Agri09 day iii - session v - part i - pierre van hedel - rabobank


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Agri09 day iii - session v - part i - pierre van hedel - rabobank

  1. 1. 15 June 20092204058 Rabobank Groep
  2. 2. 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.2204058 2 Rabobank Groep
  3. 3. Rabobank International World 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 countries2204058 3 Rabobank Groep
  4. 4. Rabo Development Develop 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 profitability2204058 4 Rabobank Groep
  5. 5. Mission Rabo Development Rabobank was Today, more than It is our mission founded 110 years 4 billion people to support ago by small world-wide do not financial sector farmers who did have access to development in not have access to financial services developing financial services economies2204058 5 Rabobank Groep
  6. 6. Partner Banks Rabo Development in Africa Rwanda Tanzania BPR NMB Zambia Mozambique Zanaco Banco Terraabobank Group 2204058 Rabobank Groep
  7. 7. Rabobank Foundation • 35 years history • Funding from profit of Rabobank Group • 25 focus countries • Member based producer organisations and savings / credit cooperatives2204058 7 Rabobank Groep
  8. 8. 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 networks2204058 Rabobank Groep
  9. 9. 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 assistance2204058 Rabobank Groep
  10. 10. 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 32204058 Rabobank Groep
  11. 11. 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 system2204058 Rabobank Groep
  12. 12. 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 cows2204058 Rabobank Groep
  13. 13. 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 development2204058 Rabobank Groep
  14. 14. 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 organisations2204058 Rabobank Groep
  15. 15. Succesful example: Emergent Farmers Project Zambia - There is a growing class of mid-sized farmers in Africa (“emerging farmers”) - They have the potential to develop into “commercial” farmers - Growth of agri-production should especially come from this farmer segment - They form an interesting target to our partner banks as they are open to innovation, growth oriented and need various financial services - One of the main bottlenecks to develop into a “commercial” farmer is lack of WC and technical expertise/management skills - Rabo & IFC believe that a combination of advisory & direct financing is the best approach to bridge the gap2204058 Rabobank Groep
  16. 16. Where does the Emergent Farmer Fit in the Farmer Profile COMMERCIAL Considerable support No financial both financial and opportunities and not technical recognized by support EMERGENT providers Considerable SMALL SCALE support both financial and technical by SUBSISTENCE NGOs and Government2204058 Rabobank Groep
  17. 17. 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-out2204058 Rabobank Groep
  18. 18. 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 Rabobank2204058 Rabobank Groep
  19. 19. 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)2204058 Rabobank Groep
  20. 20. 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 RIAS2204058 Rabobank Groep
  21. 21. • 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)2204058 Rabobank Groep
  22. 22. 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 knowledge2204058 Rabobank Groep