Financing Value Chains a Case of Crdb Bank Plc Essays

Financing Value Chains a Case of Crdb Bank Plc Essays Financing Value Chains a Case of Crdb Bank Plc Essay Financing Value Chains a Case of Crdb Bank Plc Essay Essay Topic: Chains â€Å"DEVELOPING AND FINANCING EFFECTIVE AGRICULTURAL VALUE CHAINS† Experience from CRDB Bank Plc Samson Keenja, CRDB Microfinance Services Company Limited, Dar es salaam, Tanzania INTRODUCTION Agriculture is the leading economic sector in Tanzania, providing a livelihood to 80% of the population. It is the primary source of food and raw materials accounting for 50% of the GDP and a leading export sector. It remains important for achieving sustained growth, poverty reduction and rural development. Agriculture in Tanzania is dominated by smallholder farmers (peasants) cultivating an average farm sizes of between 0. 9 hectares and 3. 0 hectares each. About 70 percent of Tanzania’s crop area is cultivated by hand hoe, 20 percent by ox plough and 10 percent by tractor. It is rain fed agriculture. Food crop production dominates the agriculture economy 5. 1 million ha. are cultivated annually, of which 85 percent is under food crops. The major constraints facing the Agriculture sector includes. 1. The falling labour and land productivity due to application of poor technology. 2. Dependence on unreliable and irregular weather conditions. Crops are adversely affected by periodical droughts. 3. Unreliable markets for the farm produce, affected not only by the principles of demand and supply but also by the Government policies on food security. 4. Poor road infrastructure for supply of farm inputs and transportation of farm produce to the markets. In Tanzania, most of production, processing and marketing functions have been assigned to the private sector. : However despite efforts by the private sector in investing in processing of crops yet a substantial amount of crops are sold unprocessed including crops such as cashew nuts and cotton. Agricultural value chains are becoming more complex over time due to change in the market environment driven by various factors among them being changes in demand, regulations, government policies and changes in lifestyles. As a result of these changes then product and market standards change which in turn, require changes from various actors in the chain that supply these products including their inputs to meet arket requirements. A critical input in the business of creating value in these changing agricultural chains is finance. Financial products need to also respond to the changing market requirements in the output markets. Mechanisms in terms of improving effectiveness of financial products, access and repayment need to be examined (Southeast Asian Regional Conference Value Chain Financing, 2007). What is a value chain? In order for a product to reach the consumer or user, there often are many processes or steps involved. Each step must have a direct link to the next in order for the processes to form a viable chain. At each stage, some additional transformation or enhancement is made to the product. Hence, a value chain is often defined as the sequence of value-adding activities, from production to consumption, through processing and commercialization. Value chains, or supply chains, in agriculture can be thought of as a â€Å"farm to fork† set of processes and flows – from the inputs to production to processing, marketing and the consumer. Each segment of a chain has one or more backward and forward linkages. A chain is only as strong as its weakest link and hence the stronger the links, the more secure is the flow of products and services within the chain (Calvin Miller and Carlos da Silva, Food and Agriculture Organization, Rome) Value chain in summary: [pic] Source: Paper on â€Å"Value Chain Financing in Agriculture† by Calvin Miller and Carlos da Silva FINANCING EFFECTIVE AGRICULTURAL VALUE CHAINS Finance is critical to increasing efficiency, improving product quality, and raising the productivity and income of value chain actors. Without access to finance, small farmers will continue to make little investment, have low of actors in the agricultural value chains financed by CRDB Bank; 1. INPUTS PRODUCTION: AMCOS, FARMER GROUPS, SACCOS, UNIONS and small to medium agribusiness entities. . PROCESSING: CURING COMPANIES, GINNERY COMPANIES and CASHEWNUTS PROCESSORS. 