Standard Bank - CIB Presentation

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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

External

• Natural (location, weather, etc.) • Price (market/sales prices, inputs prices, discounts) • Legislative (Policies, taxes, liabilities)

Internal

• Human resources (dependability, quality of work) • Product • Management • Admin

RISK SHARING

Risk management method in which the cost of the consequence of RISK is distributed among several participants in an enterprise.

The Power of PARTNERSHIPS

BANK

 Access to finance  Credit application  Pay out  Financial services  Capacity building  Marketing

COMMODITY ORG

 Gate keeper  Facilitator

INPUT SUPPLIERS

 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

FARMER

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

GOVERNMENT

 Grant funding  Infrastructure  Mechanisation  1st loss guarantees

Partnership Opportunity

• • • • 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

FINANCING OVERVIEW

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

CREDIT EVALUATION

Factors affecting credit evaluation

Repayment ABILITY

•Historic income & cost:- Income statement;  Projected income & cost:- Cash flow;  Income:- Price & yield assumptions;  Loan value v/s repayment ability.

Risk Management

 Nature of business;  Key risks (product, production, price, people, cash flow and capital);  Management expertise;  Risk mitigation (hedging, insurance, etc.).

Financial position

 Own capital contribution;  Capital & funding position and requirements;  Solvency and liquidity ratios;  Interest coverage ratio.

Security

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Pledge Secondary source of repayment; Mortgage bonds on property; Notarial bond over loose assets; Cession of crop income; Cession of insurance; Guarantees & suretyships.

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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

Business >> Starting a business >> Getting started >> Starting a business >> How to draw up a business plan

Wisdom

“If you are looking for a helping hand you will find it at the end of your arm”.

Chinese Proverb

“ After all is said and done, usually more is said than done”.

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KE A LEBOGA CONTACT: Diale Mokgojwa 011 636 8713 [email protected]

www.standardbank.co.za

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