Bringing finance to rural people macedonia s case
This presentation is the property of its rightful owner.
Sponsored Links
1 / 13

Bringing finance to rural people – Macedonia’s case PowerPoint PPT Presentation


  • 37 Views
  • Uploaded on
  • Presentation posted in: General

Macedonian Bank for Development Promotion Agricultural Credit Discount Fund. Bringing finance to rural people – Macedonia’s case. Efimija Dimovska Istanbul, October 2010. Agricultural Credit Discount Fund. ACDF Mission

Download Presentation

Bringing finance to rural people – Macedonia’s case

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Bringing finance to rural people macedonia s case

Macedonian Bank for Development Promotion

Agricultural Credit Discount Fund

Bringing finance to rural people – Macedonia’s case

Efimija Dimovska

Istanbul, October 2010


Bringing finance to rural people macedonia s case

Agricultural Credit Discount Fund

ACDF Mission

Raise the standard of living of the rural population through increased economic activity responsive to and sustainable in the emerging market

Objectives

  • Establish institutional and financial basis for sustainable agricultural financial services which are commercially viable and yet appropriate and affordable by the target groups

  • Integrate the rural population in the banking system

  • Reduce the risk to agricultural sector financiers


Bringing finance to rural people macedonia s case

Refinancing Facility

  • On-lending trough selected financial institutions

  • Matching of capital (ACDF + PFI + borrower)

  • PFIs pay interest for the discounted amount at a level of 0.5% annually

  • Credit risk on the PFI

  • PFIs apply their own lending policies to sub-loans, except the interest rate

  • Controlled use of the loan funds


Bringing finance to rural people macedonia s case

ACDF Impact

Institutional (PFI) impact

  • increased agricultural lending portfolio

  • enlarged number of rural clients

  • softer collateral introduced

  • improved overall PFI performance

    Smallholder impact

  • connection with the formal financial sector

  • access to affordable financial services

  • economic impact on household level


Bringing finance to rural people macedonia s case

Macedonian rural border areas

  • Highlands and mountainous areas

  • Agrarian economy

  • Poor transport and telecommunication infrastructure

  • High transaction costs of conducting business

  • Official unemployment rate of more than 40%

  • Aging population

  • High migration from rural settlements to bigger towns

  • Low incomes and living standard


Bringing finance to rural people macedonia s case

Lending to rural border areas

  • Profitability of agricultural and rural operations is poor and can’t generate the cash flows needed for adequate debt-servicing

  • High delivery cost

  • Poor transport and telecommunication infrastructure and difficulties to reach the clients

  • Collateral issue (no property lists, low value property)

  • Difficulties in obtaining building permits for investments in production facilities

  • High real lending risk

  • No documented trade between cross-border villages


Bringing finance to rural people macedonia s case

Lending to rural border areas

Problem: Profitability of agricultural operations is poor and can’t generate the cash flows needed for adequate debt-servicing

Recommendations and policy direction:

  • Diversification of the local economy – support the development of an alternative businesses to agriculture

  • Increase competitiveness of the agro-production by

    strengthening the regional identity - support the production of highly specific and traditional products


Bringing finance to rural people macedonia s case

Lending to rural border areas

Problem: High delivery cost

Recommendations and policy direction:

  • Support (Ex. ACDF) aimed at reducing lenders’ transaction costs on short to medium term, reduced over time and eventually eliminated

  • Adoption of laws and regulations that will enable establishment and operations of “grass level financial institutions” such as small MFI’s , Credit Unions, etc.


Bringing finance to rural people macedonia s case

Lending to rural border areas

Problem: Poor transport and telecommunication infrastructure and difficulties to reach the clients

Recommendations and policy direction:

  • Increased capital investments for infrastructure in rural regions

  • Regional Development Strategy


Bringing finance to rural people macedonia s case

Lending to rural border areas

Problem: Collateral

Recommendations and policy direction:

  • Improve the legal and regulatory framework in property titling and registration

  • Improve the efficiency of the judicial and enforcement systems

  • Expanding the list of items that can be used as collateral


Bringing finance to rural people macedonia s case

Lending to rural border areas

Problem: High real lending risk

Recommendations and policy direction:

  • Support rural diversification

  • Crop insurance

  • Credit Bureaus


Bringing finance to rural people macedonia s case

Conclusions

  • Combined measures in place will enhance provision of financial service to the rural areas

  • In developing economies financial institutions are interested in expanding their client base

  • On the long-term rural clients should be served wholly with the banks’ own resources


Bringing finance to rural people macedonia s case

Thank you for your attention!


  • Login