3. DISTRIBUTION: Loans to meet (1) transportation cost of inputs to farmers (2) meeting transport costs of harvested produces to factories, storage areas or market place. DEVELOPING EFFECTIVE AGRICULTURAL VALUE CHAINS CRDB Bank has been participating in developing effective agricultural value chains through variety of ways. In an effort to offer better services to our clients, special departments and in other case establishment of a dedicated Company to serve certain type of clients has been established. Our agriculture customers who fall in the value chain are normally segmented in the following categories (1) Microfinance customers (2) SME’s customers and (3) Corporate customers. In all three segments above, efforts are made by the bank into ensuring that there is effective agricultural value chain that address default risks while in turn reduce production unit cost, increase production volume while strives to add value in the chain. Activities that are aimed into attaining this are: ? Engage in promotion and establishment of various farmer cooperative societies such as AMCOS, SACCOS and UNIONS. Provision of technical assistance to these associations ? Assist in product designing ? Infrastructures loans such as for building irrigation system, warehouses and office buildings. ? Training and coaching our customers plus their staffs SAVINGS AND CREDIT COOPERATIVE SOCIETIES (SACCOS) are exclusively served by the CRDB Microfinance services Company Ltd, a subsidiary of CRDB Bank P lc that has been established specifically to serve micro-entrepreneurs through financial intermediaries. To develop the MFI the Company undertakes sensitization of the communities to establish microfinance institutions in areas with demand for financial services but without a financial institution. On the other hand, it takes onboard weak local microfinance institutions, building their capacities to offer tailor made products and services that really address the needs of their communities. The Microfinance Institutions, benefits by receiving free: 1. Technical assistance 2. Capacity building 3. Marketing as well as 4. Product design assistance. On the other, hand the Company initiate and manage microfinance loans on behalf of the Bank. These loans include agriculture loans (for farm inputs and cultivation), equipment loans for powertillers, tractors and irrigation systems, stock finance loans and office building loans. The Company has a team of dedicated staffs who are responsible for providing technical assistance to the affiliate intermediary institutions on regular basis, capacity building assistance and marketing assistance. They are also responsible for guiding the MFIs in accessing banks products and services. Farmer’s Groups, AMCOS, UNIONS, Company’s and Individuals engaged in agricultural activities are served by two departments of the Bank depending on their size  and credit requirement. Those departments are the Small and Medium Enterprises (SME) and Corporate Department. Customers served by SME are those with loan requirement of up to TZS 200 million. Customers with loan requirement above that amount are served through the Corporate Department of the bank. It has been realized through experience that capacity building before lending especially to those taking loans for the first time is vital for effective utilization and management of the loans. Therefore, training is conducted to the beneficiaries to improve their entrepreneurial skills but also in business management to ensure loan repayment. . CRDB FINANCING TO DIFFERENT ACTORS [pic] EXAMPLES OF PRODUCT AND SERVICES OFFERED BY CRDB BANK TO ACTORS IN DIFFERENT VALUE CHAINS Examples of products and services offered by CRDB Bank Plc to various agricultural value chains: A) PADDY VALUE CHAIN S/N |VALUE CHAIN STAGE |PRODUCTS/ SERVICES OFFERED | |1 |Crop production |Farm development loans | | | |Farm maintenance loans | | | |Powertiller/tractor loans | |2 |Storage |Stock finance loans | |3 |Processing |Loans to millers | |4 |Distribution |Loans to cover transportation costs | | | |Crops purchase loans | | | |Loans to buy transportation vehicles | B) COFFEE VALUE CHAIN: S/N |VALUE CHAIN STAGE |PRODUCTS/ SERVICES OFFERED | |1 |Crop production |Farm development loans | | | |Farm maintenance loans | |2 |Processing |Loans to curing companies | |3 |Distribution |Loans to cover transportation costs | | | |Crops purchase loans | | | |Loans to buy transportation vehicles | | | |Loans to cover export costs (CIF costs to the buying | | | |country) | | | |Crops purchase | C) SUGARCANES VALUE CHAIN: S/N |VALUE CHAIN STAGE |PRODUCTS/ SERVICES OFFERED | |1 |Crop production |Farm development loans | | | |Farm maintenance loans | |2 |Harvesting |Loans to purchase harvesting equipments e. g cane loaders | | | |Loans to buy transportation vehicles to ship canes from | | | |farms to factories | |3 |Processing |Loans to sugar factories | |4 |Distribution |Loans under SME to distributors who sells sugar to retailers| D) TOBACCO VALUE CHAIN: S/N |VALUE CHAIN STAGE |PRODUCTS/ SERVICES OFFERED | |1 |Crop production |Inputs purchase loans | |2 |Harvesting |Burns constructions loans | |3 | Processing |Loans to tobacco factories | [pic] SOME NOTED CASES ON IMPACT OF FINANCING THE VALUE CHAINS Sugarcane Financing Bank has been financing sugarcane production in various stages of the value chain from production to delivery at factory. One example is that of financing farmers at Turiani ward in Morogoro region through their TUR SACCOS by providing them with loans for farm development, maintenance and transportation to factory. The result of financing in the past seven years has been