Post on 26-Dec-2015
transcript
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
For A United and Prosperous Agricultural
Sector
AGRICULTURAL CREDIT SCHEMES: THE
MICRO-AGRICULTURAL FINANCE SCHEME FOR SOUTH AFRICA,
MAFISA
Presentation to Portfolio CommitteeParliament: Marks Building
Cape Town07 February, 2005
2
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Presidential Announcement
Re-establish the agricultural credit scheme in the Department of Agriculture
Provide capital to increase support to agricultural activities in the communal land areas as well as other small–scale agriculture.
Leave the Land Bank to deal with the commercial sector Make R1 billion immediately available to start the scheme Work with the financial institutions to implement the
provisions in the financial services charter relevant to the development of small-and medium-farming enterprises
3
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Why the Reversal ?
Enterprises Farmers Enterprises Farmers Farmers
Land BankCommercial Banks
Agricultural Coops
Agricultural Coops
Agricultural Coops
Agricultural Credit Board
Pre-1997
4
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Why the Reversal ?
Enterprises Farmers EnterprisesFarmersFarmers
Land BankCommercial Banks
Agricultural Companies
Farmers Farmers Farmers Farmers Farmers Farmers
Rural Micro-Finance Institutions
Rural Micro-Finance Institutions
1998-2004
5
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Why the Reversal ?
Enterprises Farmers EnterprisesFarmersFarmers
Land BankCommercial Banks
MAFISA: Micro-Agricultural Financial Scheme for South Africa
Farmers Farmers Farmers Farmers Farmers Farmers
Post 2004
6
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Global Microfinance Experience
• Asia– BRI of Indonesia
– BRAC of Bangladesh
– BAAC of Thailand
• Latin America– Bancosol of Bolivia
• Africa– Rural Banks
– Cooperative Banks
• Europe– DGRV of Germany
– Rabo Bank of the Netherlands
– Agricole of France
7
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Policy Issues
• Micro-finance demand among the working poor can be met by profitable and sustainable institutions
• Successful commercial microfinance can be carried out by different institutions in widely different environments
• Regulatory authorities must provide an enabling environment if institutional commercial microfinance is to succeed
• Donors supporting the growth of commercial microfinance assist through capacity building initiatives
8
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Comprehensive Agricultural Support Programme
The Hungry &
Vulnerable
Household food
security &
Subsistence
Farm & Business
level activity
Agricultural macro-
system within
consumer economic
environment
PILLARSPILLARS
On
& O
ff
Far
m
Infr
astr
uct
ure
On
& O
ff
Far
m
Infr
astr
uct
ure
Mar
ket
ing
&
Bu
sin
ess
Dev
elop
men
t
Mar
ket
ing
&
Bu
sin
ess
Dev
elop
men
t
Fin
anci
al
Ass
ista
nce
Fin
anci
al
Ass
ista
nce
Tra
inin
g &
C
apac
ity
Bu
ild
ing
Tra
inin
g &
C
apac
ity
Bu
ild
ing
Tec
hn
olog
y &
A
dvi
sory
S
ervi
ces
Tec
hn
olog
y &
A
dvi
sory
S
ervi
ces
Info
rmat
ion
&
Kn
owle
dge
M
anag
emen
t
Info
rmat
ion
&
Kn
owle
dge
M
anag
emen
t
AGRICULTURAL SUPPORTAGRICULTURAL SUPPORT
9
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Farms and Agribusiness StructureFarms and Agribusiness Structure
IV
III
II
I
Large commercial farms & agribusinesses
Small commercial farms & agribusinesses
Emerging farms and Emerging farms and agribusinessesagribusinesses
Subsistence farms andSubsistence farms and agribusinessesagribusinesses
1st E
cono
my
2nd
Eco
nom
y
10
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Socio-Economic Analysis
An estimate of 15 million rural poor people Women-headed households Women, youth and people with disabilities Some form of access to land Have some form of self-employment Earn as little as R600 per month Farming share less than 10% to total HH income Move in and out of the 1st and 2nd economies in pursuit of
household livelihood strategies Are not severely malnourished, hungry or destitute Use credit for high potential areas and high return activities
11
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Socio-Economic Analysis Use savings for subsistence farming and low return
productive activities Rely on remittances, wages, disability, pension and child
support grants for production and HH needs Live in remote and dispersed areas with poor infrastructure Participate in but do not benefit from the 1st economy May be creditworthy below and above the poverty datum
line May engage into profitable self-employment investments Use extended families and social networks to manage
production, price and market risks and disasters
12
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Business Case More savers than borrowers in a financial system Households save more than they borrow Enterprises borrow more than they save If 10 out of 15 million rural people are savers, then 5 million
rural people should be borrowers If 10 million people save at least R200 per year, then there
should be R2 billion in the rural financial market available for the 5 million rural borrowers
13
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Vision
Empowering the rural working poor, small entrepreneurs and farmers to improve their livelihoods
14
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Mission
MAFISA is the state-owned scheme that provides access to micro and retail agricultural financial services
to households, individuals and entrepreneurs in the rural areas on a nation-wide, commercial, cost-
effective and sustainable basis
