Understanding Funding Channels for Banks in Ghana

2. OUTLINE • INTRODUCTION • POSSIBLE FUNDING CHANNELS • BANKS IN GHANA • PRODUCTS AND SERVICES • LOANS • CLASSIFICATION OF LOANS • BORROWING NEEDS • REQUIREMENTS FOR A LOAN • SECURITIES • LOAN PROCEDURES • CAREER OPPORTUNITIES • SUMMARY • Q AND A

3. • Environmental revolving loan funds • Development banks & credit schemes • Ex/Im finance guarantee schemes Shareholders(equity offering) Government-subsidizedcredit Public/GOVT sources Banks InternationalDevelopmentAssistance Leasingcompanies; equipmentvendors Company Internal sources Possible funding channels Commercialsources Partners/owners Customerfirms Cashreserves Credit cooperatives/unions https://agricinghana.com/category/funding-opportunity/

4. https://agricinghana.com/category/funding-opportunity/ Possible funding channels

5. https://agricinghana.com/category/funding-opportunity/ Possible funding channels

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11. INTRODUCTION • Anestablishmentauthorized by a government to accept deposits, payinterest, clear cheques, give out loans, act as an intermediary in financial transactions, and provide other financial services to its customers. • Although banks do many things, their primary role is to take in funds—called deposits—from those with money, pool them, and lend them to those who need funds. • Banks are intermediaries between depositors (who lend money to the bank) and borrowers (to whom the bank lends money). The amount banks pay for deposits and the income they receive on their loans are both called interest. WHAT IS A BANK?

12. INTRODUCTION There are five (5) main classification of Banks • The Central Bank • The Commercial Banks • The Savings and Loans • The Microfinance Banks • The Rural Banks • The Finance Houses. CLASSIFICATION OF BANKS

13. THE CENTRAL BANK It is an institution that manages a state'scurrency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the monetary base in the state, and usually also prints the national currency, which usually serves as the state's legal tender. The primary function of a central bank is to control the nation's money supply (monetary policy), through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis. Central banks usually also have supervisory powers, intended to prevent bank runs and to reduce the risk that commercial banks and other financial institutions engage in reckless or fraudulent behavior. Central banks in most developed nations are institutionally designed to be independent from political interference. Still, limited control by the executive and legislative bodies usually exists. 16

14. COMMERCIAL BANKS IN GHANA • United Bank for Africa • Bank of Baroda • Zenith Bank • Guaranty Trust Bank • Fidelity Bank Ghana • First Atlantic Bank • Bank of Africa • Capital Bank Limited • ADB** • Access Bank Ghana • Barclays Bank of Ghana • uniBank • Ecobank • Stanbic Bank • Premium Bank Ltd • OmniBank Ghana Limited • Heritage Bank Limited • Sovereign Bank Limited GN Bank Standard Chartered Ghana Ghana Commercial Bank Société Générale (SG) UT Bank The Royal Bank Limited Energy Bank National Investment Bank BSIC Prudential Bank Limited Universal Merchant Bank CAL Bank HFC Bank FNB Bank

15. SAVINGS AND LOANS COMPANIES IN GHANA 11. Midland Savings And Loans Ltd 12. Opportunity International Savings And Loans Ltd 13. Pacific Savings And Loans Co Ltd 14. Unicredit Ghana Limited • CCML • First National Savings And Loans Co. • Multi Credit Adehyeman Savings And Loans Limited Advans Ghana Savings And Loans Eb- Accion Savings And Loans Co. Ltd Express Savings And Loans Co. Ltd Ezi Savings And Loans Limited First African Savings And Loans Co. First Allied Savings And Loans Ltd First Capital Plus Savings And Loans First Ghana Building Society Women’s World Banking BANK OF GHANA HAS LICENSED 90 SAVINGS AND LOANS COMPANIES IN GHANA.

16. MICROFINANCE/RURAL BANKS Bank of Ghana has licensed 394 microfinance institutions for small market There are over 135 rural banks in the ten regions of Ghana. FUNCTIONS OF RURAL BANKS They provide financial services to ensure growth in a predominantly agro-based economy. They provide banking services by way of funds mobilization and credit to cottage industry operators, farmers, fishermen and regular salaried employees. They grant credits to customers for the payment of school fees, acquisition/rehabilitation of houses and to meet medical expenses. Rural/Community Banks are, therefore, the main vehicle for financial intermediation, capital formation and retention of rural dwellers in the rural areas.

