ARFRACA

1. ARFRACA A Synthesis of The 2007-2008 Sub-Regional Workshops By Andrew E. Temu Rapportuer

2. A Synthesis of Sub-Regional Workshops 1. West Africa, French Speaking Sub-Regional Workshop 17th to 19th September 2007 – Burkina Faso [FCBP] 2. Southern Africa -Sub-regional Workshop 20th to 22nd November 2007 - Mozambique [BoM] ARFRACA 3. West Africa, English Speaking Sub-Regional Workshop 31st March to 2nd April 2008 - Gambia [Central Bank of Gambia ] 4. East Africa Sub-Regional Workshop 22nd to 24th July 2008 – Addis Ababa Ethiopia [Com. Bank of Ethiopia]

3. The 2008 Theme For Sub-Regional Workshops INNOVATIONS TO ADDRESS RURAL FINANCE CHALLENGES A better understanding of rural markets & agric. financing risks Take stock of successes and challenges in rural finance Explore strategies and products for rural financial institutions Specific recommendations to promote innovations for rural finance EXPECTED ACHIEVEMENT: EXPECTED OUTPUTS:

4. West Africa –French Speaking

5. West Africa –French Speaking Adapted Objective Innovations in Addressing Rural Finance Challenges Thematic Presentations 1. Measures to Increase Productivity of FI Personnel – Senegal 2. Risks of Financing LI Clients: Exp of Poor Rural Women – B. Faso 3. Expanding Networks – Best Practices and Challenges - Burundi 4. Innovations in Offering Quality FS to Rural Clients - Senegal 5. MF Services Delivered by Classical Banking system - CGAP

6. West Africa –French Speaking Key Recommendations • Mainly focussed on actions by FIs: • FIs should jointly establish RISK DATA BASES • Emphasised on HR training and keeping up-to date • Performance Assessments and Motivations

7. Southern Africa

8. AFRACA Southern Africa SRW Adapted Objective Innovations for Rural Areas and Costs of Services – Joan David Experiences of Reaching Women in RF – Anna Maria Rural MF and How it can Reach Rural Enterprises – Dr. Novalia Experiences of Commercial Bank of Zimbabwe – D. Mandivenga Best Conditions for The Rural Family – Martinho Fernandes Innovative Approaches for Quality Savings for Rural Poor – L. Mwanza Facing Innovation Challenges – Mary M. Nandazi Innovations in Addressing Rural Finance Challenges Presentations

9. AFRACA Southern Africa SRW Key Issues and Recommendations 1. A need for a unified platform for all banks to ensure increased outreach via ATMs; 2. Promote the use of cost effective technologies e.g. Mobile phones to enable money transfer; 3. Proactively adopt policies and strategies for Rural Development 4. Develop local solutions fitting into local contexts 5. Break the myth that Agriculture is a Risky Activity 6. Acknowledge that MF is not a panacea, only one tool for RD

10. East Africa AFRACA Sub-Regional Workshop Ethiopia

11. East Africa Adapted Objectives 1. Creating common understanding of the role of rural finance in food productionand increasing agricultural productivity in Africa 2. To learn and share the innovations in rural finance 3. Identify the challenges of innovations in rural finance 4. Recommend interventions to promote innovations in rural finance

12. East Africa Highlights of 11 Presented Papers • Innovations in the delivery of FS in Ethiopia by Wolday Amh • - A strategic approach through policy and bank interventions • 2. The experience of CBE by Haftu Dimtsu and Abreham Tesfaye • - A Strategy to expand outreach by CB linkages with MFIs & SACCOS • 3. Innovations in Addressing RF Challenges–Ethiopia: Birhanu Taye • - Illustrating a countries MF Policy & development of MFIs • 4. Policy for improved RF services – Ethiopia: Getahun Nana • - Policy development paying attention to the risky rural market • -