15
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Scope
PRIMARY AGRICULTURE
ManufacturersSourcesIntermediariesDistributors:
•Fertilizer•Fuel•Seed•Chemicals•Mechanisation•Animal Feed•Finance•Insurance•Advisory
HandlingStoragePreparationProcessingDistributionTransportation
INPUT MARKETS
OUTPUT MARKETS
CONSUMER MARKETS
VALUE ADDITION
16
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Sustainable Livelihoods Framework
VULNERABILITY CONTEXT
•Trends
•Shocks
•Culture
CAPITAL ASSETS
•Natural
•Social
•Physical
•Human
•Financial
Laws Policies IncentivesInstitutions
PROCESSES
TRANSFORMING STRUCTURES & PROCESSES
STRUCTURESGovernmentPrivate Sector
ISRDP
STRATEGIES
• LRAD
• CASP
• IFSNP
• ARM
• AgriBEE
• MAFISA
• Land Care
• Non-NR-based
OUTCOMES
•more income
•more jobs
•better well-being
•reduced vulnerability
• improved food security
•better sustainable use of NR-base
17
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Sustainable Rural Financial System
Financial
Services
Stakeholder
participation
Rural Financial
InfrastructureOutreach
Conducive
Policies
Non-Financial
Services
Regulation &
Supervision
Improved
sustainable
livelihoods
18
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Financial and Enterprise Viability Cycle
Viable Financial Institutions
Viable Rural Enterprises
Vibrant rural and agricultural economy
Growth
Growth
19
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Savings and Credit Household Cycle
Credit: High potential areas and high return ventures
Savings: Subsistence production and low return ventures
Rural and Agricultural
EconomyGrowth
Growth
20
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Households’ Savings and Credit Cycle
TIME
A M O U N T LUMP SUM
SAVINGS THROUGH
CREDIT
SAVING
S
21
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
22
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Strategy
Productive Assets and Technology
Improving equitable access to productive natural resources and technology
Productive Assets and Technology
Improving equitable access to productive natural resources and technology
Empowering the rural working poor and
enterpreneurs in their efforts to improve their livelihoods
Financial Assets and Markets
Increasing access to financial services and markets
Financial Assets and Markets
Increasing access to financial services and markets
Human and Social Assets
Strengthening the capacity of the rural poor and their organisations
Human and Social Assets
Strengthening the capacity of the rural poor and their organisations
23
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Principles
Rural livelihoods strategies; Collaborate, share and reinforce; Use or improve existing resources and efforts; Offer and gain something of value; Specialise in something of value; Service delivery within the 20km target; Target 10 million beneficiaries; Optimise tax-rand value return; and Rural financial services industry benchmark.
24
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Beneficiaries
Farm Workers; Farm Tenants Small Landholders; Landless; Food Emergency Beneficiaries; Farm and Labour Tenants; Land Reform and Agrarian Beneficiaries; Small, medium and Emerging Farmers; Household Food Producers; Food Garden Producers; and Rural Micro-Entrepreneurs.
25
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Products and Services
Income Level Products
Subsidised Poverty
Alleviation Programmes
Lower Middle
Standard Banking Services
Savings Loans Insurance Transfers
• LRAD• Extension• Infrastructure• AdviceConsultationFacilitationCoordinationMonitoring
Working Poor
Very Poor
• Food & water• Medicine and
nutrition• Social security• Employment
generation• Skills training
Poverty Datum Line
26
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Products and Services
Income Level Services
Subsidised Poverty
Alleviation Programmes
Lower Middle
Standard Banking Services
Information and Advice
Co-ordina
tionFacilitation Monitoring
• LRAD• Extension• Infrastructure• AdviceConsultationFacilitationCoordinationMonitoring
Working Poor
Very Poor
• Food & water• Medicine and
nutrition• Social security• Employment
generation• Skills training
Poverty Datum Line
27
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Functional Structure
Head officeHead office
District BranchesDistrict Branches
Local BranchesLocal Branches Local BranchesLocal Branches
Village
Branches
Village
Branches
Village
Branches
Village
Branches
Village
Branches
Village
Branches
Village
Branches
Village
Branches
10 million Farm and Non-Farm Customers
28
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Competence and Expertise• Economics, politics, legal and social structures and practices;• Policies and regulations of national and regional practices;• Operations and dynamics of local markets, formal and informal;• Extent and types of demand for microfinance;• Clients, their households, businesses and rates of return;• Financial expertise to manage portfolio risk and liquidity;• Treatment of poor clients as valued and respected customers;• Locally effective ways to avoid pressure to direct credit;• PR skills and ability to sell products and services.
29
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Institutional Ownership
• Understand the business opportunities of microfinance
• Defined mission and an established governance structure
• Act as commercial shareholders
• Mandate to set interest rates and fees that cover costs and risks
• Active, committed and accountable for the organization
• Capacity to access additional capital as needed
• Avoid or overcome bureaucratic and political hurdles.
