Agriculture and the rural world are underfunded
There are three main constraints with regard to agricultural and rural area financing:
Logistical constraints due to the geographical dispersion of customers and their remoteness from urban areas
Specific risks that are not clear for the majority of financial institutions and that traditional guarantees cannot cover
Specific financing needs of agricultural and rural players, requiring the development of adapted financial products
Operational support provided to Financial Institutions is one of the most effective ways of creating sustainable change
Operational support helps develop approaches tailored to the context of the institution and to strengthen the latterís capabilities in this field. This approach is entirely suitable for healthy financial institutions whose strategy includes the development of financial services for agriculture and rural areas.
The key success factors for development of an agriculture finance activity at a financial institution are: (i) a strategic commitment from the FI; and (ii) a good integration in the business environment. On this basis, HORUSís two main fields of support are the following:
Building the institutionís capacity with regard to the specificities of agricultural credit, and integrating these features in its methods and procedures at all levels, in a process of change management: adapted product design, methodology for putting and analyzing loan files, mechanisms for securing loans, risk management, MIS, communication, HR (training, setting objectives for loan officers and developing a suitable portfolio performance-based bonus system), etc.
Defining mechanisms for securing loans, by setting up partnerships. The forms these partnerships can vary widely depending on the context and value chains concerned. It can be as simple as transmission of information or capacity building and structuring of borrowers. It is sometimes possible to implement integrated mechanisms, such as revenue-based loans, disbursement of credit to the supplier who releases the loan in kind to the borrower, quasi-leasing or warrantage.
Development of an agricultural finance activity
Studies and technical assistance for FUCEC-Togo to help strengthen its credit offer to agricultural clients (AFD/FUCEC-Togo financing, 2015).
Technical assistance to Advans Cameroun to diversify its offer in rural areas: market studies (Advans funding/REGMIFA, 2011) followed by implementation support (AFD financing, 2012-2013).
Technical assistance to BNDA (Mali) to help improve its range of financial services to agricultural and rural SMEs (World Bank/Gates Foundation Agrifin Program, 2012-2014).
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