Transcript Presentasjonsmal - Africagrowth Institute

NORSAD finance services for
SADC SMEs
AFRICA SMME CONFERENCE
25th of October 2007
Sari Nikka
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NORSAD in brief
Denmark
Finland
Norway
Sweden
 Support for SADC SMEs
 Financing intermediaries
 Direct financing to SMEs
 Operates in 11 SADC countries
 Head office in Lusaka, Zambia
 6 investment professionals
 11 country advisors in SADC
 Loan portfolio and commitments
USD 69.5 million (03/2007)
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Eligible for NORSAD finance:
Funded by:
 Development Finance Institution
(DFI) established in 1991 by 4
Nordic and 11 SADC member
countries
Angola
Botswana
Lesotho
Malawi
Mauritius
Mozambique
Namibia
Swaziland
Tanzania
Zambia
Zimbabwe
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NORSAD SME Financing in SADC region
 Financing through financial intermediaries
 Lines of Credit, Agency Lines and Guarantee Lines
 Direct financing for SME projects
 Senior Loans
 NORSAD financing principles:
 Commercially viable private sector or privatization
projects and business ventures
 Projects having positive development impact
 Financed projects shall comply with International
Social and Environmental Standards (IFC/WB)
 Offers innovative and flexible financing solutions
 Expertise in SADC – Nordic Joint Venture projects
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NORSAD projects
NORSAD adds value to projects
 Long term sustainable financing
 Access to technical assistance
through NORSAD partners
 Professional commercial advice
& business linkages
 Assistance with social, HIV/AIDS
and environmental guideline
compliance
 Assisting in co-financing with
NORSAD partners –
European and SADC DFIs
 SADC – Nordic JVs expertise
 Match-making– identify suitable
Nordic business and technical
partners in specific cases
Eligible projects
 Private sector SMEs
 Financial intermediaries
financing SMEs
 Viable business plan,
with positive development impact
 Comply with social and
environmental guidelines
 Project promoters have a relevant
track record and capacity to add
value within the industry
 Debt to equity ratio 50/50
 Project can provide sufficient
collateral over 1,5 times loan
amount
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NORSAD Financing Instruments for Intermediaries I
Line of Credit (LOC) terms:
 Maximum amount USD 5 million
 Term: maximum 7 years with grace period up to 2 years
 Lending currency: EUR, USD, ZAR, GBP, DKK, SEK, NOK
 Interest rate: fixed or variable based on commercial and
political risk – market based pricing
 Front end fee of 1 % (50% paid upfront)
 Commitment Fee of 1% p.a.
 Repayment: Quarterly on interest and principle
 Collateral: Assets of beneficiary SMEs and/or third party
guarantees
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NORSAD Financing Instruments for Intermediaries II
Agency Line (AL) terms:
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Co-financing of SMEs
Maximum line USD 5 million
Term: maximum 7 years with grace period up to 2 years
Lending currency: EUR, USD, ZAR, GBP, DKK, SEK, NOK
Interest rate: fixed or variable based on commercial and
political risk – market based pricing
Front end fee of 1 % (50% paid upfront)
Commitment Fee of 1% p.a.
Repayment: Quarterly on interest and principle
Collateral: Project assets and/or
guarantees shared pari passu
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NORSAD Financing Instruments for Intermediaries III
Guarantee Line (GL) terms:
 Guarantee up to 50 % of realised losses on SME project
 Exposure: up to 50 % of debt and not exceeding
USD 500,000 per individual project
 Maximum line USD 5 million
 Term: maximum 7 years
 Lending currency: EUR, USD, ZAR, GBP, DKK, SEK, NOK
 Guarantee fee: Based on cost of funds and lending rates
 Front end fee of 1 % (50% paid upfront)
 Collateral: Assets and/or guarantees from beneficiary
SMEs, shared proportional and pari passu
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NORSAD Financing Instrument for SMEs
Direct Loan (DL) terms:
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Loan amount from USD 500,000 to USD 3 million
Term: maximum 7 years with grace period up to 2 years
Lending currency: EUR, USD, ZAR, GBP, DKK, SEK, NOK
Interest rate: fixed or variable based on commercial and
political risk – market based interest rate
 Front end fee of 1 % (50% paid upfront)
 Commitment Fee of 1% p.a.