17. CLIENT SEGMENTS OF BANKS Consistent with Value Chain Model, Banks has built strong capabilities to serve the many business and sectors in the economy. Target Market Institutional/Corporate Banking Telecoms, Power, Oil & Gas, Mining & Construction Services , AGRIC, Cocoa & Export, Public Sector Commercial/SME Banking FMCG, Manufacturing , Pharmaceuticals, Automobile Extraction & ICT, Agricultural services, Frozen Foods, Building materials & Services Retail Banking HNIs, Salaried workers, Professionals, Students Churches, Schools Treasury Insurance firms, other Financial institutions, Mining & Allied services, Importers & Exporters

18. PRODUCTS AND SERVICES RETAIL BANKING • Current Account • Saving Account • Student’s Account • Church Account • Pilgrimage Account CREDIT FACILITIES • Employee Loan • Personal Loans • SME Loan • Corporate Loans • AGRIC LOAN • Church Loan • Schools Loan REMITTANCES • Western Union • Moneygram • Ria Money Transfer • Sigue Money Transfer • TREASURY SERVICES • Call Account • Fixed Deposit • Treasury bills • Cash Management E-BANKING • MasterCard/visa • Glink • Mobile Alert • Mobile banking • Internet Banking TRADE BANKING • Foreign Currency Accounts • Foreign Exchange Accounts • Letters of Credit

19. AGRICULTURAL FINANCE/LOANS DEFINITION They are financial services ranging from short-, medium- and long-term loans, to leasing, to crop and livestock insurance, covering the entire agricultural value chain - input supply, production and distribution, wholesaling, processing and marketing. FORMS OF CREDIT There are two main forms of Credit. Balance Sheet (Cash Disbursement) : Credit/Cash is given outright to the beneficiary. Off-balance Sheet(Non-cash Disbursement): The bank may disburse in kind or by making payment on behalf or by issuing a guarantee.

20. CLASSIFICATION OF FACILITIES/CREDIT • Agricultural loans granted by Banks depends on the project type and some features such as the CASH FLOW, CAPITAL OUTLAY AND PROJECT MATURITY. • Based on the expected life of the project or activity the credit may be classified into three as follows: • SHORT-TERM LOAN:  Typically granted as working capital to meet production, transportation and marketing of agricultural produce. The period for short term loans  is up to 12 months. • MEDIUM-TERM LOAN: Granted for such purposes as the purchase of farm equipment, raising of livestock and processing equipment. The period for medium term loans is between 12 to 36 months. • LONG-TERM LOAN: Made for new and existing projects which require heavy capital outlay and / or long gestation periods, such as the establishment of plantations or cattle ranches etc. The period for long term loans is typically between 36 months and above.

21. GHANA COCOA BOARD SYNDICATED LOAN

22. WHAT IS A SYNDICATED LOAN • A syndicated loan is one that is provided by a group of lenders and is structured, arranged, and administered by one or several commercial or investment banks known as Arrangers. • Arrangers serve the investment-banking role of raising investor dollars for an issuer in need of capital. • The issuer pays the Arranger a fee for this service, and this fee increases with the complexity and risk factors of the loan. • In the Mid-1980’s when the larger buyouts needed bank financing, the syndicated loan market became the dominant way for issuers to tap banks and other institutional capital providers for loans.

23. BORROWING NEEDS • PRIMARY PRODUCTION • Food crops and industrial crops, fishing, aquaculture, poultry and livestock, vegetables for local consumption and export. • AGRI-BUSINESS • Involves storage, warehousing, transportation, concentration, distribution and marketing of agricultural produce and input of all kinds. • THE AGRIBUSINESS SECTOR INCLUDES: • Input suppliers to the agricultural sector. • Production operations on the farm. • Storage, transport and logistics of agricultural products. • The processing of agricultural commodities.

24. BORROWING NEEDS • AGRO-PROCESSING • Processing of primary agricultural produce to add value. • EXPORTS • Involves purchasing, concentration and transportation of primary and secondary agricultural produce exclusively for export. • IMPORTS • We provide loans to finance the payment of duties, taxes, and all other charges associated with bringing goods into the country for sale. • OVERDRAFTS • Credit to support Working Capital needs Term loans and/or Working Capital Overdrafts depending on the credit need of the project.

