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AgFiMS Tanzania 2011 Headline findings Irma Grundling 14 February 2012. The problem …. Smallholder & agri-business finance perceived as risky There is lack of financial services suited for agriculture Limited penetration of financial services into agri /rural areas. AgFiMS objectives.

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Presentation Transcript
the problem
The problem …
  • Smallholder & agri-business finance perceived as risky
  • There is lack of financial services suited for agriculture
  • Limited penetration of financial services into agri/rural areas
agfims objectives
AgFiMS objectives
  • The overall aim - A survey to:
    • Assess the need for financial services and support
    • Assess factors prohibiting access to financial services
    • Facilitate interventions to address the need
  • AgFiMS has two complementary components:
  • Demand side component
  • Supply side component
    • To quantify the degree and type of finance provision
objective
Objective

Land-size or turnover-based selection criteria applied

?

agfims tanzania 2011 sample
AgFiMS Tanzania 2011 sample
  • Representative sample of 626 EAs drawn by NBS
  • Listing & screening exercise provided the sampling frame
  • 4 094 face-to-face interviews were conducted with agribusiness owners
    • 3 734 interviews with producers
    • 104 interviews with processors
    • 256 interviews with service providers
  • The survey is representative at:
    • National, urban-rural, and agricultural zonal levels (including Zanzibar) for producers
    • National level for processors and service provide
agfims tanzania 2011
AgFiMS Tanzania 2011
  • +- 7m farming households
  • +- 5m households with farming as main income source
  • AgFiMS – 2 million agri-businesses
slide16
AgFiMS Tanzania 2011 Business EnvironmentIs the environment conducive for these entrepreneurs to achieve business success?
slide17

‘Ownership’ of land is a perception

  • for most producers

More than 90% producers claim land ownership although less than 10% have title deeds

most producers use more land than they own lack of capital affects productivity for 1 in 5
Most producers use more land than they ‘own’; Lack of capital affects productivity for 1 in 5
slide19
Lack of access to irrigation systems and reliance on natural water resources further inhibits productivity
slide20
Although the level of access to infrastructure is not conducive for business activities, mobile phone access provides connectivity
limitations in the business environment seems to result in distressed sales
Limitations in the business environment seems to result in distressed sales

Distressed sales?

12% sell on contract

10% sell all products on contract

slide22

Agribusinesses have virtually no

coping mechanisms to rely on when faced with business risks

slide27
Sound financial decision-making does not result in high levels of financial inclusion for agribusinesses
multiple financial strategies a matter of choice or no options
Multiple financial strategies – A matter of choice or no options?

Banked

Served by non-bank formal

and/or semi-formal institutions

43.5%

Informally served

Unserved (55.6%)

financial behaviour
Financial behaviour …

408 303

143 782

2 600

financial needs capex operational expenditure business assurance
Financial needs ....‘Capex’, ‘operational expenditure’, ‘business assurance’
78 5 business owners save but most prefer to save at home rather than putting their money in a bank
78.5% business owners save but most prefer to save at home rather than putting their money in a bank
status quo credit
Status quo : Credit

Bank

SACCOs

MFIs

Informal

Friends/ family

4% business owners

7% business owners

27% business owners

14% business owners

68.9% of credit

11.7% of borrowers

12.2% of credit

21.3% of borrowers

15.1% of credit

79.3% of borrowers

3.8% of credit

40.2% of borrowers

key capacities for agri businesses
Key capacities for Agri-businesses

Formal inclusion

Access to infrastructure

Access to markets

Access to/usage of credible financial advisory resources

Access to/usage of credible business advisory resources

Access to/exposure to appropriate agricultural advice/support

Social capital – Access to networks &support structures;

coping mechanisms

key capacities for agri businesses1
Key capacities for Agri-businesses

Top income category

Formal inclusion

  • Usage of financial services & products
  • Accessing credit
  • Access to/usage of credible financial advisory resources
  • Access to/usage of credible business advisory resources
  • Access to/exposure to appropriate agricultural advice/support
  • Access to networks &support structures; coping mechanisms

Access to infrastructure

Access to markets

Access to/usage of credible financial advisory resources

Access to/usage of credible business advisory resources

Access to/exposure to appropriate agricultural advice/support

Social capital – Access to networks &support structures;

coping mechanisms

capacities needed for formal financial services usage
Capacities needed for formalfinancial services usage
  • Access to/usage of credible financial advisory resources
  • Access to/usage of credible business advisory resources
  • Access to/exposure to appropriate agricultural advice/support

Information

  • Access to networks &support structures; coping mechanisms

Structure/organisation

Infrastructure & access to market

establishing info hubs as a first step
Establishing info hubs as a first step
  • BUSINESS ADVICE
  • Financial management principles
    • Record keeping; Debt management; Income diversification; Cash flow management
  • Strategic business decisions
    • Competitive edge; Pricing; Marketing; Contracting; Group/networking
  • Risk management
    • Price; Weather; etc.
  • FINANCIAL ADVICE
  • Products, services & requirements
  • Financial education
  • Financial advice
    • Investments; debt; insurance
    • Long-term; short-term planning

Info Hub

  • STRUCTURING/FORMING GROUPS
  • How
  • Requirements; Obligations; Responsibilities
  • Management
  • Structure
  • AGRI RELEVANT INFO
  • Inputs
    • Sources, pricing, credit/advance, security., risks
  • Process
    • Preparation, prevention, remedial, labour, best practices
  • Yield
    • Storage, transportation, timing, surplus/demand & price
slide52

ACADEMIC INS

NGOS

FINANCIAL

INST

RESEARCH

INST

BUSINESS

INST

GOVERN-MENT

OPPORTUNITY

DEVELOPMENT

PRICING

AUTHORITY

VALUE CHAIN PLAYERS

DONORS/

INVESTORS

INFORMATION HUB

Benefits for all role-players

OPPORTUNITY

DEVELOPMENT

AGRI

BUSINESSES

more than an info hub
More than an info hub ....

INFORMATION HUB

  • SUSTAINABILITY
  • RESPONSIBILITY
  • INFO SHARING RULES
  • TECHNOLOGY-BASED
  • FACE-TO-FACE
  • SEMINAR/CONFERENCE

OPPORTUNITY

  • TECHNOLOGY EXPOSURE FOR AGRIBUSINESSES
  • INTEREST GROUP MEMBERSHIP/NETWORKING
  • MICRO CREDIT SYSTEM / CREDIT BUREAU