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INTERGRATED RISK MGT

INTERGRATED RISK MGT. ABDUL KYANIKA NSIBAMBI CENTENARY BANK UGANDA 2 nd April 2009. Location. Mission Statement. “To provide appropriate financial services, especially microfinance, to all people of Uganda, particularly in rural areas, in a sustainable manner and in accordance with the law”.

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INTERGRATED RISK MGT

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  1. INTERGRATED RISK MGT ABDUL KYANIKA NSIBAMBI CENTENARY BANK UGANDA 2nd April 2009

  2. Location

  3. Mission Statement “To provide appropriate financial services, especially microfinance, to all people of Uganda, particularly in rural areas, in a sustainable manner and in accordance with the law”

  4. Centenary Bank – HistoryFirst Years ( 1982 – 1993) 1983 – Formed as a Credit Trust with the name “ Centenary Rural Development Trust”, by the Uganda National Lay Apostolate, 1985 – Began providing financial services 1993 – Registered as a Commercial Bank with only 8 branches,

  5. Centenary Bank Ownership

  6. CENTENARY BANK TO DATE • One of the fastest growing Commercial Banks in Uganda – over 700,000 depositors and over 90,000 borrowers • Pioneered Microfinance in the Banking sector, serving mainly Micro and SME’s • Actively involved in Agricultural lending, the backbone of Uganda’s economy • Large branch network with 32 branches networked countrywide, 52 ATMs and employing over 1,300 staff

  7. Centenary Bank – Branch Network

  8. Centenary Bank – Loan PortfolioAs at 31st December 2008 • Loan Clients 92,611 • Volume is $ 144,000,000 funded by a deposit base of $ 172,272,000 • 74% of the LP are micro loans, with minimum loan amount of $ 50 • NP Loans = 1.5%, • The Agricultural LP is 13% – 14% of the Total LP,

  9. PERFOMANCE FOR THE LAST SEVEN YEARS

  10. Agricultural LP Growth.

  11. Proposed H/q OF THE BANK

  12. Why Agricultural Lending? • The mission statement of the bank is to extend financial services to rural economically active poor, • 80% of Ugandan population stay in rural areas and main activity is Agriculture. • Uganda has conducive climate for agricultural production and fertile soils, • The national economy is entirely dependent on agriculture, • There is increased demand of agricultural commodities in the region,

  13. Agricultural Lending – History • Started in 1998 as a pilot test targeting small farm holder farmers • Focus was mainly on commercially oriented farmers located in rich agricultural regions,

  14. Agricultural Enterprises Financed • Crop/animal production, processing & marketing, • Crops financed: maize, vegetables, rice, coffee, bananas, oilseed crops • Animal production including cattle fattening, and dairy production, poultry, and piggery,

  15. Risks in Agricultural Lending • Purely dependent on nature, • Crop and animal diseases and pests, • Market & price risks, • Poor loan management by credit officers and institutions in the following areas; loan evaluation, Structuring, Documentation, Monitoring, Recovery.

  16. Risks in Agricultural LendingCont’d….. • Perishability of the agriculture produce, • Loan Collateral Limitations, • Poor Credit Culture in some parts of the country, • Lack of entrepreneur skills by farmers, • Bad policies and Instability.

  17. Risk Mitigation Measures by the Bank, • Focus on commercially oriented farmers, • Holistic approach in credit appraisal by considering all sources of income of the household, • Combination of securities/collateral approach, • Using well trained credit officers with a background of agricultural academic qualifications,

  18. Risk Mitigation Cont’d…….. • Quick and timely loan processing • Proper structuring of loan payments depending on the farmers cash flows, • Diversification of the agricultural portfolio, • Using an efficient back office credit mgt system to monitor the portfolio growth and quality,

  19. Risk Mitigation Cont’d…….. • Networking with other partners in the agribusiness industry which include farmers’ association, government, processors, NGOs, FIs. • Increasing outreach by coming up with new products, opening more branches and lending offices,

  20. Challenges of Agricultural Lending • Lack of credit history,  • Lack of farm records, • Heterogeneity of farming, • Seasonality of agricultural production & Loan Term Structure. • Clients are widely dispersed with inadequate rural transportation facilities,

  21. Challenges ctn’d • Poor physical and institutional infrastructure, • Lack of production statistics from the farmers,

  22. End LOVE SERVE AND UNITE Thanks for Listening

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