Transcript Standard Bank - CIB Presentation
RISK SHARING PARTNERSHIPS
Prepared for Client Name Your name here Date AgriSETA Conference Presentation by Diale Mokgojwa, Manager: AgriBEE 15 th September 2011
Exposure to the possibility of loss; a chance or situation involving such a possibility.
Types of Agricultural Risks
• Natural (location, weather, etc.) • Price (market/sales prices, inputs prices, discounts) • Legislative (Policies, taxes, liabilities)
• Human resources (dependability, quality of work) • Product • Management • Admin
Risk management method in which the cost of the consequence of RISK is distributed among several participants in an enterprise.
The Power of PARTNERSHIPS
Access to finance Credit application Pay out Financial services Capacity building Marketing
Gate keeper Facilitator
Quality seeds/ breed Capacity building
PRODUCTION MANAGEMENT (50% of business)
Production risk management Financial management and admin Capacity building, skills dev & transfer- technical, business Measurable milestones
Access to land
3 year track record
Willingness to partake
Full disclosure of financial position MARKETING MANAGEMENT (50% of business)
Product Off-take contract (price risk management)/ hedging/ export Support INSURANCE Mitigates risk
Grant funding Infrastructure Mechanisation 1st loss guarantees
• • • • Leverage the Bank’s balance sheet to lend across the value chain Amount of Risk Sharing facilities enable the Bank to leverage that amount 10 times the guarantee facility Private & Public sector entities with similar goals DE-RISK THE MARKET
Purpose of finance Kind of finance Overdraft Business Revolving Business Credit Term Loan Plan (BRCP) Medium Term Loan Agricultural Vehicle and Production asset finance Loan Working Capital Input costs, crops, livestock Implements, machinery and other capital equipment Office equipment Vehicles Property Yes Yes No No No No Yes Yes Yes Yes No No No No Yes Yes No Yes No No Yes Yes No Yes No Yes No No No No No No Yes Yes Yes No
Factors affecting credit evaluation
•Historic income & cost:- Income statement; Projected income & cost:- Cash flow; Income:- Price & yield assumptions; Loan value v/s repayment ability.
Nature of business; Key risks (product, production, price, people, cash flow and capital); Management expertise; Risk mitigation (hedging, insurance, etc.).
Own capital contribution; Capital & funding position and requirements; Solvency and liquidity ratios; Interest coverage ratio.
Pledge Secondary source of repayment; Mortgage bonds on property; Notarial bond over loose assets; Cession of crop income; Cession of insurance; Guarantees & suretyships.
• • • • • • • •
Reasons loans are declined
Business is unsound, risk is too high, bank cannot determine risk – business is not sustainable Insufficient security or lack of collateral Lack of owners commitment, often indicated by his/her contribution to the business Business plan does not provide adequate information Purpose of the finance required is not justified Character or suitability of owner Passive investment – owners not involved in the business Adverse behaviour on existing credit facilities Business Plans – see www.standardbank.co.za
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“If you are looking for a helping hand you will find it at the end of your arm”.
“ After all is said and done, usually more is said than done”.
KE A LEBOGA CONTACT: Diale Mokgojwa 011 636 8713 [email protected]