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Samoa Agritourism Policy Setting Workshop 2016: Asian Development Bank Consultant - Accessing financial opportunities in Agritourism development

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Samoa Agritourism Policy Setting Worskhop 2016
Linking Agriculture and Tourism through Policy setting:
Strengthening the local agrifood sector and promoting agritourism

Workshop organised by the Government of Samoa and CTA
in collaboration with PIPSO

Published in: Government & Nonprofit
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Samoa Agritourism Policy Setting Workshop 2016: Asian Development Bank Consultant - Accessing financial opportunities in Agritourism development

  1. 1. SABS Samoa AgriBusiness Support Project SAMOA AGRITOURISM POLICY SETTING FORUM Panel 6 “Panel Forum: Agribusiness Financing: Innovative Solutions to support Agribusiness and Agritourism” Samoa Conference Centre, Apia Samoa 16th December 2016 Presented by: Ian M. Buck B.Ag.Sc.,Grad.Dip.Ag.Econ.,Dip.FS(FP).,FAICD.,FAIM. Facility Manager Samoa AgriBusiness Support Project Supported by the Asian Development Bank and The Government of Samoa Promoting Agribusiness & Economic Development 1
  2. 2. Recapping from Wednesday • ADB provided a Grant to the Government of Samoa - MOF is the EA; • Government of Samoa on-lent the Grant to Participating Financial Intermediaries (PFI or Banks) via Subsidiary Financing Agreement (SFA) between Government of Samoa and each PFI; • Each PFI holds funds in a designated project account which are then proportionally allocated to Subloan A & Subloan B components; Subloan A = Guaranteed Cash Collateral = Security – ALL approved partners; Subloan B = Repayable Supplemental Seed Capital Loan = Top up Equity – SOME; SABS Funding Arrangement
  3. 3. • All prospective agribusiness project partners must meet SABS Eligibility Criteria – (Financial & Environmental) to qualify for support; • FM works with partner agribusiness to develop business plan and prepares finance application for submission to bank; • Bank provides the commercial loan - Projects must meet appropriate credit and other risk-related criteria as determined and applied by each commercial bank; • Must use the finance for a “qualified project” in accordance with the conditions detailed in the loan agreement with each bank; • Very Important: All initial discussions with partners held as “Strictly Private & Confidential” & as “Commercial in Confidence”; Trust & Confidence. The SABS Financial Support Services
  4. 4. 4 Project Cost Funding Structure Security $400,000 50% of PC $200,000 (Bank) • SABS G’teed Cash Collateral 50% of loan = $100,000 (Sub Loan A) • Client Security - $100,000 • Prime Security – FH, LH property; • Letter of g’tee (eg SBEC) • Cash held on TD Remainder of finance of $200,000 to make up total amount of $400,000 to be structured as below EITHER $200,000 (Bank) Client security – To value of loan • FH, LH property • Make Weight – CM over P&E, Supply purchase agreements, OR $100,000 (Bank) Plus $100,000 (SSC Loan) (SABS Repayable Supplemental Seed Capital Loan) SABS RSSC loan - T&C (Sub Loan B) • Eligibility criteria apply • 0% interest / repayable lump sum end of term; • No penalty early repayment • Only available as part of whole p’kge • Top up equity
  5. 5. Summary of finance support process • Allows for considerable flexibility in structuring the finance package; • PFI may advance a loan of up to 50% of an investment of which SABS could secure through use of Cash Collateral funds (Sub loan A); – Note 50% for first time sub-borrower ; 30% second time beneficiary; • Maximum loan amount eligible for cash collateralised support is $750,000 (50% of Project cost of $1,500,000); • Maximum SABS contribution via cash collateral is $375,000; • Repayable Supplemental Seed Capital Loan (SSC Loan ) is limited to 25% of Project cost to a maximum of $100,000 per customer; • SSC Loan is at nil interest with bullet repayment within 7yrs; • SABS could effectively support a project partner with up to 50% of project cost; • SABS role is to facilitate access to cost effective finance packages, working collaboratively with PFI and partner agribusiness – three way partnership. 5
  6. 6. Financing Sustainable Agribusiness & Agritourism - both similar  Manage Risk - Banks price for risk & don’t like nasty surprises! • Understand the Business-Understand the Risks – “know your client, know your product”; Walk through - first impressions etc What are the products, and where are the markets ? • Who is managing the business? Track record – financial performance etc Time in the business? Key person risk strategies etc What standards do they operate to? • Understand the supply chain characteristics; What are the strategies to overcome supply risks to the business? How reliable is the supply chain and has the business developed solid supply line relationships? • Plan & Test – A robust business and finance plan is essential; Monitor the finances – actuals to forecasts monthly – be quick to inform !6
  7. 7. Thank You (Fa’afetai) SABS Contact Details: Facility Manager Level 3 I Ministry of Finance Central Bank Building I Apia I Samoa E: ianb @sabs.ws T: 685 34353 or M: 685 7749478 SABS Samoa AgriBusiness Support Project Promoting Agribusiness & Economic Development 7

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