AGRICULTURAL CREDITS & RISK MANAGEMENT The experience of UNICS Plc - CAMEROON

1. AGRICULTURAL CREDITS & RISK MANAGEMENTThe experience of UNICS Plc - CAMEROON Presented at theAFRACA (African Rural and Agricultural Credit Association) sub-regional workshop for Francophone Africa, held in Yaoundé – CAMEROON, from November 25 – 27, 2009 By AYONGWA, Roger Emmanuel General Manager, UNICS Plc

2. Introduction • Agriculture plays a crucial role and constitutes the backbone of Cameroon's economy: • employing 70 percent of the country’s workforce, • providing 42 percent of its GDP, and • 30 percent of its export revenue (MINREX Dec. 2008 stats). 2. The importance of farm credit as a critical input to agriculture is reinforced by the unique role of Cameroonian agriculture in the macroeconomic framework and its role in poverty alleviation: • Economic importance, • Social stability.

3. Content of presentation • Part 1: UNICS Plc, products, relation to agric credits • Part 2: Major risks related to agric credits • Part 3: Experiences in 05 regions of Cameroon • Part 4: Perspectives, way forward, & Conclusion

4. PART I PRESENTATION OF UNICS Plc Who we are; Our mission; UNICS products and services Credit portfolio; Implication in agric credits.

5. Who are we ? • UNICS – UnityCo-operativeSociety: www.unicsgroup.com • Vision: Bank, Group of companies • Microfinance Institution of the 1st Category: members • Created in January 2000 with Head Office in Yaoundé • PLC sinceJan. 2009, pendingaccreditation as Cat. 2 MFI • 10 branches in Cameroonspread over 5 regions • Over 31.000 clients (30 Sept. 09); 107full time staffs • At 30/09/09 (in FCFA) - Share Capital: 320 M; Ownresources: about 1,000 M; Resourcescollected: 2,600 M; Placements: 2,700 M (80% short term), total balance sheet: 4,000 M.

6. Our Mission We “Co-operate to solve future economic problems through present day decisions and actions, thereby producing viable citizens capable of living creatively in society”. Socio-economic mission to our society – social development with a financial objective: • Provision of financial services to all categories of people and businesses • Accomplish sustained and profitable service delivery – classic and specific: savings, credits, money transfer.

7. UNICS Products and Services • Conventional financial services: • Resources: Ordinary savings, Term deposits • Ordinary credits (loans, salary/business overdrafts, lines of credit) • Cautions • Money transfer: Western Union • Specific services • Speedy loans & Automatic overdrafts (for salary earners) • Speedy Cash money transfer • Cheque-clearing, project financing, business partnerships, etc.

10. Agric Loans: Purposes • Obtention of all forms of input to agricultural production: • Buying of inputs for the cultivation of food grain crops as well as for horticulture, aquaculture, animal husbandry, floriculture and sericulture businesses; • Purchase of agricultural machinery (tractors, harvesters and trucks); • Construction of irrigation systems; • Purchase of agricultural land; • Environmental and animal Protection Projects.

11. Nature of UNICS involvement in agricultural credits • Direct financing: • Involvement with the provision of funding for: • Farming – subsistence and commercial; • Animal husbandry; • The distribution of farm products. • Parties involved: enterprises, groups, individuals. • Indirect financing: • Funding is provided to parties involved indirectly in production: sub-contractors, salaries of agric workers.

12. PART IIAGRIC CREDIT RISKS AT UNICS Plc Synopsis of the nature of risks involved Mechanisms by UNICS to manage some of these risks

13. 2.1 – Synopsis of risks • Credit analysis risks: • Weak technical capacity of credit analysts – HR factor • Lack of sector statistics for decision-making • Credit realization risks: Guarantees generally difficult to liquidate; • Credit utilization risks: Object of credit misdirected, due to poor follow-up or collusion; • Price and currency risks: Prices most often determined by consumers instead of producers – Cocoa, Coffee, Cotton, Vegetable oil…; • Natural and Systemic risks: Unpredictable times due to climate changes, risks related to changes in laws or regulations, instability and unpredictability of political environments

14. 2.2 – Risk-Management Mechanisms • Personnel Training & Development; • Portfolio Segmentation; • Customized credit facilities and follow-up of use; • Proper Organisation of the Credit Department: • Decision in committees; • Regular reviews, and reporting; • Policies and procedures at the disposal of all parties; • Proper clientele education.

15. PART IIIEXPERIENCES AT VARIOUS UNICS BRANCHES

16. THE UNICS EXPERIENCE AT KRIBI, LIMBE, BUEA, & BONABERI

17. THE UNICS EXPERIENCE AT AKWA, BIYEM-ASSI, & BAFUT

18. PERSPECTIVES, WAY FORWARD, & CONCLUSION

19. Perspectives: Challenges & wayforward • Implantation: Problematic proximity, communication costs, security, etc • Way forward: Means of mobility – motorbikes, temporary locations, partnerships. • Innovations, e-banking technologies: Use of mobile phones offers an opportunity of getting into the e-banking industry. • Way forward: Forge ahead with the establishment of partnerships in this regard. • More sustainable sourcing of funds: Rarity of funds, and usually at exhorbitant costs (6% - 12%, generally). • Way forward:Need to open up to national and international funders, so as to, in turn, offer funding at more sustainable rates. • Guarantees for agric projects: Rthis still constitutes a major area of worry, due to the rarity of real guarantees among credit postulants. • Way forward:Need to explore more innovative means of getting securities for credits to lower delinquency rates.

20. CONCLUSION CREDIT = CONFIDENCE BUT BETTER TRUST, THEN VERIFY, THAN BE SORRY THANKS FOR YOUR KIND ATTENTION!!!