republic of cÔte d’ivoire union- discipline - labour ministry of agriculture regulatory and...
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REPUBLIC OF CÔTE D’IVOIRE
Union- Discipline - Labour
Ministry of Agriculture
Regulatory and Policy Framework for Value Chain Finance: African
PerspectivesFinance Perspectives in Côte d’Ivoire
Ministry of Agriculture
Regulatory and Policy Framework for Value Chain Finance: African
PerspectivesFinance Perspectives in Côte d’Ivoire
PresentationOutline
1. History of Agricultural Sector Finance
2. Current Environment of Agricultural Sector Finance
3. Challenges 4. Finance Perspectives
From 1926 to 1991, credit institutions were established to collect funds and grant loans to farmers or to producers organizations :
Caisse Centrale de Crédit Agricole Mutuel –Central Agricultural Credit Union Fund-(1926-1957)
Crédit de la Côte d'Ivoire (1955-1959)Caisse Nationale de Crédit Agricole- National
Agricultural Credit Fund- (1959-1968)Banque Nationale de développement Agricole-
Agricultural Development National Bank-(1969-1991)
1. HISTORY OF AGRICULTURAL SECTOR FINANCE
1. HISTORY OF AGRICULTURAL SECTOR FINANCE
1. HISTORY OF AGRICULTURAL SECTOR FINANCE
Review: successive bankruptcy of all finance institutions set up
REASONS
Outstanding debts are very high ranging from 23%
to 74%, thereby leading to capital reduction Poor governance of institutions previously
established
Inefficient debt recovery agencies set up as a result of bankruptcy.
1. HISTORY OF AGRICULTURAL SECTOR FINANCE
1. HISTORY OF AGRICULTURAL SECTOR FINANCE
Actions taken: Preparation of the 1992-2015 Agricultural Development Master Plan to enable operators in the agricultural industry to support agriculture finance activities.
Results achieved: Development of decentralized financial Systems (CREP, COOPEC, CMEC, setting up guarantee funds for some farming sectors, establishment of social funds to compensate for the lack of a National Agricultural Bank)
1. HISTORY OF AGRICULTURAL SECTOR FINANCE
1. HISTORY OF AGRICULTURAL SECTOR FINANCE
However, supply of structured loans is still low compared to producers expectations.
Between 1999 and 2003, agricultural credit supply was lower by 1% compared to demand.
2. CURRENT ENVIRONMENT OF AGRICULTURAL SECTOR FINANCE2. CURRENT ENVIRONMENT OF
AGRICULTURAL SECTOR FINANCE
Sharp increase in demand for funding at all levels.
Implementation of structural reforms in the sectors with the establishment of specialized instruments (FIRCA, FIMR).Some sectors set up their own funding instruments (FDH, FGCCC)
2. CURRENT ENVIRONMENT OF AGRICULTURAL SECTOR FINANCE2. CURRENT ENVIRONMENT OF
AGRICULTURAL SECTOR FINANCE Initiatives in the form of subsidies or direct support to various actors (ex: Food Fund, ….) Banque de financement agricole-Agricultural Credit Bank-(BFA) focusing on the operation of commercial banks, lack of systems specific to agricultural stakeholders.Lack of genuine public instruments to ably support the national finance sector as part of loan distribution and making the loans granted more secure.
How can you the growing need of agricultural credit be addressed without jeopardizing existing Financial Institutions ?
Under which conditions can the banking sector adjust its lending policies with farming economic cycles specificities and constraints ?
3. CHALLENGES 3. CHALLENGES
4. PERSPECTIVES4. PERSPECTIVES
How can the growing need of agricultural credit be addressed without jeopardizing existing Financial Institutions ?
Under which terms can the banking sector adjust its lending policies with farming economic cycles specificities and constraints ?
4. PERSPECTIVES4. PERSPECTIVES
FORMULATION OF CÔTE D’IVOIRE’S FRAMEWORK LAW ON AGRICULTUREThis Framework Law on Agriculture (LOA) shall serve as a framework for the implementation of agriculture development policies and strategies. This will also help bring into line, enhance and/or address the inadequacy in existing specific laws for the agricultural sector. The LOA is aimed to set out guidelines for the agricultural sector with regard to introducing innovations, to anticipating any arising related issues and strengthening the economic organization of the agricultural sector.
4. PERSPECTIVES4. PERSPECTIVES
FORMULATING A STRATEGY FOR FUNDING FARMING
Mechanisms/Recommendations Implementation Actions Actors
Improving on the quadripartite mechanism: banks - purchasers /technical partners - takeover bid - producers
Strengthening takeover bids to avoid imbalanced power relationship
State
Review the establishment of banking risks offices in case of need.
StateIndustry sectortakeover bids
Release of concessional resource from FIs to finance small farm businesses
Feasibility study on the establishment of a dedicated refinancing fund
State/Sectors
4. PERSPECTIVES4. PERSPECTIVES
Mechanisms/Recommendations Implementation Actions Actors
To support one or many FIs in the development of a credit supply commensurate with farm businesses, particularly in terms of food crop which is hard to finance
Identify financing sourcesRecruit strong FIs showing interest and/or look into setting up a dedicated FI.Conduct studies on the identification of opportunities to finance small farm businesses and then showcase them to FIs.
State
Develop a farm micro-leasing offer. State Develop a storage loan offer.
4. PERSPECTIVES4. PERSPECTIVES
Mechanisms/Recommendations Implementation Actions ActorsDevelop more efficient lending technologies to lower interest rates
State
Partial subsidy in kind for plant material selected.
Identify the target (speculation, criteria for access)Implement a technical partnership.Identify the funding source
State
Index-based & death and disability insurance mechanisms
Survey: situational analysis and definition of actions.
State
4. PERSPECTIVES4. PERSPECTIVES
Mechanisms/Recommendations Implementation Actions Actors
Price premium
Identify funding sources - budget headings or subsidized credit lines.A study to come up with a subsidy mechanism (target, channel, operation…)
State
Establish a specialized guarantee fund for food production (food crops, animal husbandry, fishing…)
Based on import and agricultural production levies , support the organization of the food crop sector
State
Define the institutional system to manage guarantee funds and be able to sustain them.
Ad hoc study – look into the possibility to run all guarantee funds within a farm guarantee institution with various windows
State