13. East Africa Highlights of 11 Presented Papers • 5. Policy Initiatives for Improved RFS –Tanzania: Flora Rutabanzibwa • - Basics and premise for a specific Rural Financial Services Strategy • 6. Wholesale lending for MF operations – Kenya: Newton Nithiga • -An institutional experience and recommendations of HOW to do it • 7. Enhancing proximity of FS to rural people – Uganda: M. Katamba • - Illustration of how R-MFPs delivered by the Uganda FinanceTrust • 8. Providing access to FS for small scale farmers – Kenya: by Job Kemei • - A case of a Non-Bank development Finance Corporation

14. East Africa Highlights of 11 Presented Papers • 9. Institutional Assessment in financing Rural Ethiopia Value Chain – • Atakilti Kiros • -Performance, Opportunities and Challenges in Financing VC • 10. MFI – Bank Linkages – Ethiopia: Mekonen Yelewemwessen • -Deployment of savings mobilization (70%) and concessional lending • to extend FS to micro and rural population • 11. Women as players in the financial sector by Hikmit Abdela • - Socio Economic role and the burden on Women and Justification • for special focus on gender in RF.

15. Regulatory Matters, Policy and Bus. Environment for RFS East Africa: Summary of Issues Agriculture +Governments role; should not be a direct service provider +Continued improvement of regulatory frameworks in the region + Provision of required public goods: roads, telecommunication +Global food crises & enhanced importance of Agricultural Finance +Value Chain Finance addressing needs of diverse agriculture actors

16. East Africa: Summary of Issues Services and Products: Substantial Work is needed to: + Increase rural outreach, emphasis on savings instruments + Special focus: SMEs, Youth and Women & Other disadvantaged + Technology based services and products

17. West Africa English Speaking AFRACA Sub-Regional Workshop - Gambia

18. West Africa English Speaking Adapted Objectives Share experiences in innovations for Rural Financial Services. 2. Make recommendations for further development of rural financial markets.

19. West Africa English Speaking Highlights of 14 Presented Papers 1.Innovation in addressing RF Challenges – Gambia: Bai Senghor - Technology, Strategic Planning, Institutional arrangement 2. Policy initiatives for improved RFS – Nigeria: Paul N. Eluhaiwe - Characteristics, hindrances and approaches to RFS provision 3. Commercial Banks in Microfinance – Gambia: Seeku Jaabi - Linkages Modalities of a Commercial Bank’s participation in Micro-finance 4. Commercial Banks as partners in serving the un-banked poor – Insights from practice s by ECOBANK; Partnership with ACCION 5. Alternative Business Channels to Bank the Un-banked:By Ismaila Faal - IT based services: ATM, PoS Terminals, GSM Mobile, Mobile Banking etc

20. West Africa English Speaking • 6. Climate Change: Opportunities and Challenges, Gambia – S. Jaabi - Tapping on climate change as an opportunity: Diverse Products • 7. Risks & Costs of FI’s operations in Ghana: K. Owusu-Twumasi • - Innovative Strategies and approaches to minimize risks and costs • - E.g Apex Link Domestic Transfer - rural community focused transfer tool • 8. Bank of Sierra Leone experience: Rosaline Gobio-Lamin • Strategies to serve a rural set-up without grassroots institutions • 9. Standard Chartered Bank MF Strategy: Assantou Barry • A $500mn Microfinance facility to serve 4 million people • 10. Micro-finance in Islamic Banking: Mamodou Jobe • - Adaptability of MUDARABA, MURAHABA, MUSHARAKA models Highlights of 14 Presented Papers

21. West Africa English Speaking • 11. Trust Bank SMS Banking Innovation, Gambia: Dodou Nyang • Account Mgt: Balances, Forex, Order C/books, Stop Checks • 12. GSM Communication in Modern Banking –AFRICELL, P. Braima • Market Information, Prices by SMS through the GSM services • 13. Gambia Women Finance Association (GAWFA): Katty Jatta • Inter-generational Benefits, pro-rural women finance • 14. IFAD’s Rural Finance Experience: Alassan Bah • -Viable Self Sustaining Networks for Village Based Financial Services Highlights of 14 Presented Papers

