mespt s experience in wholesale financing presentation at afraca workshop
Download
Skip this Video
Download Presentation
MESPT’S EXPERIENCE IN WHOLESALE FINANCING: PRESENTATION AT AFRACA WORKSHOP

Loading in 2 Seconds...

play fullscreen
1 / 16

MESPT’S EXPERIENCE IN WHOLESALE FINANCING: PRESENTATION AT AFRACA WORKSHOP - PowerPoint PPT Presentation


  • 134 Views
  • Uploaded on

MESPT’S EXPERIENCE IN WHOLESALE FINANCING: PRESENTATION AT AFRACA WORKSHOP. NAIROBI SAFARI CLUB 28/09/06. ORIGIN. The European Union and GOK implemented the Micro Enterprises Support Programme between December 1997 to December 2002. The programme had 3 components Credit BDS

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' MESPT’S EXPERIENCE IN WHOLESALE FINANCING: PRESENTATION AT AFRACA WORKSHOP ' - lawrence-garcia


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
mespt s experience in wholesale financing presentation at afraca workshop

MESPT’S EXPERIENCE IN WHOLESALE FINANCING: PRESENTATION ATAFRACA WORKSHOP

NAIROBI SAFARI CLUB

28/09/06

AFRACA Presentation 28/09/06

origin
ORIGIN
  • The European Union and GOK implemented the Micro Enterprises Support Programme between December 1997 to December 2002.
  • The programme had 3 components
    • Credit
    • BDS
    • Institutional Support and Capacity Building (ISCB)
  • BDS and ISCB were sinking funds (grants) while credit was a revolving fund.
  • To continue with activities of the credit component, EU and GOK agreed to form a public (not private or Government) Trust.

AFRACA Presentation 28/09/06

legal status
LEGAL STATUS
  • The Trust was notified under legal Notice Number 104 of 20th June 2001.
  • First set of Trustees signed the Trust Deed on 30/10/2002.
  • Trust deed registered on 12/11/2002.

AFRACA Presentation 28/09/06

funding
FUNDING
  • The Trust received seed capital of Euros 4.4 million from the European Union.
  • Trust has also entered into a US$ 2.0 Million rural finance Project implementation MOU with Danida.
  • Trust currently negotiating funds for:-
    • Growth oriented enterprises (missing middle) with potential for employment creation.
    • Capacity building for microfinance intermediaries and Saccos.
  • Trust also discussing collaboration with development partners and other organizations interested in funding the micro finance and Sacco sectors.

AFRACA Presentation 28/09/06

mandate
MANDATE
  • Credit (Funds for on-lending)
  • Business Development Services (BDS).
  • Institutional Support and Capacity Building.
  • Equity Participation.
  • Initial operations of MESPT in the credit component.
  • The aim in credit is to “Establish a strong, stable, market-based micro finance sector in Kenya”.

AFRACA Presentation 28/09/06

loan criteria
LOAN CRITERIA
  • MESPT works with organizations that reach or have the potential to reach a large number of Micro Enterprises on a sustainable basis.
  • Preference given to rural areas.
  • Potential borrowers must have audited accounts for at least 3 years.
  • Potential borrowers must have a healthy loan portfolio and a profitable track record.
  • Potential borrowers must have a reasonable number of potential borrowers.

AFRACA Presentation 28/09/06

loan criteria cont
LOAN CRITERIA (CONT.)
  • Saccos must have a stand alone micro finance component or willing to start one.
  • Borrowers must demonstrate that they are legally registered under relevant laws of Kenya.
  • Many of the aspects on loan criteria are negotiable.

AFRACA Presentation 28/09/06

loan types and terms
LOAN TYPES AND TERMS
  • Currently providing working capital loans of between 3 and 50 million.
  • Loan period is 36 months.
  • Base interest rate is between 10% and 12% per annum on reducing balance.
  • A loan application fee of KShs. 5,000 is charged.

AFRACA Presentation 28/09/06

loan types and terms cont
LOAN TYPES AND TERMS (CONT.)
  • A 1% commitment (appraisal) and legal fee is also charged.
  • Grace period is currently 1 to 2 months on interest and 3 months on principal for normal loans and 3 months on interest and 6 months on the principal for agriculture loans .
  • MESPT carries out surveys on loan conditions and interest rates to ensure that we remain competitive and fair to clients.

AFRACA Presentation 28/09/06

progress made
PROGRESS MADE
  • The Trust has approved 30 loans totaling KShs. 600 million.
  • MESPT works with other wholesale lenders to develop the industry as follows:-
    • Stromme microfinance
    • Jitegemee Trust
    • Oiko Credit

AFRACA Presentation 28/09/06

progress made cont
PROGRESS MADE (CONT).
    • Cordaid
    • ICCO
    • Novib
    • Planet Finance
  • Trust will work towards development of MSME Sector by collaborating with the following:-
    • World Bank MSME project (FSD)
    • IFC – SMEs Solutions Centre

AFRACA Presentation 28/09/06

progress made cont1
PROGRESS MADE (CONT).
  • French Development Agency
  • DFID Financial Deepening Trust
  • DFID BDS Project
  • Danida – ASPS

AFRACA Presentation 28/09/06

challenges
CHALLENGES
  • A. National Level
    • Delay in the enactment of the Microfinance Bill.
    • The return of the Shylocks and crooks who are fleecing members of the public and destroying the industry.
    • Un-coordinated donor interventions and competition (MSME project policy component while the MSE Sessional Paper was approved in parliament the day before).

AFRACA Presentation 28/09/06

challenges cont
CHALLENGES (CONT).
  • B. MESPT Challenges
    • Inadequate funds for on-lending.
    • Sustainability and fair rates of interest and other loan costs.
    • Absence of capacity building support mechanism – (Not just loans are needed).
    • Collateral arrangements (process is cumbersome).
    • Reaching the smaller MFIs as lending criteria restricts us to the larger ones.

AFRACA Presentation 28/09/06

challenges cont1
CHALLENGES (CONT).
  • C. At Client level
    • Perpetuation of poverty (the debt trap)
    • Inability to pass benefits to end borrowers (interest rates).
    • Poor Governance Structures (mismanagement and diversion of funds).
    • Efforts concentrated on the group lending approach (missing middle holds the key to economic take-off).

AFRACA Presentation 28/09/06

thank you
THANK YOU

AFRACA Presentation 28/09/06

ad