AGRICULTURAL DEVELOPMENT BANK
PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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“PRODUCTS AND SERVICES AVAILABLE TO SUPPORT THE CASHEW SUB SECTOR” A PAPER PRESENTED BY THE AGRICULTURAL DEVELOPMENT BANK AT THE NATIONAL CASHEW WEEK CELEBRATION ALISA HOTEL ON APRIL 18 2007
INTRODUCTION The one week celebration of a crop which ranks third in world production of edible tree nuts has come at an opportune time and we feel very honoured to be invited to participate.
PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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Focus of the Bank The
focus of the Bank is to provide financial support for the development and modernization of agriculture and its related sectors within the economy. Since its inception, the bank in pursuance of Government’s development agenda has supported a number of activities in the agricultural sector including financing of export crops. PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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THE BANK’S SUPPORT FOR THE CASHEW INDUSTRY
Our
massive support for the cashew industry over the past years is as follows:
PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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Lending Budget and Approvals for Cashew Production (2004-2006) 2004
2005
2006
Budget
4,000,000,000.00
10,500,000,000.00
15,000,000,000.00
Approvals
8,021,167,000.00
7,814,907,000.00
8,059,400,000.00
% Approved
200.5
74.4
53.7
PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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2007 BUDGETARY ALLOCATION FOR THE SECTOR
In 2007 a budgetary allocation of ¢18.0 billion has been made for cashew production and ¢1.2 billion has been made for cashew processing.
PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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TYPES OF FACILITIES AVAILABLE TO THE CASHEW SUB-SECTOR
Credit
for primary Production Credit for marketing (Short Term) Credit for processing equipment (Medium and Long Term) Working capital for processing (Short Term) Marketing and Distribution (Short Term) PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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WHO IS ELIGIBLE FOR CREDIT Individuals Sole
Proprietorship Partnerships Limited Liability Companies Registered Co-operative Societies Organised Groups involved in Micro Small and Medium Enterprise activities PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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WHAT TO DO TO ACCESS CREDIT FROM THE BANK FOR NEW VENTURES Prepare and present: 1. A Business Plan for the Project and 2. A Marketing Plan and Opportunities
PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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WHAT TO DO TO ACCESS CREDIT FORM THE BANK (cont’d) FOR GOING CONCERNS Prepare and present: 1. Business Plans containing all the necessary information as regards start ups 2. Statement of Accounts for at least three (3) years for going business concerns 3. Budgets 4. Cash flow Projections PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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SECURITIES ACCEPTABLE TO THE BANK Acceptable security include: Cash
Collateral in blocked Accounts Group Executives Guarantee /Warranty (Especially for Micro Loans) Personal Guarantees
PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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SECURITIES ACCEPTABLE TO THE BANK (cont’d)
Stocks,
bonds, Treasury Bills Life Policies Indemnities Immovable/Landed Properties
PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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CONCLUSION Mr. Chairman, we are all aware that the cashew sub sector is an important generator of foreign earnings for many countries and a major source of job and wealth creation for rural communities. Indeed the support given by the Brazilian Government has resulted in the crop being a driving force of that economy. PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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CONCLUSION (cont’d) The
potential of the sub sector is immense. There is therefore the need for creating awareness on quality nut production to increase yields to ensure availability of nuts for processors to enable maximum gains in the sector.
PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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THE BANK’S GOALS
As a development bank our main goals among others include: To generate sustained increases in foreign exchange earnings through rapid expansion of particularly non-traditional agricultural export crops To generate productive employment and poverty reduction To promote profitable value-addition to agricultural produce through investment in agricultural marketing and processing PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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TENOR OF CREDITS
Financing the broad activities could take one of the following: Short-Term Loan/Credit - typically granted as working capital to meet production, transportation and marketing of produce/products for up to 18 months. Medium Term Loan - granted for such purposes as the purchasing of farm equipment, processing equipment, manufacturing equipment and other production activities with gestation periods between 18 months and 5 years. Long-Term Loans - For new and existing projects that require heavy capital outlay and/or long gestation periods, usually beyond 5 years PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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MODES OF CREDIT DISBURSEMENT
Non-Cash Disbursement -The Bank may disburse in kind or by making payment on behalf of the beneficiary customer according to invoices submitted Cash Disbursement - the Credit is given outright to the beneficiary to finance the approved activity Cash and in-kind Disbursement -Applicable where disbursement requires all the two above stated forms of disbursement. PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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ELIGIBILITY CRITERIA Risk
Assessment Past Credit Records if applicable Technical Viability Financial Viability and ability of the project/business to generate enough cash to repay facility with interest PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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ELIGIBILITY CRITERIA (cont’d)
Management
strength and succession Owners stake in project/Equity Market for produce/products (very important) Security Coverage Environmental Impact PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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BUSINESS PLANS FOR NEW VENTURES (START-UPS)
The Business Plan should include the following details: Technical
and financial viability of project Management profile and Experience in the Business Suitability of Location for project
PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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BUSINESS PLANS FOR NEW VENTURES (START-UPS) cont’d
Availability
of raw materials, utilities and
labour Identified Risks in the Project and Mitigation Factors Proposals of Equity in Project
PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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MARKETING PLAN AND OPPORTUNITIES FOR NEW VENTURES
This should include the following:
A detailed description of how Micro Small and Medium Enterprises (MSMEs) would compete in the market as it delivers its services. i.e. The target market Price structure, objective, procedures and policy Competitor Analysis PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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MARKETING PLAN INFO R’QD (cont’d) A
detailed description of the produce/products Promotion Location There should be a target to provide excellent service delivery to meet customers’ need
PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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SOME FACTORS THAT PREVENT BUSINESSES FROM ACCESSING THE FACILITIES
1. 2. 3. 4.
Lack of requisite experience and knowledge about the business Most businesses not properly registered Lack of training of operators and employees Mis-matching, using short-term funds for long term projects e.g. working capital for the acquisition of fixed assets PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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SOME FACTORS THAT PREVENT BUSINESSES FROM ACCESSING THE FACILITIES (cont’d) 5.
6. 7.
8. 9.
Employment Problems-having round pegs in square hole either because they are relation or friends to owners Succession Plans not made, death of key staff collapses business Overtrading of owners, do not nurture business to grow but immediately divert funds into new business Poor Financial Management, use business funds for “Highlife Accounts” Inaccurate or lack of records on business PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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SOME FACTORS THAT PREVENT BUSINESSES FROM ACCESSING THE FACILITIES (cont’d)
10. 11. 12. 13.
Poor Supervision and monitoring mechanism Inability to have a good market share Inadequate or difficulty in acquiring quality raw materials Lack of credible certification
PRODUCTS AND SEVICES AVAILABLE TO SUPPORT THE CASHEW SUBSUB-SECTOR - ADB
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