30
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Organization and Management
• Effective asset-liability management
• Product and services for low-income households and enterprises
• High loan repayment rates
• Monthly income statements and balance sheets for each outlet
• Effective cash management
• Systems of staff recruitment, evaluation, promotion and incentives
• Service locations and opening hours convenient for clients
• High quality supervision, internal control and internal audit
31
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Human Resources Development
• Develop a management career track within the institution
• An effective recruiting methods for entry-level positions
• Promotion tracks, career paths and compensation for staff
• Management and staff training programs for microfinance
• Develop a culture of accountability
• Provide staff incentives based on performance indicators
• Combine responsibility, accountability, training and incentives for staff members
32
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Corporate Philosophy
• Trust
• Incentives
• Commitment
• Simplicity
• Standardization
• Transparency
• Flexibility
• Accountability
• Profitability
• Staff Training
• Market Knowledge
33
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Loan Products
• Standardization of credit and savings products with flexibility
• Design and price credit and savings products together
• Offer loans to any creditworthy borrower
• Provide loans to individuals or self-formed small groups
• New borrowers start with small loans
• Provide larger loans as borrowers prove capacity to repay
• Most loans are for working capital, with relatively short terms and frequent payment installments
• Make loans only to ongoing enterprises or people experienced in their work
• Borrower training, other than orientation to the loan program, is not required to receive the loan
34
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Loan Approval and Disbursement
• Train staff to evaluate the character of borrowers and capacity to repay
• Base loan amounts on borrowers’ repayment abilities from their current income flows
• Simplify loan applications and take credit decisions quickly at the lowest-level outlet
• Borrower transaction cost are relatively low because forms and procedures are simple
35
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Loan Collection and Procedures
• Lending institutions bear the credit risk
• Staff who approve loans are responsible for their collecting
• Credit officer monitor borrowers whose loans are in arrears
• Borrowers may re-borrow if they have good repayment record
• Borrowers who do not repay are not permitted to borrow again
• Borrowers can be offered incentives for prompt payment
• Borrowers who miss a payment are visited immediately
• Late payments are recorded promptly
36
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Loan Portfolio Management
• Loan accounting and reporting are simple and transparent
• Loan loss reserves and provisions are adequate and regularly reviewed
• Accord priority to delinquency measurement and management
• Outlets that make loans are regularly and carefully supervised
• Make routine and careful estimates of loan demands
• Prioritise and carry out frequent and regular asset-liability management
• Loan portfolios are diversified with regard to enterprise type
37
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Saving Mobilization• Teach staff that the poor do not need to be trained in order to save
• Mobilise savings from people who love or work near the institution
• Loans and savings accounts are designed, priced and managed together
• Savings instruments are not compulsory
• Provide good security, quick and friendly service and effective cash management
• Set interest rates on fixed deposits at or near the rates of the nearest banks
• Train staff to identify potential savers
• Keep savings and deposit accounts confidential
• Make special arrangements to collect savings on payday
• Visit clients regularly at their homes and places of work
• Locally appropriate public relations activities are emphasized
38
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Delivery Network and Relationships
MAFISA:
Rural
Financial
System
MAFISA:
Rural
Financial
System
Provincial DFIsProvincial DFIs
Provincial DoAsProvincial DoAs
DBSADBSA
IDCIDC
DonorsDonors
KhulaKhula
BanksBanks
Rural MFIsRural MFIs
User-OwnedUser-Owned
Agri-CoopsAgri-Coops
APEX FundAPEX Fund
Agri-CosAgri-Cos
SAVVEMSAVVEM
Post OfficePost Office
MunicipalitiesMunicipalitiesLand BankLand Bank
39
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Financing StrategyFinancing Strategy
PDAs
Agri Coops
Agri Cos
DoA
KHULA
DBSABanks
Traders
MAFISA
Land Bank
Post Office Donors
Provincial DFIs
IDC
FARMING, AGRIBUSINESS & NON-FARM RURAL COMMUNITIES
Local Govt
APEX FUND
MFIs
40
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Sources of Funding
MAFISAMAFISA
Operational Income
Investments Grants
Parliamentary Appropriation
41
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector
Phased Implementation Plan
Cabinet approval; Conclude MOUs and SLAs with partner institutions; Develop and launch quick win products in selected areas; Prepare a MAFISA Concept Document; Prepare a MAFISA Business Plan; Establish a statutory basis to establish MAFISA; Appoint MAFISA Board and CEO; Establish MAFISA organisational structure; Gradually expand the MAFISA branch network; Conduct staff training and deployment; Build strong partnerships and alliances; Monitor and evaluate implementation; and Assess impact on the livelihoods of the rural poor.
42
DEPARTMENT: AGRICULTUREREPUBLIC OF SOUTH AFRICA
MAFISA: Confidential, not for circulation or quotation
For A United and Prosperous Agricultural
Sector THANK YOU