25. BORROWING NEEDS • AGRIC EQUIPMENT AND INPUTS • It provides credit to finance the purchase of agricultural equipment and inputs that aids in agricultural production. Loan tenor is between 5 - 7years. • CERTIFICATE/INVOICE DISCOUNTING • Loans are given against a certificate or invoice raised by the customer. • LETTERS OF CREDIT • A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.

26. APRIL 24, 1996 AT _SIGHT_____________ ABC CO. AMOUNT XYZ CO. ABC CO. Agreement (1) Letters of Credit B/L (6) Merchandise Merchandise (5) (13) Importer (Buyer) (Seller) (2) Apply for LC (7) (9) LC Advised (12) LC/ Docs Draft (10) (4) (3) Letter of Credit Docs/Draft (8) (11) U.S. Bank Foreign Issuing Bank

27. REQUIREMENT FOR LOAN • Requirements for credit vary from one category of borrowers to another. However the following requirements apply to all categories: • Opening of account with the Bank. • Submission of business proposal. • Details of account operations. • Financial Statements/Cash flow projections. • Evidence of managerial capability to handle project. • Evidence that project is not environmentally harmful. • Evidence that project can generate adequate cash flows to support repayment of facility. • Provision of security acceptable to the Bank.

28. SECURITIES • In all cases, the applicant will be required to provide security and/or collateral for the loan. These may take several forms, depending on the terms and conditions, nature and size of the facility granted: • Cash Collateral. • Group Executive Guarantee/Corporate Guarantee. • Personal Guarantee. • Stocks, Bonds. • Life policies. • Landed properties. • Assignments of proceeds.

29. LOAN PROCEDURE AND APPROVAL • Applicants are advised to observe the three steps involved in the processing of loan requests. • All applications for financial assistance should be directed to the Branch where the applicant's account is held or a branch near the project site. On receipt of a request for loan, a relationship manager or credit officer will contact the applicant for further discussions. • The credit officer or relationship manager will verify the information furnished by the applicant. In all cases the project site may be visited to assemble the necessary data required to analyze the project. • After the project has been analyzed and found viable, the credit officer or relationship manager finally prepares a credit report and submits it to the appropriate approval authority.

30. LOAN PROCEDURES 1 Application applicant prepares proposal and submits to bank banks’ loan procedures have 4 basic stages 2 Review Bank evaluates application and sets or negotiates conditions failure Award 3 We will examineat each stage in more detail Paying back, with interest 4

31. 1 Application Before applying to any particular bank, research and review potential funding sources Have initial informal discussions with bank loan officer Fill out bank’s loan application form; obtain all necessary data Submit the loan application and supporting documents to bank. APPLICATION ! Establishing a personal relationship with the bank/loan officer is very important!

32. APPLICATION REVIEW AND LOAN AWARD More information requested 2 Review Application Review Negotiateterms* Award Agreement on terms? NO YES Review and award involve the following steps: Commitment letter & term sheet Funds received Loan agreementsigned *Terms include, e.g. interest rate,repayment period & collateral

33. What is the basis of the bank’s review? • economic viability of the project.(Will it be profitable) • the financial/economic status of the enterprise/individual applying the facility The bank’s review of the application is focused on two distinct aspects of risk: Often more important!

34. 5 C’S OF CREDIT • CHARACTER – Past history of borrower in paying bills. • CAPITAL – Borrowers Wealth Position • COLLATERAL – possession by the borrower of assets that back up the loan. • CONDITIONS - trends and volatility of the borrower’s industry • CAPACITY – Legal Standing and ability of the borrower to generate loan payments on a consistent basis

35. WHO SHOULD APPROACH A BANK FOR ASSISTANCE? • Any individual (18 years and above, must be of a sound mind) • Group or limited liability company with a viable project. • WHEN TO APPROACH THE BANK? • Since most agricultural projects are time bound we advise that customers seeking financing should approach the Bank early. • Customers can also approach the Bank during the project conception stage for advice.

36. CAREER OPPORTUNITIES IN BANKING • Teller • Security analyst • Marketing personnel • Human resource managers • Investment banking specialist • Bank training specialist • Sales/Relationship Manager • Loan officer • Credit analyst • Loan workout specialist • Mergers of Bank operation • Branch Managers • System analyst /IT • Auditing and control personnel • Bank examiner and specialist

37. CASE STUDY A SHORT DISCUSSION WHERE WILL YOU INVEST YOUR MONEY