Post on 21-Dec-2015
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BRD MFIs Refinancing
Introduction
To support Microfinance sector, the GoV established the credit and the capacity building funds. The capacity building fund aims at developing professional management and financial sustainability of Microfinance Institutions. The purpose of the credit fund is to provide sustainable refinancing access to MFIs in form of external lines of credit and enable MFIs access liquidity to invest and obtain earnings. The managing institutions of the capacity building fund are AMIR and CAPMER whereas the managing institution of the credit fund is BRD.
BRD had already identified the refinancing and the capacity building of MFIs as the main pillars in the development of the Microfinance industry. That is why it created a microfinance program according to the decision of its Board meeting held on July 9th 2002.
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“To become the Government of Rwanda’s investment arm by financing the nation’s development objectives with a focus on the priority sectors of the economy.”
Mobilize financial resources to drive Rwanda’s development
Develop special financing programs for key export sectors
Expand BRD’s product portfolio to meet customers needs
Engage and support key customers and partners
Promote Microfinance Services
Increase BRD’s effectiveness through reconfiguration and
training
MissionMission
Strategic Priorities
Strategic Priorities
VisionVision “To be the most profitable bank at the service of poverty in financing priority sectors of the Rwandan Economy”.
BRD MFI REFINANCING
BRD Vision, Mission and Strategic Priorities
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LOANS
LEASING
AGENCY FUNCTIONS
GUARANTEE FUND
EQUITY
TRADE FINANCE
MICROFINANCE
ADVISORY SERVICES
BRD Agriculture Financing
BRD New and Old Products
DEPOSIT MOBILISATION
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A detailed feasibility study or business plan for the A detailed feasibility study or business plan for the projectproject
Proven technical capacity in the field of the project Proven technical capacity in the field of the project
Demonstrated capacity to manage the projectDemonstrated capacity to manage the project
Adequate market share Adequate market share
30-50% participation by promoter of investment 30-50% participation by promoter of investment (15% for cooperatives)(15% for cooperatives)
GE
NE
RA
L
CO
ND
ITIO
NS
Guarantee to secure the loanGuarantee to secure the loan
Interest rate of 10-16%. Interest rate of 10-16%.
Repayment period: Varies and can be up to 10 yearsRepayment period: Varies and can be up to 10 yearsFIN
AN
CIA
L
CO
ND
ITIO
NS
BRD MFI REFINANCING
BRD Lending Conditions
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Mortgages with title deedsMortgages with title deeds
Pledge of receivables or resourcesPledge of receivables or resources
The joint guarantee of spouse or any other partnerThe joint guarantee of spouse or any other partner
Guarantee fundGuarantee fund
Gu
aran
tees
Accidents and fire insurance, etc..Accidents and fire insurance, etc..
Project financedProject financed
Solidarity guarantee / caution solidaireSolidarity guarantee / caution solidaire
BRD MFI REFINANCING
BRD General Lending Conditions
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BRD MFI REFINANCING
BRD Experience Financing - Figures
Total BRD Portfolio amount to RWF 31.8 Billion . RWF 29.6 Billion are in DDI and RWF 2.3 Billion are in FOREDEM
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BRD MFI Refinancing
BRD Experience in MFI Refinancing
Activities Number of
Projects
Value of projects
Comments
Loans applications 22 4 003 717 172
Loans approved 10 1 600 000 000 Loan agreement in process for 2 MFIs
Loans disbursed 8 1 320 000 000Loans rejected 8 2 524 156 400 The reasons of
rejection differ from the institutions to another.
Portfolio as at 31st August 09
8 796 493 030 87% are loan in class 1, 9% in class 2 and 4% in class 4, 3% are in arrears.
Pipeline as at 30th September 09
2 70 000 000
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• No BNR license of the MFIs
• No legal status of the MFI
• Weak management of the MFI
• Weak performance of the MFI
• Lack of guarantees
• Insufficient profitability of the business
• Insufficient experience of the MFI
• High level of leverage and be classified as a bad debtor in
banking sector
BRD MFI REFINANCING
Issues for MFI refinancing
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• Lack of transparent norms and performance indicators,
• Lack of transparent pricing policy of products and services;
• Poor governance of MFIs;
• High rates of non-performing loans for the MFIs;
• Lack of sufficient equity;
• low level of MFI’s deposits;
• Week Management Information and internal control Systems.
BRD MFI REFINANCING
Issues for MFI refinancing
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BRD MFI Refinancing
BRD Initiatives in Addressing Issues Hampering the MFI Refinancing
• Guarantee funds that provide partial guarantees (SME
Guarantee fund, SMGF, FAGACE)
• Capacity building and Technical assistance trough BRD
Advisory Services
• Partnership with Microfinance stakeholders
• Updated Criteria and Conditions of refinancing
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BRD MFI Refinancing
BRD Criteria and Conditions for the MFI Refinancing
• NPL less than 10%
• BNR Reporting requirements,
• BNR Governance Standards,
• The amount of credit to be given by BRD should not exceed 20%
of the MFI total deposits,
• 80% of the MFI loan portfolio should be in productive sectors and
MFIs should be present in rural area,
• No additional guarantees will be required apart from MFI’s assets,
• BRD will refinance MFIs at 6% and MFIs will finance their clients
at reasonable interest rate, agreed on with BRD.
NB: Microfinance Banks are excluded from eligible MFIs to be refinanced, they have access to other resources,
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BRD MFI Refinancing
Documents to presents when requesting refinancing
• Application letter
• BNR License
• BNR’s report for 3 quarters
• Legal Status ( Ubuzima gatozi)
• Business Plan for 5 years,
• Audited Financial statements for 3 years,
• Portfolio and loan aging reports,
• Credit Policy,
• Memorandum and articles of association( statuts)