Value Chain Financing Overview Prof. Ronald T. Chua Asian Institute of Management
Value Chain Financing Overview <ul><li>Review of the Value Chain Framework </li></ul><ul><li>Value Chain Development and V...
Why a Value Chain Perspective? <ul><li>Microenterprises/rural agricultural households part of a bigger economic system </l...
Value Chain Approach Objectives <ul><li>A tool/approach for identifying opportunities and constraints for: </li></ul><ul><...
The Value Chain Framework* <ul><li>“ Value chains encompass the full range of activities and services required to bring a ...
*Taken from: The Value Chain Framework: USAID Briefing Paper
*Taken from: The Value Chain Framework: USAID Briefing Paper
Value Chain Structure Elements <ul><li>End Markets </li></ul><ul><li>Business and Enabling Environment </li></ul><ul><li>V...
Value Chain Dynamics <ul><li>Upgrading </li></ul><ul><li>Value-Chain Governance </li></ul><ul><li>Power exercised by firms...
Value Chain Outcomes <ul><li>Value Chain competitiveness </li></ul><ul><li>Micro and Small Enterprise  Benefits </li></ul>...
Value Chain Approach <ul><li>Main objectives – increased competitiveness and benefits to marginal participants/poor </li><...
Value Chain Financing <ul><li>“ financing provided to or by a value chain actor in order to increase value-chain growth an...
Source: Value Chain Finance: Understanding and Increasing Access.  USAID Concept Paper
Value Chain Financing <ul><li>Identify areas in value chain where financing may be a constraint </li></ul><ul><li>Understa...
Matching Financier to Projects <ul><li>Financiers </li></ul><ul><li>Donors </li></ul><ul><li>Governments </li></ul><ul><li...
Deep Pockets Limited Financing Capacity Long Short Payback Period Expectation Social Financial Return Expectations High Lo...
Deep Pockets Limited Financing Capacity Long Short Payback Period Expectation Social Financial Return Expectations High Lo...
Large Medium Small Financing Required Short Medium Short Term Payback Period Expectation Financial, High Financial,Medium ...
Large Medium Large Financing Required Financial, Long Term Social Long Term Long Term Payback Period Expectation Financial...
Value Chain Financing <ul><li>Identify areas in value chain where financing may be a constraint </li></ul><ul><li>Understa...
THANK YOU! Email: rontchua@gmail.com
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Value chain financing ron chua

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Value chain financing ron chua

  1. 1. Value Chain Financing Overview Prof. Ronald T. Chua Asian Institute of Management
  2. 2. Value Chain Financing Overview <ul><li>Review of the Value Chain Framework </li></ul><ul><li>Value Chain Development and Value Chain Financing </li></ul>
  3. 3. Why a Value Chain Perspective? <ul><li>Microenterprises/rural agricultural households part of a bigger economic system </li></ul><ul><li>Increasing microenterprise/rural agri household incomes may require interventions beyond the enterprise/household level </li></ul>
  4. 4. Value Chain Approach Objectives <ul><li>A tool/approach for identifying opportunities and constraints for: </li></ul><ul><ul><li>improving chain growth and competitiveness </li></ul></ul><ul><ul><li>benefit more marginalized participants </li></ul></ul><ul><li>Takes on a systems perspective (the value chain) </li></ul><ul><li>Analytical Perspectives </li></ul>
  5. 5. The Value Chain Framework* <ul><li>“ Value chains encompass the full range of activities and services required to bring a product or service from its conception to sale in its final markets – whether local, national, regional, or global. Value chains include input suppliers, producers, processors, and buyers. They are supported by a range of technical, business and financial service providers” </li></ul>*Taken from: The Value Chain Framework: USAID Briefing Paper
  6. 6. *Taken from: The Value Chain Framework: USAID Briefing Paper
  7. 7. *Taken from: The Value Chain Framework: USAID Briefing Paper
