Presented by: Ms Marie Pascaline DIASSO Operations director

1. RESEAU DES CAISSES POPULAIRES DU BURKINA ********************************* THE EXPERIENCE OF RCPB IN RISKS MANAGEMENT Presented by: Ms Marie Pascaline DIASSO Operations director April 2009

2. PLAN • Presentation of RCPB • RCPB in agriculture financing • RCPB in risk management • 1. The identification and the evaluation of risks • 2. The main agriculture risks • 3. Risks mitigation • IV. Perspectives • V. Conclusion

3. PRESENTATION OF RCPB • WHAT IS THE RCPB? • Mutualist movement governed by the law 59 ADP of 15/12/94; • The 1st branch created in 1972 • Its structured at 3 levels: • - branch= place of services (saving and credit ) • - regional Union = center of services for affiliated branches (follow-up, training, management of liquidity, support advice ) • - Federation = orientations, development coordination, financial survey, representation, etc. • Setting-up in 42/45 provinces of Burkina Faso; • 160 places of services delivery among which 2/3 in rural areas

4. PRESENTATION OF RCPB • THE RCPB’s main statistics • 555 000 members owners among whom 30 % of women • 1 000 000 clients • 87 million US dollars of local deposits • 79,5 million US dollars of outstanding loan among which 40 % in agriculture • Permanent staff: 827 with 70 % of women

5. RCPB IN AGRICULTURE FINANCING • THE COVERED SECTORS • Cereal : storage, securing, pre-payment • Fruits and vegetables : truck farming, transformation • Cattle : aviculture, geting fat, ox • Rice : production, selling • Cotton: production

6. RCPB IN AGRICULTURE FINANCING • PRODUCTS AND AGRICULTURAL SERVICES • LOANS PRODUCTS • Truck farming: input and equipment • Getting fat : trading, equipment • food production : input and equipment • Transformation of farm produces: Working capital, equipment • Pre-payment of cereal: Working capital, input, equipment • Cotton: equipment and input • Storage: trading • Securing: pledging cereal’s attics

7. RCPB IN AGRICULTURE FINANCING • PRODUCTS AND AGRICULTURAL SERVICES (cont’d) • SAVINGS PRODUCTS • Sight deposit • Term deposit • Savings with objective

8. LE RCPB DANS LE FINANCEMENT DE L’AGRICULTURE • PRODUCTS AND AGRICULTURAL SERVICES (cont’d) • THE NON FINANCIAL SERVICES • Support advice: organizing producers associations in partnership with the suppliers of the non financial services • Increasing producers awareness on the services offered by the branches • Training: with the contribution of technical • partners • Lead up producers to open accounts

9. RCPB IN RISKS MANAGEMENT The used method is: • Risks identification and evaluation; • The implementation of a mechanism to manage and to mitigate the risks; - The evaluation of the efficiency of the set up device;

10. RCPB IN RISKS MANAGEMENT 1. THE IDENTIFICATION AND THE ESTIMATE OF THE RISKS - The identification of the risks is made through the analysis of the external and internal environment by taking into account forecasts of medium and long-term transformation. - The evaluation to measure the importance of the risks following the frequency, the impact, the efficiency of the procedures and the existing control. - The major risks are in the strategic planning;

11. RCPB IN RISKS MANAGEMENT • Map of the agricultural risks • Credit risks; • Liquidity risks ; • External risks

12. RCPB IN RISKS MANAGEMENT CREDIT RISK • Risk of Arrearspayments which can recover from the diversion of the purpose of the credit, the over evaluation of the quantities of input wich are necessary, etc. • Risk of concentration (8,5 billion financing of cotton input is 27,6 % of the total of the outstanding loan in 2005)

13. RCPB IN RISKS MANAGEMENT LIQUIDITY RISKS • Difficulty of matching of the terms of applications and resources; • Inadequacy between the volume of Loan disbursement and the volume of raised savings with the producers ( very tiny savings);

14. RCPB IN RISKS MANAGEMENT EXTERNAL RISKS • Climatic chances (uncertainty of rains); • Risks of instability of the world courses; • Lack of outlets at the level of most of the agricultural sectors; • Risk of dysfunction of the Producers organizations; • Quality of inputs.

15. RCPB IN RISKS MANAGEMENT • CREDIT RISK MITIGATION • Creation of a fund to ease the cotton sector’s risk, wich represent 20 % of the interest income from the financing of the cotton sector; - Participation in the process of identification and validation of the needs of the producers;

16. RCPB IN RISKS MANAGEMENT • CREDIT RISK MITIGATION (cont’d) • To ease concentration risk : • Cofinancing with a bank to mutualize the risks; • reduction of the amount of financing of the cotton inputs credits; • implementation of a strategy of diversification of the credit portfolio in particular on the other agricultural sectors.

17. RCPB IN RISKS MANAGEMENT • LIQUIDITY RISK MITIGATION • The increasing of the producers awareness to the culture of savings; • The promotion of the savings middle term and capitalization;

18. RCPB IN RISKS MANAGEMENT • To encourage the financing of the agriculture to the national level, Burkina state proceeded in: • The research for markets for the drainage of certain farm produces. • The increasing of the producers capacities building (agricultural training, equipment in advantageous payment terms , control of the water, the organization of the agricultural sectors); • Implementation of a fund of smoothing for landing in the decline of the costs of purchase of the cotton to the producers

19. PERSPECTIVES • Improve the access of the agricultural rural populations to financial services in spite of the risks connected to the sector • Contribute to the organization and to the professionalization of the farmers of the various sectors in their activities management • Create a partnership with the non financial service providers to support the farmers; • Create and agriculture financial center in order to manage better the risks connected

20. CONCLUSION • Microfinance: tool of financing of the farming sector In spite of the risks (operational, financial and climatic) • better structured and organized Farming sector = condition of success of the financing • tripartite Partnership: Farmers - non financial Service providers – microfinance Institutions = Win-win solution • Professionalization of the actors = security for the sector and for risks decrease