Other Subjects

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Other Subjects

• SNV PUM

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Other subjects SNV PUM

• Bank Loans and Funding
• A big leap

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Bank Loans and Funding

• I have received many complaints about basically
  the fact that Banks are not interested to lent
  money to agricultural projects.
• And if Banks would be interested, that interest
  rates are sky-high
• I cannot comment on interest rates but want to
  ask the following question

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Bank Loans and Funding

• Would you lent money to
• A company with outdated, not modern, equipment
• That cannot really produce for export
• Has a too low capacity
• No equal quality raw materials nor equal quality
  end-products
• No certificates
• So has to produce for a (stagnant) local market
• No long term contracts with farmers nor with
  customers, no business-plan
• Possibly a one time export order, but no
  guarantee for repeat orders
• And above all an owner that also has other,
  completely unrelated businesses and therefore
  cannot really devote his full attention to the
  project for which he wants to borrow money?

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Anybody answering with yes?
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Bank Loan, Funding, Leasing

• Funding may imply you are not fully owner
• But it also implies support for the project from
  the funding co-owner
• Bank Loan high interest rates
• Fund part of the equity for the funder, but
  also lower investment by the initiators and
  therefore possibly easier to materialize.
• Leasing equipment can be used but not be owned
  until it is fully paid.

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Funding

• During my study I stumbled across a possibly
  interesting fund from NAADS called CF
• A call once a year
• Requiring proper business-plans, which may not be
  easy to write and guarantee
• But looks like an interesting opportunity
• 50/50 equity
• Your 50 also can be e.g. land, building,
  management and does not have to be cash
• It makes sense to shop around and not just
  consider this opportunity

8
Micro-leasing

• Another option might become micro-leasing
• Processor wants to buy a machine
• The machine is paid by a financing company
• And paid back by the entrepreneur from the
  revenues of product sales
• System works in Kenya, for Uganda discussed by
  Swiss Contact

9
The big leap forward

• If small companies cannot get funds or loans,
  then what is a solution?
• Join forces
• Dont build many drying plants in one area
• Combine resources
• Build one together
• Make a good business-plan
• Hire a professional manager or
• Let one of the owners pay full attention to the
  project
• Find the proper support, financially, managerial
  and organizational, re. plant lay-out and
  routing, equipment, quality aspects etc. On any
  aspect required.