting
partners
•
Factors to consider in selection of
parties are issues such as:1.
2.
3.
4.
5.
Credit worthiness of the players
Experience in the area of expertise
Compliance with regulations
Effect of competition
Management and governance etc
Structuring strategic
alliances
•
This entails identifying the roles and
responsibilities of parties involved in the
partnership.
•
It further calls for specialization of areas of
expertise of the players e.g.
–
In a horticulture exporting business, matters of
transport and handling becomes an area of
expertise for the exporting company while paying
out growers is the field of financial service provider
Implementation
•
Each party must effectively execute its role within
the specified time frame.
•
Evaluation of impact
–
Against the basis of win-win situation each player
should get quantifiable benefits from the partnership
example; farmers need working capital to pay casual
workers.
VALUE CHAIN CONCEPT
Value chain concept allows
integration of the various players
in agriculture production,
processing and marketing.
BENEFIT
• Reduces operation costs for small scale producers
• Achieve economies of scale
• Enhance specialization in areas of strength
• Allow the parties to take advantage of technological
development
• Allow growth and expansion
• Spread risks among the parties
• Ensure cash flow for the producers and processors/buyers
• Generate opportunities for other BDS players e.g. sprayers of
chemicals
CHALLENGES
•
Is based on willingness of parties some of who drop along the way
•
It takes a long time for players to come together and agree to work in partnership
•
Calculation of benefits against cost-benefit analysis is a lengthy process
•
Introducing and enforcing contracts to farmers
•
Mobilization of groups is an uphill task
•
Changes in prices after contracts are signed
•
Competition and diversion- farmers are multi banked and difficult to follow
•
Lack of insurance cover for most produce frustrate the parties
PARTNERSHIP CASE
STUDY OF OSHO
CHEMICALS
• Equity bank and Osho chemicals identified opportunities
in partnering through an MOU
• Objective:
– To facilitate financial intermediation to the distribution network of
Osho Chemicals
• Gaps:
– a) the distributors could not buy enough stock due to financial
constrains.
– b) farmers could not buy from stockists enough chemicals for
their crops and livestock
TARGET
• Small scale horticulture and livestock
farmers
• Major distributors of agro and veterinary
chemicals
• Osho chemical stockists / entrepreneurs
RATIONALE
Both organizations have;
• Wide distribution network
• Wide customer base
• Target of the bottom of the pyramid
• Strong in IT
PRODUCTS
• Farmer friendly remittance account-allow customers to
save, no ledger charges
• Farmers flexible and affordable loans
• Stockists Biashara Imara loans
• Distributors business loans and overdrafts at favourable
rates
• Other products such as asset financing, payroll solution,
trade finance etc
VALUE PROPOSITION FOR REMITANCE
PRODUCTS
• Affordable
- Minimum Operating balance - Nil
- No ledger fee/No maintenance fee
• Accessible
- Account opening balance-Nil
- No restrictions on amounts and frequency
of withdrawals
- No appointment on seeing the managers
- 65 Branches, 44 Village Mobile Branches & 200
ATMs
Our Loan Products
Social Loans
• Medical
• Education
• Emergency
Working Nation Loans
• Salary Advance
• Equiloan – check off loans
Agricultural Loans – Backbone of Economy
• Farm Input
• Crop Advance
• Commercial Farm Loans
Supporting Commerce, Trade and Industry
• Micro Loans (Biashara Imara)
• Vijana Biashara Loans
• Fanikisha Women Loans
• Overdraft
• Working Capital
• Business Development Loans
Growing Together In Trust!
VALUE PROPOSITION FOR LOAN
PRODUCTS
• Available to all account holders
• Tailored to the individual needs
• As low as Kshs.500-1,000/• Appraisal ability to pay based vis-a-vis collateral based
• No appointments to see bank management
• Flexible Securities/collateral
• Prompt disbursement
Alternate Delivery Channels
Eazzy Banking/Mobile SMS Banking
The mobile phone as a delivery channel is a revolutionary way of
branchless banking making basic financial services more accessible to
millions of Kenyans across the country:
• Airtime top-up
• Balance enquiry
• Transfers to nominated accounts (within Equity Bank)
• Bill payments
• Internet Banking
• Supermarkets Cash back services
• Points of sale
• Retail Outlets agency network
• Equity MoneyLine – Money transfer
Our Inspiration
• That when years turn our vision dim
and gray, we shall still be seeing beauty
in the tired wrinkles of our faces and
shall take comfort out of the fact and
knowledge that when we were given
the opportunity we did all we could to
empower our people to exploit
opportunities and realise their full
potential on the road to economic
prosperity.
THANK YOU
Email:
[email protected]
Web site: www.equitybank.co.ke
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