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Rabobank Groep 2204058
15 June 2009
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Rabobank is a cooperative bank
• Rabobank does not have shareholders; the capital of the bank is in a „dead hand‟. Not maximizing profitability is being pursued, but the delivery of „customer value‟.
• Members of the 153 local banks appoint their board and are represented in CKV („Rabobank parliament‟), which meets quarterly with the executive board to decide on major issues.
• Rabobank is now a large, international bank with EUR 612 billion of assets and the only privately owned AAA rated bank.
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Rabobank InternationalWorld wide leading food and agri bank
• Rabobank‟s international market niche is food- & agri business
• Customer Network: many of the global food companies
• Expertise: dedicated agri-research team (80 professionals)
• Agri products: weather derivatives, price hedging instruments
• Rural retail banks in various countries
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Rabo DevelopmentDevelop network of partner banks in Africa
• Equity participation (minority position) in a bank that remains local
• Board will be strengthened by Rabobank professionals
• Rabobank will provide managers for Executive Board to complement local managers
• A comprehensive technical assistance program will be executed through the deployment of Rabobank banking specialist
• Aiming to expand lending to agriculture by combining Rabo agri finance expertise with local expertise
For Rabobank this is a long term commitment, in which the development
into a leading rural bank prevails over short term profitability
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Rabobank was
founded 110 years
ago by small
farmers who did
not have access to
financial services
Today, more than
4 billion people
world-wide do not
have access to
financial services
It is our mission
to support
financial sector
development in
developing
economies
Mission Rabo Development
Rabobank Groep 22040586Rabobank Group
Partner Banks Rabo Development in Africa
Rwanda
BPRTanzania
NMB
Mozambique
Banco Terra
Zambia
Zanaco
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Rabobank Foundation
• 35 years history
• Funding from profit of Rabobank Group
• 25 focus countries
• Member based producer organisations and
savings / credit cooperatives
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African Agri Sector: mission of
Rabobank Foundation
• Use experience and network of Rabobank to
improve income of rural population
• Focus points:– Cooperatives more than 100 years experience
– Food & Agri
– Banking / business experience
– Banking networks
– Client networks
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Approach:
– „Business approach‟ to clients in developing countries (financial projections, annual targets, organisation structure etc.) in line with banking methodology
– Ensure long term impact through economic viability
Instruments:
– Loans– Guarantees (funded / unfunded)– Grants for capacity building– Technical assistance
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Four models of supporting agricultural sector in
developing countries
1.Traditional cooperative development
2.Linking with (Rabobank) partner banks
3.Linking with Rabobank International clients
4.Combination 1,2 and/or 3
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1. Traditional approach
–Assisting starting or growing marketing
cooperatives with grants and TA
–Emphasis on capitalisation and bankability
–RF provides loan when cooperative is ready
to absorb this
–Often cooperation with local implementing
party
Bottlenecks:
– Follow up in local banking system
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Succesful example: Dairy Sector
Promotion in Tanzania
• Supporting farmers cooperative (3300 members) to
purchase shares in dairy processing
• Investing in cattle breeding company to ensure supply of
crossbred cows
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2. Linking with Partner banks of Rabobank
–More effective monitoring and
implementation through local presence
–Contact with local bank from beginning
–Early adaptation to local banking standards
and requirements
– (funded) Risk participation between RF and
Bank
Bottlenecks:
– In some countries lack of viable economic activity and
related technical and market knowledge
– Local support structure needs further development
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Succesful example Rice Mozambique
(proposal)
• RF: risk sharing for loans to start-up cooperative
• Banco Terra: lending and monitoring
• Other donors: donated equity, supporting local
organisations
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- There is a growing class of mid-sized farmers in Africa (“emergingfarmers”)
- They have the potential to develop into “commercial” farmers
- Growth of agri-production should especially come from this farmersegment
- They form an interesting target to our partner banks as they areopen to innovation, growth oriented and need various financialservices
- One of the main bottlenecks to develop into a “commercial” farmeris lack of WC and technical expertise/management skills
- Rabo & IFC believe that a combination of advisory & direct financingis the best approach to bridge the gap
Succesful example: Emergent Farmers
Project Zambia
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COMMERCIAL
EMERGENT
SMALL SCALE
SUBSISTENCE
Considerable support
both financial and
technical
Where does the Emergent Farmer Fit in
the Farmer Profile
Considerable
support both
financial and
technical by
NGOs and
Government
No financial
opportunities and not
recognized by support
providers
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Current status + lessons learned
- Program is partnership between Rabobank, Zanaco, ZNFU and IFC
- Pilot launched in Zambia this season, now comprises 14 farmers
- Yield improvement (maize) was significant especially at the higher end of the farmer group
- Decision taken to expand to >50 farmers for 2009/2010 season
- Target 300 farmers in +/- 5 years
- Tight monitoring is key to success
- Control is only feasible through branch network of Zanaco
- Average loan is some USD 40k but growing
- Discussions started with Banco Terra (Mozambique) for program roll-out
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3. Involve private sector
– Introduce viable economic activity to group
of farmers
–Formation of cooperatives / associations
around this activity
–Private sector provides technical know-how
and marketing / processing outlet
–Careful selection of private sector parties,
often well-known clients of Rabobank
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Role of Rabobank Foundation
–Support for capacity building of farmers
groups to become independent member-
based organisations
–Reduced transaction costs for private sector
as cooperative takes over technical tasks
–Loan to farmers through private sector
and/or cooperative
–Linking with local banks (model 2)
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Example: Cameroon Cacao and
Paraguay Cotton
• Technical and marketing knowledge provided by
Rabobank International clients.
• RF provides funding for support of farmers
(Paraguay)
• RF facilitates finance
• Cameroon: additional key role for Rabobank
Agribusiness consultancy RIAS
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• Combination of these models is a new concept within
Rabobank Foundation
• Required is a committed private party, clear economic
benefit for farmers and presence of local bank with the
right attitude
• Aim for triangle relationship between processor/off-taker,
the outgrower/coop and the local partner bank
• Shifting repayment risk from outgrower/coop to the higher
rated off-taker/processor (tri-partite agreement)
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Example Mozambique Sugarcane
• RF: support cooperatives, rehabilitation of land,
risk sharing for loans
• Banco Terra: financial infrastructure, lending,
monitoring
• RI Client (international sugar co): technical,
marketing and processing support
• RIAS: agribusiness knowledge