REPUBLIC OF CÔTE D’IVOIRE Union- Discipline - Labour Ministry of Agriculture Regulatory and Policy Framework for Value Chain Finance: African Perspectives Finance Perspectives in Côte d’Ivoire

Presentation Outline 1.History of Agricultural Sector Finance 2.Current Environment of Agricultural Sector Finance 3.Challenges 4.Finance Perspectives

From 1926 to 1991, credit institutions were established to collect funds and grant loans to farmers or to producers organizations :  Caisse Centrale de Crédit Agricole Mutuel –Central Agricultural Credit Union Fund-( )  Crédit de la Côte d'Ivoire ( )  Caisse Nationale de Crédit Agricole- National Agricultural Credit Fund- ( )  Banque Nationale de développement Agricole- Agricultural Development National Bank-( ) 1. HISTORY OF AGRICULTURAL SECTOR FINANCE

Review: successive bankruptcy of all finance institutions set up REASONS  Outstanding debts are very high ranging from 23% to 74%, thereby leading to capital reduction  Poor governance of institutions previously established  Inefficient debt recovery agencies set up as a result of bankruptcy.

1. HISTORY OF AGRICULTURAL SECTOR FINANCE Actions taken: Preparation of the Agricultural Development Master Plan to enable operators in the agricultural industry to support agriculture finance activities. Results achieved: Development of decentralized financial Systems (CREP, COOPEC, CMEC, setting up guarantee funds for some farming sectors, establishment of social funds to compensate for the lack of a National Agricultural Bank )

1. HISTORY OF AGRICULTURAL SECTOR FINANCE  However, supply of structured loans is still low compared to producers expectations.  Between 1999 and 2003, agricultural credit supply was lower by 1% compared to demand.

2. CURRENT ENVIRONMENT OF AGRICULTURAL SECTOR FINANCE  Sharp increase in demand for funding at all levels.  Implementation of structural reforms in the sectors with the establishment of specialized instruments (FIRCA, FIMR). Some sectors set up their own funding instruments (FDH, FGCCC)

2. CURRENT ENVIRONMENT OF AGRICULTURAL SECTOR FINANCE  Initiatives in the form of subsidies or direct support to various actors (ex: Food Fund, ….)  Banque de financement agricole-Agricultural Credit Bank-(BFA) focusing on the operation of commercial banks, lack of systems specific to agricultural stakeholders.  Lack of genuine public instruments to ably support the national finance sector as part of loan distribution and making the loans granted more secure.

 How can you the growing need of agricultural credit be addressed without jeopardizing existing Financial Institutions ?  Under which conditions can the banking sector adjust its lending policies with farming economic cycles specificities and constraints ? 3. CHALLENGES

4. PERSPECTIVES  How can the growing need of agricultural credit be addressed without jeopardizing existing Financial Institutions ?  Under which terms can the banking sector adjust its lending policies with farming economic cycles specificities and constraints ?

4. PERSPECTIVES FORMULATION OF CÔTE D’IVOIRE’S FRAMEWORK LAW ON AGRICULTURE This Framework Law on Agriculture (LOA) shall serve as a framework for the implementation of agriculture development policies and strategies. This will also help bring into line, enhance and/or address the inadequacy in existing specific laws for the agricultural sector. The LOA is aimed to set out guidelines for the agricultural sector with regard to introducing innovations, to anticipating any arising related issues and strengthening the economic organization of the agricultural sector.

4. PERSPECTIVES FORMULATING A STRATEGY FOR FUNDING FARMING Mechanisms/RecommendationsImplementation ActionsActors Improving on the quadripartite mechanism: banks - purchasers /technical partners - takeover bid - producers Strengthening takeover bids to avoid imbalanced power relationship State Review the establishment of banking risks offices in case of need. State Industry sector takeover bids Release of concessional resource from FIs to finance small farm businesses Feasibility study on the establishment of a dedicated refinancing fund State/Sectors

4. PERSPECTIVES Mechanisms/RecommendationsImplementation ActionsActors To support one or many FIs in the development of a credit supply commensurate with farm businesses, particularly in terms of food crop which is hard to finance Identify financing sources Recruit strong FIs showing interest and/or look into setting up a dedicated FI. Conduct studies on the identification of opportunities to finance small farm businesses and then showcase them to FIs. State Develop a farm micro-leasing offer. State Develop a storage loan offer.

4. PERSPECTIVES Mechanisms/RecommendationsImplementation ActionsActors Develop more efficient lending technologies to lower interest rates State Partial subsidy in kind for plant material selected. Identify the target (speculation, criteria for access) Implement a technical partnership. Identify the funding source State Index-based & death and disability insurance mechanisms Survey: situational analysis and definition of actions. State

4. PERSPECTIVES Mechanisms/RecommendationsImplementation Actions Actors Price premium Identify funding sources - budget headings or subsidized credit lines. A study to come up with a subsidy mechanism (target, channel, operation…) State Establish a specialized guarantee fund for food production (food crops, animal husbandry, fishing…) Based on import and agricultural production levies, support the organization of the food crop sector State Define the institutional system to manage guarantee funds and be able to sustain them. Ad hoc study – look into the possibility to run all guarantee funds within a farm guarantee institution with various windows State