22. Consideration of Client Characteristics in Innovating for RFS APPRECIATE AND BEAR IN MIND THAT Rural poor are bankable Access is more important than the cost to the poor Rural poor require and demand for a diverse range of services West Africa-English: Recommendations Alternative Methods - Innovations in Services and Products RECOGNIZE THAT: MFIs are sustainable if designed properly Build in risk management strategies while delivering RFS Embrace Technology Simplify products and processes Tap on linkages between Commercial Banks and MFIS

23. Organizational and Institutional Aspects West Africa-English: Recommendations Policy Framework and Business Environment for RFS Foster to integrate MFIs in the Financial System for sustainability Develop partnerships and create synergies Go where clients are: physical presence in rural areas Emphasize appraisals, timely delivery & training on loan products Ensure favourable macro-economic environments Avail good policy, Reg. frameworks and supervisory services Integrate Rural Finance into the Mainstream Financial Sector Improve Rural Infrastructure: Roads, Telecommunication

24. Innovations in Rural Finance: What are they? • NEW CREATIONS OF SOCIAL AND ECONOMIC SIGNIFICANCE • Often it is a combination of existing elements • COMPRISES RADICAL IMPROVEMENTS • But can entail gradual improvements over time • INNOVATIONS MAY BE EITHER OR A COMBINATION OF • Technical, Managerial, Institutional, Policy & regulatory • INNOVATIONS ARE TRIGGERED VARIOUSLY • Most commonly by challenges being experienced • Opportunities offered by technology, environment etc.

25. HIGH TRANSACTION COSTS TO INSTITUTIONS & CLIENTS • Physical access / Poor Infrastructure • Asymmetric Information • Moral Hazards • Dysfunctional markets • Financial literacy Innovations to Address What? or Why 2007/08 AFRACA Series ? • HIGH RISKS IN RURAL FINANCE AND AGRIC. COMMODITY MARKETS • Systemic Risks E.G. Biological Nature of Agricultural Production • Unpredictable Weather • Climate Change [Floods and Draughts] • VOLATILE CASH FLOWS AND LOW RISK BEARING ABILITY • Markets Risks: World Agricultural Commodities Prices • Poverty: Low Income and Capital Bases

26. Examples of Innovations from the 2007/2008 Series • - Micro Banko – FDM Mozambique, Specialised rural microfinance institution • - Commercial Banks linking with MFIs – Ethiopia, Gambia • - Community Bank in Zimbabwe • - NATSAVE - Zambia, special policy and strategy to have rural branches • - Central Bank of Nigeria – Legislated that CBs must have rural branches • - RURAL FINANCE STRATEGIES – Ethiopia, Tanzania

29. IDENTIFIED INNOVATIONS LINKAGES AND WHOLESALE Jitegemee Trust :2 Tier Linkages, Apex supporting total needs of MFIS Wholesale Lending : Comm. Bank Wholesales Loans to MFIs for onward lending ECOBANK – W. Africa : In 23 countries- wholesale, retail, partners with ACCION CB EQUITY FINANCE Straus Commission1966 in SA: Compelling CB to finance & advise rural MFIs Stan. Chartered 500mil Francs for MFIs

31. AFRACA 2007-2008 Series ResultsA Synthesis Challenges &Rural Constraints Theoretical & Generic Solutions 1. High Risks RFM /Agr. 2. High Trans. Costs 4. Volatile Cash Flows 5. Small savings & loans 6. Low capital base 7.Social cultural Practices and Experiences: Lessons from 2007/08 AFRACA Series 1. Products 2. Organisations 3. Policies 1. New Products: IT Based 2. New Policies: MFP & RFS 3. Org Innovations: e.g. CB – MFI links Way Forward? Thank you for the attention Scaling-up?