 Repayment: Quarterly on interest and principle
 Collateral: Assets and/or guarantees
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NORSAD Case: Intermediary Financing I
ICC - Leasing finance institution serving SMEs
 Local leasing company in better position to reach out to
a larger number of SMEs than NORSAD direct loans
 With NORSAD loan the Leasing company has been
able to help small and medium size companies to
become reliable suppliers to the mining industry
 Terms of financing:
 USD 5 million Line of Credit, 5 year maturity, 1 year grace
 Collateral: assignment of all leases, securities taken by the leasing
company in respect of leases financed under the LOC, cession over
insurance policies
 Financial covenants: D/E ratio, Liquidity ratio, Capital Adequacy ratio
 Other terms: NORSAD endorsement on leases (incl. pricing and
terms) under the LOC
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NORSAD Case: Intermediary Financing II
ICC - Leasing finance institution serving SMEs
Development impact:
 More competition by increasing capacity of mining
sector SMEs – linkage of SMEs to main stream mining
sector
 Development of local resources
 Employment effect: created more than 700 jobs
 NORSAD loan influenced leasing company to improve
the environmental compliance of their clients
 Impact on diversification and strengthening of the
finance sector
 Impact on diversification of the leasing company credit
allocation towards mining SMEs
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NORSAD Case: Direct Financing I
Agricultural and Meat Processing Company
 Privatization project with rehabilitation and expansion of
existing operations
 Company buys cattle from local farmers, fattens them at
its feedlot station and later slaughters and processes the
meet at the abattoir
 NORSAD assisted to get TA and capacity building from
APDF at the time of Business Plan preparation
 Terms of financing:
 USD 1.5 million direct loan, 6 year maturity, 1 year grace
 Collateral: First mortgage bond and specific charge on fixed assets,
floating charge on movable assets, personal guarantee from sponsors
 Other terms: Ownership change clause and dividend restrictions
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NORSAD Case: Direct Financing II
Agricultural and Meat Processing Company
Development impact:
 Regional diversification - earnings to local small-scale
farmers
 Employment creation: 120 direct jobs, 500 indirect jobs
 Foreign currency generation and savings: exports and
imports substitution
 Improve local populations access to quality food products
 NORSAD loan facilitated the growth of business and
creation of linkage from cattle breeders to meat producers
 NORSAD assisted to get TA and capacity building from
APDF at the time of Business Plan preparation
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NORSAD Experience: Elements for Success
Owners/Management
Organization
 Adequate accounting
systems and financial
reporting
 Good Corporate Governance
 Hands on experience and
technical know how
 Proper working capital
management and control
systems
 Correct business attitude
 Have strong management
team consisting of
 Resource planning for input
and output
 Administration
 Financial
 Production, Sales
 Good HR policies, training
and incentives for employees
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NORSAD Project Process
Timing
1- 3 weeks
Project
identification
1 -3 months
Screening
Sponsor presents:
 Business Plan
 Sponsor information
 Audited accounts
Initial evaluation done
within short period of
time
Approval in principle by
Norsad management
Investment
appraisal
Negotiation
and
contract
Detailed investment
and market study
(“due diligence”)
1 – 7 years
Implementation and
operation
Exit loan
repaid
Disbursement after
conditions are met
Meet local partner in
target country
NORSAD assisstance
on TA and social &
environmental issues
Agree on terms and
define roles
No board level
participation
Board approval
Value enhancement
perspective
Sign contract
The speed of the process is depended mostly on the sponsor making
information available
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[email protected]
Sari Nikka, Chief Executive Officer
Mobile: +260 966 866 030, e-mail: [email protected]
www.norsad.org
NORSAD Contact Details
Rosemary Liywalii, Senior Portfolio Officer
e-mail: [email protected]
Patience Matshe, Chief Investment Officer
e-mail: [email protected]
Alice Zulu, Senior Investment Officer (Angola, Lesotho, Tanzania)
e-mail: [email protected]
Edward Mulilo, Senior Investment Officer (Botswana, Mozambique, Swaziland)
e-mail: [email protected]
Justin Nthala, Investment Officer (Mauritius, Malawi, Namibia)
e-mail: [email protected]
Mulenga Bwalya, Assistant Portfolio Officer (Zimbabwe)
e-mail: [email protected]
Tel: +260 1 255663/4 or 255773/4 Fax: +260 1 255432
Anglo American Building, 74 Independence Avenue
P.O. Box 35577, 10101 Lusaka, Zambia
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