2. 2
Executive summary
• Big Grape’s goal is to provide much needed credit to small scale farmers and market traders
• Big Grape Holdings is structured as two separate business units
• Big Grape Financial Services (BGFS) provides $100 to $500 loans to traders and SMEs
• Big Grape Capital (BGC) operates a chicken out-grower project in Domboshawa – so far we have set up
18 chicken runs each producing 1600 chickens every 7 weeks
• Our mission is to help people move from being informal farmers and traders to become
established members of the formal financial sector
• BGMF’s has experimented with different borrowing segments, our focus now on lending to Traders/SME’s
• BGMF has created a customer database of key informal markets in the capital city Harare
• The e-Mali banking system and our ‘Human ATM’ model will expand the reach of our MF products
• BGC is well exposed to the large, fast growing broiler chicken market
• We have developed a streamlined model for financing and overseeing the growth of broilers
• We are providing our small holder farmers with an average of $4,800/yr of cash income
• BGC’s existing poultry farmers provide an immediate consumer pool for additional financial services
• BG can extend the CRISP program to rural farmers nationwide
• Opportunities to further invest in the poultry supply and value chains – specifically cold-chain facilities
3. 3
Agenda
• Background on Big Grape Holdings
• Business overview: Big Grape Micro-Finance
• Business overview: Big Grape Capital
• Big Grape’s Value Proposition
• Appendix
4. 4
Big Grape’s goal is to provide much needed
credit to small scale farmers and market traders
• One of the UN’s Millennium Development Goals (MDGs) is to halve
poverty by 2015
• Financial services play a key role in enabling households to
acquire assets, engage in productive economic activity and pay for
goods and services that can improve and protect human well-being
• When provided with accessible and flexible financial services those in
the informal sector can be key actors in contributing to the attainment
of the MDGs
• Big Grape’s mission is to provide members of Zimbabwe’s informal
economy with access to financial services to help bring them out of
poverty
• Building a network of creditworthy small scale farmers will
allow us to grow as a microfinance firm by bringing our customers
into the formal economy
• Our Chicken Rearing and Investment Self-Help Project
(CRISP) in Domboshava and Insiza district in Matebeleland is our
first step to creating a sizable pool of creditworthy communal
farmers.
5. 5
Big Grape Holdings is structured as two
separate (but integrated) business units
BG Financial
Services
• BGFS (Pvt) Ltd provides financial
inclusion models for the informal,
mass market sector in Zimbabwe
• Experimented with different
products and identified loans to
Traders/ SMEs as the most viable
segment
• Winding down our other loan
products in order to focus on
Farmers and Traders/SMEs
• Peak loan book size: $243k
Big Grape Capital
• BGC (Pvt) Ltd is an agro-focused
structured finance firm that focuses
on community based developmental
projects
• BGC operates a chicken out-grower
project in the Domboshawa area &
Insiza
• Number of farmers: 28
• Annualised bird production: 283 ,
020 broilers
• Annuali broiler sales: $1,546,928
Planned flow of
customers as our
farmers’ enter
the formal
financial sector
6. 6
The BGC-BGMF integration: developing ‘unbankable’
farmers into empowered, loyal customers
Small-holder farmer
1
• Our farmers initially
have no financial or
credit track record
• BGC provides farmers
with financing for
construction of a
chicken run, as well as
input financing for
feed and day old chicks
• These loans are secured
against the physical
assets provided
Microfinance
customer
2 Banking services
customer
3
• Farmers develop a
credit track record
through their chicken
production activities
• BGMF is able to provide
the farmer with
financing for other
essential items such as
water pumps, heating
and lighting equipment.
• Farmers can also access
beneficial consumptive
loans for dependents’
school fees, medical
fees and
bereavements.