  8. 8. Value Chain Structure Elements <ul><li>End Markets </li></ul><ul><li>Business and Enabling Environment </li></ul><ul><li>Vertical Linkages </li></ul><ul><li>Horizontal Linkages </li></ul><ul><li>Supporting Markets </li></ul>*Taken from: The Value Chain Framework: USAID Briefing Paper
  9. 9. Value Chain Dynamics <ul><li>Upgrading </li></ul><ul><li>Value-Chain Governance </li></ul><ul><li>Power exercised by firms in their relationships with each other </li></ul><ul><li>Inter-firm cooperation and competition </li></ul><ul><li>Transfer of information and learning between firms </li></ul>*Taken from: The Value Chain Framework: USAID Briefing Paper
  10. 10. Value Chain Outcomes <ul><li>Value Chain competitiveness </li></ul><ul><li>Micro and Small Enterprise Benefits </li></ul>*Taken from: The Value Chain Framework: USAID Briefing Paper
  11. 11. Value Chain Approach <ul><li>Main objectives – increased competitiveness and benefits to marginal participants/poor </li></ul><ul><li>Define/Understand Value Chain </li></ul><ul><li>Change Structure </li></ul><ul><li>Change Dynamics/Relationships </li></ul>
  12. 12. Value Chain Financing <ul><li>“ financing provided to or by a value chain actor in order to increase value-chain growth and competitiveness” </li></ul>Source: Finance in the Value Chain Framework. USAID Briefing Paper
  13. 13. Source: Value Chain Finance: Understanding and Increasing Access. USAID Concept Paper
  14. 14. Value Chain Financing <ul><li>Identify areas in value chain where financing may be a constraint </li></ul><ul><li>Understand the nature of the financing needed </li></ul><ul><li>Identify opportunities and constraints in increasing value chain financing </li></ul><ul><ul><li>Policy issues </li></ul></ul><ul><ul><li>Other </li></ul></ul><ul><li>Matching financier profile to nature of financing needed </li></ul>
  15. 15. Matching Financier to Projects <ul><li>Financiers </li></ul><ul><li>Donors </li></ul><ul><li>Governments </li></ul><ul><li>Multilaterals/Bilaterals </li></ul><ul><li>Equity Investors </li></ul><ul><li>Value-chain participants (traders, manufacturers) </li></ul><ul><li>Informal Lenders </li></ul><ul><li>Financial Institutions </li></ul><ul><li>Project Types </li></ul><ul><li>Infrastructure (roads, bridges) </li></ul><ul><li>Farm production </li></ul><ul><li>Processing Plants </li></ul><ul><li>Transportation </li></ul><ul><li>Warehousing </li></ul><ul><li>Cooperative Formation </li></ul><ul><li>Trading </li></ul><ul><li>Research and Development </li></ul>
  16. 16. Deep Pockets Limited Financing Capacity Long Short Payback Period Expectation Social Financial Return Expectations High Low Risk Appetite Financier Attribute
  17. 17. Deep Pockets Limited Financing Capacity Long Short Payback Period Expectation Social Financial Return Expectations High Low Risk Project Characteristics
  18. 18. Large Medium Small Financing Required Short Medium Short Term Payback Period Expectation Financial, High Financial,Medium Financial, Low Return Expectations Low Medium High Risk Trading Processing Farm Level Production (small holder cash crops) Project
  19. 19. Large Medium Large Financing Required Financial, Long Term Social Long Term Long Term Payback Period Expectation Financial High Social Low Financial and Social Low Return Expectations High High Medium Risk Technology Research and Development Social Mobilization Roads/ Infrastructure Project
  20. 20. Value Chain Financing <ul><li>Identify areas in value chain where financing may be a constraint </li></ul><ul><li>Understand the nature of the financing needed </li></ul><ul><li>Identify opportunities and constraints in increasing value chain financing </li></ul><ul><ul><li>Risks </li></ul></ul><ul><ul><li>Policies that affect risks </li></ul></ul><ul><ul><li>Other </li></ul></ul><ul><li>Matching financier profile to nature of financing needed </li></ul>
  21. 21. THANK YOU! Email: rontchua@gmail.com
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