1. ADB Funded Agribusiness Development & Diversification Project SBP Implanting Agency for Component 2 (Agribusiness Finance Development) Asian Development Bank

2. 2 The Implementing Agency is SBP operating under a separate loan agreement with the ADB Component 2 commenced in June 2006 and the project is providing limited Technical Assistance (TA) support to the Agricultural Credit Department (ACD) at SBP

3. 3 Objectives of Component 2 1.Support PFIs to develop their understanding of potential agribusiness finance markets – including awareness building and selection of PFIs to be supported 2.Enhance PFIs capacity to undertake increased agribusiness lending – including delivery of capacity building support consultancy to between 3-5 PFIs

4. 4 Component 2 The component is divided into two sub-components  Sub-component 2.1 Agribusiness Finance Awareness Building  Sub-component 2.2 Agribusiness Finance Capacity Building

5. 5 Sub-component 2.1 (Agribusiness Finance Awareness Building) Started in late June 2006 Two key objectives: 1.Increase PFI management awareness of opportunities for lending into the agri and agribusiness sector 2.Identification of between 3-5 PFIs to receive capacity building support consultancy from the project (i.e. preparation for sub- component 2.2)

6. 6 Sub-component 2.1 (cont) Awareness building is an on-going process and will continue throughout the duration of the project. Awareness building focuses on broader issues which impede agribusiness lending e.g.  Identification of agribusiness lending opportunities  Introduce PFIs to international best practices for agribusiness lending  Within the SBP regular functions and outreach program address lending constraints and introduce improved guidelines and appropriate measures  Identify and support linkages with other agencies working in the agribusiness lending sector. i.e. ASF LDDB, commercial organisations, etc

7. 7 Sub-component 2.1 (cont) Selection of PFIs (for capacity building support) The section process started in late June 2006  Selection process has involved meetings with 13 banks and associated requests for information relating to agri and agribusiness lending.  Additionally, 3 non-banking financial institutions (leasing companies) were also visited  Request for information on agribusiness lending was sent to 7 banks with no (or very limited) agri lending

8. 8 Sub-component 2.1 (cont) Selection of PFIs (cont)  Heads of Agri Lending Departments and other senior management were engaged in this process.  The Project requested information relating to each PFIs agri and agribusiness lending, operational procedures, future development and marketing plans, and capacity building support measures identified by each PFI as priorities.  The SBP/ADB consultant has been assessing this information and undertaking its appraisal, which includes the level of commitment by senior management at each PFI to support project objectives.

9. 9 Banks Visited by the Project Including agri and agribusiness lending portfolios Bank Al Falah United Bank Limited MCB Bank Limited Askari Bank Limited Prime Commercial Bank Limited Faysal Bank Limited National bank The Bank of Punjab Habib bank Limited Soneri Bank Limited Allied bank Limited Metropolitan Bank Limited Bank Al-Habib Limited Sub-component 2.1 (cont)

10. 10 Non Banking Institutions visited by the project Crescent Leasing Corporation Limited ORIX Leasing Pakistan Limited Saudi Pak Leasing Company Limited Sub-component 2.1 (cont)

11. 11 Sub-component 2.1 (cont) PICIC Commercial Bank Ltd Saudi Pak Commercial Bank Ltd ABN-AMRO Bank Citibank Meezan Bank Ltd SME Bank Ltd Standard Chartered / Union Bank Banks with no (or very limited) agri lending but which provided agribusiness lending information

12. 12 The assessment process is on-going and due for completion before the end of December 2006 Sub-component 2.1 (cont)

13. 13 Sub-component 2.2 (Agribusiness Finance Capacity Building) To start in March / April 2007 Key objectives: 1.Assist selected PFIs with the promotion of agribusiness lending via customized consulting support 2.Support PFIs to meet eligibility criteria for participation in the Partial Credit Guarantee (PCG) facility under the ADB funded SMESDP – supervised by the SBP and promote linkages with other project components i.e. ASF, LDDB, etc 3.Enhance commercial viability of agribusiness loans 4.Act as a catalyst for broader development of agribusiness finance at other financial institutions

14. 14 How will the TA support each PFI?  Capacity building support will be provided via a tri-partite agreement between PFI/SBP/Contractors  A senior agribusiness banking consultant will mentor the incumbent Agricultural Credit Department management and other appropriate departments at each selected PFI  Where applicable the support will operate across banking departments to focus on agribusiness lending opportunities i.e. corporate, SME, industrial, etc  PFIs will be provided with “tailor-made” consultancy which is specific to individual PFI needs, and responsive to requirements identified by the management at each PFI Sub-component 2.2 (cont)

15. 15 Sub-component 2.2 (cont)  The duration of capacity building support will be based on requirements at each PFI successfully selected  The project can provide additional specialised support when and where a need arises.  The project’s primary focus is towards increasing agribusiness lending to; (i) livestock; (ii) horticulture; and floriculture sectors, but is not restrictive and includes all agribusiness lending opportunities that present commercial viability.

16. 16 Where are we now?  In September 2006 SBP issued Expressions of Interest (EOI) for an international tender to provide consulting services to selected PFIs (based on ADB standard procedures) A shortlist of potential consulting companies is imminent  SBP will very shortly issue a Request for Proposals (RFP) to the short listed International/Domestic companies.  PFI selection is on-going and due to be completed before the end of the year (for the initial phase)

17. 17 Where are we now? (cont)  Successful PFIs will be required to submit a business plan to SBP and the contracted consulting company, which outlines the PFIs development plans for agribusiness lending and priority capacity building support measures required  It is anticipated that capacity building support could start in April 2007.  Phase 1 of the capacity building support will not include all 5 PFIs to start at the same time, i.e. PFI support will be introduced individually in stages.

18. 18 Questions