• Farmers accumulate
savings and develop a
need for conventional
banking products
• Big Grape’s long term
goal is to obtain a
micro-banking
license, allowing us to
provide an inclusive, low
cost and convenient
banking platform
• The long standing,
trusted relationship
with our farmers will
encourage them to bank
with us
Huge opportunity exists to expand this model into layers,
cattle, pigs and numerous other livestock and crop
commodities
7. 7
Big Grape Holdings Directors
• 4-years experience as a
money market dealer
with HSBC and
Barnfords Securities
• 6-years experiences
with Tetrad Group –
rose to position of Exec
Director of Operations
• Bcom (Hons), National
University of Sciences &
Technology
• Studying for a Masters
in Business Leadership
John Bere
Group Managing
Director
• Founding partner and
non-exec director of
Reach Africa
Investments
• Formerly ‘GM – Global
Markets and Trade
Finance’ at Tetrad Bank
• Bachelor of Business
Science and Master of
Commerce (Hons) from
Rhodes University
• Studying for a PhD in
International Finance
from Wits Business
School
Tapiwa Karoro
Managing Director
BGFS
8. 8
Agenda
• Background on Big Grape Holdings
• Business overview: Big Grape Micro-Finance
• Business overview: Big Grape Capital
• Big Grape’s Value Proposition
• Appendix
9. 9
BGMF’s goal is to overcome liquidity constraints
for traders and SME’s
• Big Grape Microfinance (Pvt) Ltd is a microfinance company
focused on developing financial inclusion models for the
informal mass market sectors of the economy
• We provide $100-$500 loans to market traders, with daily and weekly
repayment schedules
• BGMF’s medium to long term goal is to evolve into a
microfinance bank that provides an inclusive, low cost,
convenient and simple banking platform
• Our loan book has been an
exploratory one, geared towards
proofing the viability of various
microfinance models and products – our
aim is to officially launch and grow our
loans offering to Traders/SMEs
10. 10
BGMF’s has experimented with different borrowing
segments, the focus is increasingly on SME’s
BG Micro-Finance
• Private sector
loans were
purely cash
loans
• Hire purchase
loans were
also granted
to salaried
Pvt. Sector
clients
• Big Grape Micro-finance started out as a micro-lending Joint Venture
• We experimented with numerous types of borrowers, with varied
degrees of success
• Private sector, salary based loans turned out to be very risky due to private
companies not consistently paying their employee’s wages
• Trader/SME loans have consistently shown very low default rates, and
so we have set ourselves the target of 75% of loans to be underwritten
to these borrows
11. 11
Trader/SME loans are popular amongst informal
store owners, particularly amongst females
BG Micro-Finance
High default
rate results
from formal
sector
employers
failing to
pay their
employees
Majority of Trader/SME
loans are to female
business owners
Monthly interest rates
Product Tenor Pricing Average
loan
Size Default
Rate
Traders
Avondale 1
Month 10% 500.00$
4%
Mbare 24
days 10% 100.00$
1%
Gulf 1
Month 10% 300.00$
2%
Tamic 24
days 10% 100.00$
2%
Other 1
Month 10% 300.00$
3%
Salary
Based 3
Months 6.50% 390.00$
27%
Hire
Purchase 3,
6,
9,
12
Months 4% 462.00$
0%
Civil
Servants 3
Months 4.50% 300.00$
0%
12. 12
The e-Mali banking system and our ‘Human ATM’
model will expand the reach of our MF products
BG Micro-Finance
The e-Mali payment system allows us
to reach a vast number of clients
Our “Big” idea is to empower our
traders to act as human ATMs
• e-Mali is an S.A. based mobile
technology company
• e-Mali has operated in Zimbabwe
since 2010
• The e-Mali system works off an
agency network much like Ecocash,
and also has an existing distribution
network across the country
• We have piloted the platform in the
Mbare Agriculture Market, and it
is proving to be the ideal solution to
service the high transactional mass
markets
• We will empower our informal
trading clients to disburse and
collect on approved loans
• These traders are accustomed to
handling cash on a daily basis
• This will enable our existing and
new traders to “sweat” their daily
cash holdings and earn additional
income
• This “human ATM” model will
expand the reach of BGMF’s
lending programs
13. 13
Agenda
• Background on Big Grape Holdings
• Business overview: Big Grape Micro-Finance
• Business overview: Big Grape Capital
• Big Grape’s Value Proposition
• Appendix
14. 14
BGC’s goal is to facilitate the inclusion of small-
holder farmers into the formal financial sector
• BGC looks to invest in a number of community based projects and
businesses that bring the ordinary Zimbabwean closer to
financial services and solutions through financial inclusion,
while building key competencies and capacity along investment value
chains.
• Big Grape Capital believes in investing in projects that empower rural
smallholder farmers through sustainable income generation, job
creation and development, and thus creating a reliable credit
pool for Big Grape Microfinance.
• We are currently focused on
growing our Chicken Rearing
and Investment Self Help
Project (CRISP) in Domboshava
District.