remarkable as shown in the table below. It will be noted that between 2007 and 2008 there was a rapid increase in all aspects of production, this was contributed by the decision by the Company to finance farmers (through their group) to purchase grab loaders equipment to facilitate harvesting of sugarcane. As in the previous years, not all sugarcanes from outgrowers farmers were being harvested to due lack of equipment despite higher demand from factory. This was causing farmers to lose their crops and those who harvested late after start of the rain season obtained lower renderment and thus lower returns. |SUGARCANE PRODUCTION TREND AS A RESULT OF SACCOS FINANCING TO OUTGROWERS- TUR SACCOS | |   |   |2002 |2003 | |1 |Price during Harvest (100kgs) |35,000 |100 | |2 |Price at selling time after storage(100kgs) |70,000 | | |5 |Production per acre before WRS (tons) |1. 6 |100 | |6 |Production per acre after WRS (tons) |3 | | SECTOR WISE DISTRIBUTION OF CRDB BANK PLC LOAN PORTFOLIO Agriculture and Livestock constitute the largest portion of the CRDB Bank Loan portfolio with 21%, however by considering financing of the value chain then three sectors will be involved of microfinance, manufacturing/processing and agriculture with a percentage of about 34%. CONCLUSION Through financing the agriculture value chain by considering the different actors from small farmers to corporate agribusinesses it is possible to overcome the challenges o f agriculture in a country. This can only be possible through innovative approaches to serve the different segments by considering their differences in their activities, finance requirements, understanding of farming business and management of loans. It has also been proved beyond doubt that access to finance to the different actors has helped in reducing production unit cost, increase production volume while adding value in the chain. Corporate PHYSICAL FLOWS SME Corporate CRDB Microfinance Corporate CRDB BANK PLC STORAGE AMCOS. GINNERY COMPANIES AND CASHEWNUT PROCESSORS DISTRIBUTION TRANSPORTERS PROCESSING CURING COMPANIES GINNERY COMPANIES AND CASHEWNUT PROCESSORS INPUTS PRODUCTION AMCOS, FARMERS GROUPS, UNIONS, SACCOS, Agribusiness entities CRDB Microfinance SME

Transitive Verbs

Transitive Verbs Transitive Verbs Transitive Verbs By Maeve Maddox The grammatical term â€Å"transitive verb† occurs in numerous posts on this site, usually with a reminder of what it means, but perhaps a dedicated post will be useful to readers who remain shaky on the concept. Note: To keep this post focused on the concept of transitive verbs and their direct objects, I am not going to mention terms that apply to other kinds of objects or verbs. The prefix trans occurs in many English words. It’s from Latin transire, a combination of the Latin preposition trans, â€Å"across† and the infinitive ire, â€Å"to go.† English words beginning with trans usually have something to do with moving something â€Å"across† to something or someone else. For example: transatlantic: passing or extending across the Atlantic Ocean. transcribe: to make a copy of something in writing; to copy out from an original, i.e., move the original writing â€Å"across† to another place. transfuse: to pour a liquid from one vessel or receptacle into another. In the case of blood, cause to flow from the donor or bag â€Å"across† to the recipient. The trans in â€Å"transitive verb† indicates that the action of an action verb carries across to a receiver of the action. The receiver that receives the action of a transitive verb is called its â€Å"direct object.† The dog bit the intruder. (Bit is an action verb. Intruder receives the action.) The batter hit the ball out of the park. (Hit is an action verb. Ball receives the action.) A flock of sheep halted traffic from here to the highway. (Halted is an action verb. Traffic receives the action.) Here’s how to decide if an action verb is transitive: First, identify the main action verb in the sentence. For example, in the first sentence, the main verb is bit. Then, ask the question, â€Å"Bit what?† The answer to â€Å"what?† will be the direct object: intruder. Not all action verbs are transitive. For example, the action verb kick may or may not have a receiver. For example, compare these sentences: 1. The girl kicked the football over the goal. 2. The baby kicked furiously in the bath. In the first sentence, when you ask â€Å"kicked what?† you find the answer â€Å"football.† In this sentence, kicked is a transitive verb because the action of kicking is received by the football. Football is the direct object of kicked. In the second sentence, when you ask â€Å"kicked what?† you do not find an answer to the question. The action does not travel across to any receiver. There is no direct object. In the second sentence, kicked is not transitive. Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the Grammar 101 category, check our popular posts, or choose a related post below:50 Redundant Phrases to AvoidHomogeneous vs. Heterogeneous25 Idioms with Clean