Docstoc

Presentation to Partners - Ethiopia CIAFS

Document Sample
Presentation to Partners - Ethiopia CIAFS Powered By Docstoc
					DEVELOPMENT
CREDIT AUTHORITY-
DCA
PRESENTATION TO FTF PARTNERS 2nd
QUARTRLY COORDINATION MEETING
          EXECUTIVE SUMMARY
• DCA programs have been in Ethiopia for 13 years and facilitate
  increased lending via partnerships with local lenders

• Current Ethiopian DCA have been expanded to provide
  enhanced coverage to agriculture and health care industries

• More than US$20 million combined is available for agriculture
  and health care loan guarantees, with the objective to
  increase lending and grow the equipment leasing market

• Serengeti Capital gives Technical Assistance to this program
  focusing on both Borrowers and Banks
   MAJOR OBJECTIVES OF DCA PROJECT
• Loan guarantee scheme (50%) with local banks supporting
  small and medium enterprises in various sectors

• Support the development of key sectors and financial markets

• Mobilize local cash, encourage local markets, and explore new
  sectors and activities

• Demonstrate the sustainability and profitability in tradition
  under represented economic sectors
                OVERVIEW OF DCAs
Background                             Approach
• Broad financing authority            • Partnership agreements with
  allowing private sector bank           local private banks
  resources to have a greater and
  sustainable impact in supporting     • USAID guarantees 50% of
  economic growth                        borrower’s collateral need

• Have been used by USAID/             • Partner banks reimbursed the
  Ethiopia since 1999 to stimulate       net principal on default loans
  lending to underserved markets         covered under the agreement

• Past target groups include SMEs      • All loans made with partner
  in priority members of the             banks’ funds
  Diaspora community and
  women entrepreneurs focusing         • Due diligence and credit
  on Agriculture related activities.     decisions made by lender
      CURRENT ETHIOPIAN DCA

                           Structure
• Agricultural Equipment Financing DCA

• Health Care DCA

• Diaspora DCA

• Women DCA
      PROPOSED DCA STRUCTURE
              • A US$13.5 million, multi-bank loan portfolio guarantee
Health care     for private health providers offering HIV/AIDS and TB
                services
              • Equipment financing facility shared by two private
                commercial banks - NIB Bank and Bank of Abyssinia



              • A US$7.3 million, multi-bank loan portfolio guarantee
Agriculture     for six years
              • Equipment financing facility shared equally by two
                private commercial banks - Bank of Abyssinia and
                Zemen Bank
            EXPECTED IMPACT
            • Partner banks increase lending in agricultural sector
Results       – especially financing for agricultural equipment
            • Targeted small holder farmers and agro-processing
              industries will have opportunity to accumulate
              capital assets that enable them to maximize their
              farming activities

            • Partner banks develop own strategy for expanding
Long-term     lending to targeted businesses without a guarantee,
goals         perhaps via leasing subsidiaries or expanded lending
              via intermediaries to agricultural sector
            • Additional local financial institutions will introduce
              equipment leasing businesses/ subsidiaries or, at a
              minimum, increased lending to this sector
          SERENGETI CAPITAL’S ROLE

                                          • Provide technical assistance
                Health care
                                            under the various programs as
                                            follows:
Agricultural
                                             – Serve as a point of contact
                Technical
equipment
                assistance
                               Diaspora         for DCA implementation &
 leasing
                                                monitoring
                                             – Provide borrower focused
                  Women                         TA
               entrepreneurs
                                             – Provide bank focused TA
         BORROWER FOCUSED TA
TA SUPPORT PROCESS

         Step 1              • Before approaching the bank, email or call the Serengeti’s Ethiopia office
                               to make an appointment. Serengeti’s role is to guide beneficiaries
Contact Serengeti Capital,     through the process and facilitate a relationship with the bank. Interested
                               parties should come prepared with a business plan. Serengeti will review
    Ethiopia                   business and may recommend amendments




        Step 2               • Loan applicants must obtain documents listed below. If an applicant does
   Assemble required           not have these documents and do not know how to acquire them,
                               Serengeti Ethiopia will give information on how to do so.
      documents

        Step 3
                             • After completing step two, Serengeti Ethiopia will write a TA support letter
  Submit application to        recommending beneficiary to the banks. Banks will not process the loan
   appropriate bank            application under the DCA without this certification.
                             • Banks will also conduct their own appraisal before granting credit
            BORROWER FOCUSED TA
              • Assist with business plan development
Business
development   • Review Business plan and cash flow projections
              • Appraise Feasibility studies
              • Advise on bank regulations and guidelines
              • Business registration assistance
              • Training on business functions


              • Help potential borrowers understand how lending
Potential       process functions
lenders
              • Link potential borrowers with appropriate banks
         BORROWER FOCUSED TA
CHECK LIST OF REQUIREMENTS FOR LOAN APPLICATION
 Application letter                 Original collateral documents
 Yellow card                         (e.g. Title deed, car ownership
                                      booklet, etc…)
 Tax identification No.
                                     Consent of mortgagor (if
 Feasibility study/Business plan     property owned by third party)
 Valid license/registration No.     Evidence of marital status
 Investment permit                  Financial statements/S;I/S;C/F)
 Article and memorandum             Invoices
  Association/PLC/SC
                                     Bills of quantity
 Delegation of Authority for
  signing loan contracts             Credit information from other
                                      banks
 Company board resolution to
  borrow
             BANK FOCUSED TA
             • Training on how to administer the DCA guarantee
Capacity
building     • Training on credit-risk analysis and cash-flow lending
             • Pre-screening and referrals of potential beneficiaries
             • Conducting field visits with bank staff to observe
               potential projects and borrowers
             • Designing and promoting a lending product using
Marketing      the guarantee
assistance
             • Advising on setting up specific lending units in the
               Bank to promote new products around guarantee
             • Outreach to potential borrowers targeted by the
               guarantee
QUESTIONS?

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:1
posted:5/3/2013
language:Unknown
pages:13