15. 15
The market for broiler chickens is fast growing,
leaving significant room for BGC to grow
BG Capital
10
0
20
70
30
60
50
40
55
2010 2012
18
201320112009
52
38
17
20082007
30
64
Domestic productionBroiler DOC* production (2007-13)
Million chicks
* Day-old chick
Source: ZPA
Since 2009, Zimbabwe
broiler production has
increased 3.5x to 64M
birds per year
• Our 14 farmers currently produce 16MT of meat per month (0.46% of the Zimbabwe
market). We have just added an additional 4 farmers who will begin production soon
• We plan to add an additional 50 farmers, which would bring production to 40MT/month
(1.44% of the ZIM market) – still only a small fraction of the overall market
16. 16
Big Grape is positioned to benefit from growth
in domestic small holder broiler production
-
2,000
4,000
6,000
8,000
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Monthly domestic broiler production (metric tonnes of meat)
Small
holder
farmers
Large
scale
farmers
BG Capital Source: ZPA
• African Development Bank statistics
indicate domestic production
accounts for only 55% of demand
• There is a huge opportunity to
replace imports with local production
17. 17
CRISP engages small holder farmers to grow
broiler chicken over a 5 week cycle
Provide
training to
farmers
(BGC extension
officers)
Monitor
farming
throughout
the cycle
(BGC
extension
officers)
Collect birds
from farmer
(BGC)
Pay farmer
within 14 days
of delivery
(BGC)
Slaughter birds
(Abattoir)
Market birds
(BGC)
Identify small
holder farmers
(BGC)
Select &
contract
farmers
(BGC)
Finance inputs:
chicken runs,
chicks and feed
(BGC)
5 week chicken
rearing cycle
BGC’s process
oversight roles:
• Providing a
guaranteed market
for the birds
• Managing the end to
end value chain and
supply chain
• Providing program
management and
quality control of
bird production
• Providing financial
literacy training to
farmers
BG Capital
18. 18
Each stakeholder brings key resources to
CRISP’s poultry farming operation
Big Grape Capital
• Market linkages
and off-take
relationships
• Access to capital
• Experience
managing the
chicken rearing
cycle
Small-holder farmer
• Labour
• Land
• Security
Abattoir
• Slaughtering facility
• Distribution of slaughtered
birds
• Packaging and branding
BGC Extension
Officer
• Technical expertise
• Relationships with
farmers
BG Capital
19. 19
BGC provides numerous benefits to farmers
participating in the CRISP program
1. Access to finance
‒ Finance for infrastructure and production inputs
‒ Access to equipment, including feeders and drinkers
2. Access to training & support
‒ BGC extension officers resident in the area provide assistance
‒ Irvine’s and Profeeds also act as advisors to farmers
3. Guaranteed off-take for the chickens
‒ Full payment for delivered birds as contracted despite market
uncertainties
4. Improved financial literacy and income generating
potential
BG Capital
20. 20
CRISP has made a significant impact on the
lives of its members and their families
BG Capital
• BGC farmers are earning on average $4,800/year – these farmers had little or no
cash income prior to joining the scheme
• This puts them well above ZIM’s GDP per capita of $905/yr (source: World Bank)
Snapshot as at 26/8/2014
Farmer
Name
Total
No.
of
Rearing
Cycles
Total
No.
of
Birds
Produced
Average
Mortality
Rate
per
Cycle
Average
FCR
per
Cycle
Average
Dressed
Weight
per
bird
produced
Average
Pay-‐out
per
Cycle
Infrastructure
Loan
size
Nhamo
E
4
6097
3.12%
1.865
1.21
$
880.97
$
3,275.49
Nhamo
M
3
4682
2.40%
1.1
1.35
$
926.57
$
3,275.49
Fuze
6
8954
3.24%
1.48
1.32
$
809.75
$
3,327.99
Chidobera
5
6907
9.62%
1.644
1.25
$
387.55
$
3,316.49
Marimo
1
1552
3.90%
1.29
1.9
$
623.01
$
3,314.93
Ngwerume
2
2692
4.85%
1.75
1.29
$
585.16
$
2,325.99
Chikorowondo
4
5937
7.42%
1.585
1.32
$
908.72
$
1,787.43
Nhamo
F
3
4579
4.60%
1.74
1.18
$
542.22
$
3,380.49
Mungate
3
4581
5.15%
1.52
1.22
$
536.38
$
3,744.93
Chinyani
4
6015
5.72%
1.60
1.23
$
480.07
$
2,903.99
Nyakonda
4
6283
2.33%
1.67
1.27
$
856.07
$
3,311.49
Edna
Dongo
0
$
3,162.99
Makunde
2
3078
3.75%
1.42
1.25
$
830.72
$
999.39
Gombera
1
1557
2.70%
2.2
1.09
$
(115.27)
$
1,757.87
Nzirawa
$
999.39
Sanyika
$
1,403.68
Kudakwashe
$
620.00
21. 21
An average Farmer can generate $4,100/yr of cash
income for themselves. BGC receives a return of
230%/yr
BG Capital
Revenue (1600 birds @ 5% mortality): $6,047
Less Costs:
Cost of day old chicks $1,200
Starter $682
Grower crumps $552
Grower Pellets $1,104
Finisher $863
Total feed $3,201
Vaccines $13
Poultry medication $108
Transportation-feed $140
Transportation- livebirds $150
Total cost per 1,600 birds $4,811
Profit from chicken rearing $1,235
Less BGC charges:
BGC Management Fee (5% of input costs) $241
Chick commission $160
Feed commission $320
Total BGC charges per 1600 birds: $721
Farmer income: $515
