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Value Chain Financing Overview

Value Chain Financing Overview. Prof. Ronald T. Chua Asian Institute of Management. Value Chain Financing Overview. Review of the Value Chain Framework Value Chain Development and Value Chain Financing. Why a Value Chain Perspective?.

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Value Chain Financing Overview

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  1. Value Chain Financing Overview Prof. Ronald T. Chua Asian Institute of Management

  2. Value Chain Financing Overview • Review of the Value Chain Framework • Value Chain Development and Value Chain Financing

  3. Why a Value Chain Perspective? • Microenterprises/rural agricultural households part of a bigger economic system • Increasing microenterprise/rural agri household incomes may require interventions beyond the enterprise/household level

  4. Value Chain Approach Objectives • A tool/approach for identifying opportunities and constraints for: • improving chain growth and competitiveness • benefit more marginalized participants • Takes on a systems perspective (the value chain) • Analytical Perspectives

  5. The Value Chain Framework* • “Value chains encompass the full range of activities and services required to bring a product or service from its conception to sale in its final markets – whether local, national, regional, or global. Value chains include input suppliers, producers, processors, and buyers. They are supported by a range of technical, business and financial service providers” *Taken from: The Value Chain Framework: USAID Briefing Paper

  6. *Taken from: The Value Chain Framework: USAID Briefing Paper

  7. *Taken from: The Value Chain Framework: USAID Briefing Paper

  8. Value Chain Structure Elements *Taken from: The Value Chain Framework: USAID Briefing Paper End Markets Business and Enabling Environment Vertical Linkages Horizontal Linkages Supporting Markets 8

  9. Value Chain Dynamics • Upgrading • Value-Chain Governance • Power exercised by firms in their relationships with each other • Inter-firm cooperation and competition • Transfer of information and learning between firms *Taken from: The Value Chain Framework: USAID Briefing Paper

  10. Value Chain Outcomes • Value Chain competitiveness • Micro and Small Enterprise Benefits *Taken from: The Value Chain Framework: USAID Briefing Paper

  11. Value Chain Approach • Main objectives – increased competitiveness and benefits to marginal participants/poor • Define/Understand Value Chain • Change Structure • Change Dynamics/Relationships

  12. Value Chain Financing “financing provided to or by a value chain actor in order to increase value-chain growth and competitiveness” Source: Finance in the Value Chain Framework. USAID Briefing Paper

  13. Source: Value Chain Finance: Understanding and Increasing Access. USAID Concept Paper

  14. Value Chain Financing • Identify areas in value chain where financing may be a constraint • Understand the nature of the financing needed • Identify opportunities and constraints in increasing value chain financing • Policy issues • Other • Matching financier profile to nature of financing needed

  15. Financiers Donors Governments Multilaterals/Bilaterals Equity Investors Value-chain participants (traders, manufacturers) Informal Lenders Financial Institutions Project Types Infrastructure (roads, bridges) Farm production Processing Plants Transportation Warehousing Cooperative Formation Trading Research and Development Matching Financier to Projects

  16. Value Chain Financing • Identify areas in value chain where financing may be a constraint • Understand the nature of the financing needed • Identify opportunities and constraints in increasing value chain financing • Risks • Policies that affect risks • Other • Matching financier profile to nature of financing needed

  17. THANK YOU! Email: rontchua@gmail.com

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