Docstoc

Value Chain Financing

Document Sample
Value Chain Financing Powered By Docstoc
					Value Chain Financing
      Overview
    Prof. Ronald T. Chua
      Asian Institute of
        Management
    Value Chain Financing Overview

   Review of the Value Chain
    Framework
   Value Chain Development and
    Value Chain Financing
    Why a Value Chain Perspective?
   Microenterprises/rural agricultural
    households part of a bigger economic
    system
   Increasing microenterprise/rural agri
    household incomes may require
    interventions beyond the
    enterprise/household level
    Value Chain Approach Objectives
   A tool/approach for identifying
    opportunities and constraints for:
    • improving chain growth and
      competitiveness
    • benefit more marginalized participants
   Takes on a systems perspective (the
    value chain)
   Analytical Perspectives
    The Value Chain Framework*
   “Value chains encompass the full range of
    activities and services required to bring a
    product or service from its conception to
    sale in its final markets – whether local,
    national, regional, or global. Value chains
    include input suppliers, producers,
    processors, and buyers. They are
    supported by a range of technical,
    business and financial service providers”


    *Taken from: The Value Chain Framework: USAID Briefing Paper
*Taken from: The Value Chain Framework: USAID Briefing Paper
*Taken from: The Value Chain Framework: USAID Briefing Paper
Value Chain Structure Elements
   End Markets
   Business and Enabling Environment
   Vertical Linkages
   Horizontal Linkages
   Supporting Markets




 *Taken from: The Value Chain Framework: USAID Briefing Paper
8
              Value Chain Dynamics
   Upgrading
   Value-Chain Governance
   Power exercised by firms in their
    relationships with each other
   Inter-firm cooperation and
    competition
   Transfer of information and learning
    between firms
*Taken from: The Value Chain Framework: USAID Briefing Paper
           Value Chain Outcomes
   Value Chain competitiveness
   Micro and Small Enterprise Benefits




*Taken from: The Value Chain Framework: USAID Briefing Paper
        Value Chain Approach
   Main objectives – increased
    competitiveness and benefits to
    marginal participants/poor
   Define/Understand Value Chain
   Change Structure
   Change Dynamics/Relationships
           Value Chain Financing

 “financing provided to or by a value
  chain actor in order to increase
  value-chain growth and
  competitiveness”




Source: Finance in the Value Chain Framework. USAID Briefing Paper
Source: Value Chain Finance: Understanding and Increasing Access.
USAID Concept Paper
         Value Chain Financing
   Identify areas in value chain where
    financing may be a constraint
   Understand the nature of the financing
    needed
   Identify opportunities and constraints in
    increasing value chain financing
    • Policy issues
    • Other
   Matching financier profile to nature of
    financing needed
    Matching Financier to Projects
          Financiers               Project Types
   Donors                     Infrastructure (roads,
   Governments                         bridges)
   Multilaterals/Bilaterals      Farm production
   Equity Investors             Processing Plants
   Value-chain                    Transportation
    participants (traders,          Warehousing
    manufacturers)             Cooperative Formation
   Informal Lenders                   Trading
   Financial Institutions         Research and
                                     Development
         Financier Attribute

Risk Appetite    Low           High


  Return     Financial         Social
Expectations

  Payback       Short          Long
   Period
Expectation
 Financing      Limited     Deep
 Capacity                  Pockets
      Project Characteristics

    Risk       Low         High


  Return     Financial     Social
Expectations

  Payback      Short       Long
   Period
Expectation
 Financing    Limited      Deep
 Capacity                 Pockets
  Project      Farm Level      Processing    Trading
               Production
               (small holder
               cash crops)
    Risk           High          Medium          Low


  Return        Financial,     Financial,M    Financial,
Expectations       Low            edium          High

  Payback      Short Term        Medium         Short
   Period
Expectation
 Financing        Small          Medium         Large
 Required
   Project          Roads/         Social        Technology
                Infrastructure   Mobilization   Research and
                                                Development


    Risk         Medium            High            High


  Return       Financial and       Social       Financial
Expectations       Social           Low           High
                    Low
 Payback        Long Term          Social       Financial,
  Period                           Long         Long Term
Expectation                        Term
 Financing         Large         Medium           Large
 Required
         Value Chain Financing
   Identify areas in value chain where
    financing may be a constraint
   Understand the nature of the financing
    needed
   Identify opportunities and constraints in
    increasing value chain financing
    • Risks
    • Policies that affect risks
    • Other
   Matching financier profile to nature of
    financing needed
   THANK YOU!

Email: rontchua@gmail.com

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:66
posted:7/25/2012
language:English
pages:21