EBRD EastAgri Annual Meeting 2005

1. EBRDEastAgri Annual Meeting 2005 1st March 2005

2. EBRD’s Objective in MSE Finance Provide private micro and small enterprises, throughout our countries of operations, not catered to by the formal financial sector with sustainable access to financial services regardless of the industry sector.

3. Approach to MSE Finance • Ensure fast and wide outreach including remote and depressed areas • Ensure commercial viability of MSE lending as building block for sustainability • Integration of MSE lending operations into formal financial system as standard • Efficient use of Technical Assistance funds with clear and measurable performance benchmarks • Donor Co-ordination & Harmonization - in On-lending, Project Management, and TA-Institution Building

4. PBs, MFIs and NGOs • Where there are commercial banks that meet standards of integrity, commitment and financial stability, TA and loan funds are provided (40). • Where no suitable commercial banks are available, or where these banks are unwilling to adopt necessary procedures and client orientation, specialised MFIs are set up (12). • NGOs being explored – ‘best-practice’, track-record, and preferably ‘commercialising’ so that they can attract capital market funds rather than scarce donor resources for lending (1 NGO upgrade, 1 NGO loan and 1 NGO TC only).

5. Results & Successes Overall (to end Dec 2004) EBRD has been promoting MSE development throughout the region for 10 years. It is now operating in 19 countries with 55 partners, through 944 branches employing 3,671 loan officers

6. Results & Successes Overall (to end Dec 2004)

7. Results: Number of Loans Disbursed(to end Dec 2004)

8. Results: Volume of Loans Disbursed(to end Dec 2004)

9. Agricultural Loans – Volume of Loans Outstanding ( to end Dec '04)

10. Outstanding Portfolio (to end December 2004)

11. Main Lessons: • Economic impact is substantial on regional/national basis, but only if large number of enterprises reached rather than “token” levels • Financial viability of Micro and Small lending for partner institutions requires “critical mass”, i.e. volume and efficiency needed for these transactions to make good business sense • Know-how to fill finance gap exists - there is a model that works • Factors that limit or unleash impact: • TA availability for institution building • Consultant Quality • Legal regulatory environment: key impediments must be tackled • Cannot totally rely on existing banks (design innovation needed). In some cases the creation of a “Greenfield” bank dedicated to MSE finance is required (for example, KMB in Russia)

12. Next Steps for MSE lending programmes • Increase rural lending and village outreach • Farm Lending – specialised loan officers • Push extremes –express micro loans and longer term fixed asset loans as borrowers grow • Partner Banks: continue to include new banks as long as sufficient TA is available (a long-term proposition). Mature partners to continue business without consultants’ (80% of branches have ‘graduated’) • MSE banks - increase deposit mobilisation and gain independence from IFIs; diversify creditors; widen branch networks, increase financial services for the ‘poor’ “Loan officers in Kyrgyz Republic solve transport problems in rural areas by using bicycles”

13. ProCredit Bank Serbia

14. Introduction • ProCredit Bank Serbia (former MFB) started in March 2002 • Now operating through 28 branches • Faculty of Agriculture,Novi Sad • Great potentials in Vojvodina • Novi Sad-training and database centre • Agriculture-long tradition in Vojvodina • Vojvodina-regions

15. Agriculture • 21% of GDP, second only to manufacturing (24%) • 25% of GDP together with associated food and beverage products • 44% of population lives in rural areas, a third of whom rely wholy, or in part, on agriculture for their livelihoods

16. Agriculture • 17% of total exports are agri products, processed food, beverages, and tobacco products. • Agriculture producers: private farmers, Agro Kombinats (460) and co- operatives (400) • Private farmers own 83% of the 3.35 mill. ha of arable land. The average farm is 2- 5 ha, usualy in several plots • 3% of land is irrigated

17. Variety of Agricultural Production Vegetables/Crops Fruits/Crops Vegetables/Hogs Hogs/Crops Herbs Cows/Crops Crops

18. Crop Year

19. Agro Credit Technology Agricultural analysis

20. Technological map • Lists all necessary operations • Gives the timing for these operations • Includes all expenses (seed,fertilizers,fuel…) • Map has two sections • Comment • We have about 40 maps • Maps for cattle breeding

21. Financial resume • A continuation of the technological map • Its role is to sum up the expenses listed in the technological map • The financial resume does not include yields eaten by animals • Serbian Chamber of Commerce • Stock exchange

22. Risk in Agriculture

23. Agriculture perspective • Privatisation and restructuring of AK and agro-processors • Land restitution and strengthen land markets • Rejuvanate food marketing chain • Rehabiltate drainage canals • Regional development • Rural finance

24. Business Loans Outstanding – number

25. Business Loans Outstanding – volume

26. Numberof Agri Loans Disbursed By Branches

27. Volumeof Agri Loans Disbursed By Branches EUR

28. Agri Loans Outstanding- in volume

29. Agro Loans Outstanding- in numbers

30. Agro Loans Outstanding-By Maturity (Volume)