Less infrastructure loan repayments:
(paid by farmer for first 12 months only)
$184
Farmer Income after loan repayments:
(first 12 months only)
$331
Unit economics: representative example of small
poultry farm profitability per cycle
• Feed makes up 66% of overall costs
for chicken rearing
• Each chicken run consumes 3.7 tonnes
of feed for every 5 week cycle
• BGC generates $721 of gross profit
per cycle off a base of $4,811 of
invested capital
• This equates to a monthly return of
7.2%, or an annual return of 230%
• Each project runs 8 cycles per year –
chicken rearing takes 5 weeks and the
run is rested for 2 weeks between each
batch of chickens
• Bird mortality rate is the key driver of
project profitability
• 5% mortality is a conservative
estimate, current mortality rates are
4.3%
• Farmers generate $515 of cash income
per cycle – equates to $4,100/yr
• Farmer receives a loan of $1,130 to
build their chicken run
• The loan is paid off in 8 installments at
an interest rate of 2.5%/month – this
equates to an annualised return of 34%
for BGC on these infrastructure loans
22. 22
Agenda
• Background on Big Grape Holdings
• Business overview: Big Grape Micro-Finance
• Business overview: Big Grape Capital
• Big Grape’s Value Proposition
• Appendix
23. 23
Our business model is aligned with our goal of
financial inclusion for the informal sector
• The two sides of our business harness the potential of
the informal market:
• Chicken Rearing and Investment Self-Help Project (CRISP)
• Traders and SME loans
• Strategic and operational infrastructure in place:
• Management team
• Operational systems and procedures for credit
assessment, processing, disbursement and collection
• Flagship Microfinance Branch
• Existing database of small scale farmers and informal
traders
• Raised funding through developmental initiatives
• AIZ/Technoserve Award Winner
• Create Fund Beneficiary
A proven,
integrated
business
model
The
capabilities
needed to
expand our
footprint
Experience
accessing low
cost financing
24. 24
Expansion opportunities for Big Grape
1. Big Grape’s existing poultry farmers provide an immediate consumer pool
for other financial services, including:
• Asset financing – farm equipment, home appliances etc.
• Consumer loan – school fees and medical fees loans, emergency loans
• Micro insurance
• Transactional services – money transfer and payment services
• Savings and investment services
2. Big Grape’s existing informal market trader base provides an immediate
distribution channel (and market) for third party products
• Database of 315 Mbare traders dealing in fresh and dried food products
• Opportunities for micro-consignment models for commodities ranging from timber and
steel, to soya chunks and dried fish
3. Big Grape can extend the CRISP program across the country to other rural
districts, targeting the youth, women and the populous at large.
4. Opportunities to invest in the poultry supply and value chains – specifically
cold-chain facilities
• Invest in abattoir facilities with guaranteed supply through CRISP farmers
• Placing 5 farmers/week à 7,752 birds/week à process at least 1,550 birds/day
25. 25
Agenda
• Background on Big Grape Holdings
• Business overview: Big Grape Micro-Finance
• Business overview: Big Grape Capital
• Big Grape’s Value Proposition
• Appendix
26. 26
Agenda
• Background on Big Grape Holdings
• Business overview: Big Grape Micro-Finance
• Business overview: Big Grape Capital
• Appendix
27. 27
Investment risks and mitigation strategies
Risks Mitigation strategy
• Default rates on loans
rise above historical levels
• Daily collections through in-house and independent
agents
• Prudent provision levels
• Credit Insurance
• Inability to find a sufficient
number of bankable loan
recipients
• Create bankable loan recipients through initiatives
such as the CRISP program
• Work with established informal trader organisations
• The Regulator introduces a
cap on interest rates
• Raise cheaper sources through developmental
funding sources based on the social impact of our
projects
• Increase in mortality
rates as existing chicken
runs age and/or disease
outbreak
• Expand the production capacity of existing farmers
by funding the completion of new houses
• Bring on new farmers, from different areas on to
the program
• Inability to find suitable
abattoir facilities for the
new birds
• Invest in own abattoir facilities – BGC has current
applications for funds with SNV and RVO – Facility
for Sustainable Entrepreneurship and Food Security
• Side marketing of birds
becomes more prolific
• Conduct autopsies on birds reported as deceased
• Provide immediate cash payment on delivery
• Alleviate farmer cash shortages by giving them
access to credit facilities
Big
Grape
Micro
Finance
Big
Grape
Capital
