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DEVELOPMENT CREDIT AUTHORITY - Ethiopia CIAFS

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DEVELOPMENT CREDIT AUTHORITY - Ethiopia CIAFS Powered By Docstoc
					DEVELOPMENT
CREDIT AUTHORITY-
DCA
PRESENTATION TO FTF PARTNERS 2nd
QUARTRLY COORDINATION MEETING
       Overview of DCA In Ethiopia
• The major objective of DCA is to support the development of
  key Economic Sectors and financial markets through
  mobilization of public fund and demonstrate the sustainability
  and profitability of Credit operation under represented
  economic Sector (SMEs engaged in different activities)
• DCA programs have been implemented since 1999 at Global
  and National levels in order to facilitate increased lending via
  partnerships with local private banks. As a result, in Ethiopia
  more than 38 million USD loans have been disbursed to
  business enterprises with a subsidy cost of $3.2 million USD,
  which leveraged $1: $12
• Currently, Ethiopian DCA have been expanded to provide
  enhanced coverage to agriculture enterprises (Small
  Agriculture farmers & Coop unions) and health care
  institutions.
         DCA –Way of doing Business
Background                       Approach
  • Needs Partnership agreements with local private banks
 • USAID provides 50% of borrower’s collateral needs
 • In the case of default, Partner banks reimbursed the net
   principal of loan provided on basis of the agreement
 • All loans made with partner banks’ funds
 • Due diligence and credit decisions made by lender
    ACTIVE ETHIOPIAN DCA LPG

• Agricultural Equipment Financing DCA
                            Structure


• Health Care DCA

• Diaspora owned business enterprises LPG

• Women owned business enterprises LPG
    NEW SIGNED LPG 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
                for six years
              • Equipment financing facility shared equally by two
Agriculture     private commercial banks - Bank of Abyssinia and
                Zemen Bank
              • Many applicants were submitted their BP to partner
                banks with the support of Serengeti-Capital TA &
                waiting for banks decision
            EXPECTED IMPACT
            •   Enable financing of bankable projects that haven’t an
                opportunity to get loan without providing Collateral to banks
            •   Partner banks increase lending in agricultural sector – especially
Results         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
            •   Increase the diversity of employment opportunity and income in
                rural areas
            •   Create a sustainable partnership between private sector &
                financial institutions, which enable partner banks to develop
Long-term       their own strategy for expanding lending to targeted business
goals           w/o guarantee requirements
            •   Additional local banks will be attracted in DCA mechanism, and
                introduce Agr-Equip leasing business
            •   Contribute the achievement of FtF objectives in poverty
                reduction & Economic growth in targeted regions
          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
              • 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 skills & knowledge


              • Advise about the requirements of DCA guarantee
Advisory        loans
Services
              • Link potential borrowers with appropriate banks
             BANK FOCUSED TA
             • Training on SMEs lending mechanism
             • Training on credit-risk analysis and cash-flow lending
Capacity
building     • Pre-screening and referrals of potential beneficiaries
             • Evaluation of potential projects eligibility & requirements
               at field level with bank staffs
             • Monitoring and Supervision of beneficiary projects
               performance on the field
             • Designing & promoting a lending product using the
Marketing      guarantee scheme
assistance
             • Advising on setting up specific lending units in the bank to
               promote new products around guarantee
             • Develop Outreach strategy to potential borrowers
               targeted by guarantees

				
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posted:5/26/2013
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