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Coris Bank officials in Mali learned risk mitigation strategies for agricultural lending and how to better negotiate with loan applicants during a Trade Hub training in the capital, Bamako, February 17-18, 2017. Following similar workshops in Cote d’Ivoire and Burkina Faso, the training walked 15 participants through practical modules on different agribusiness value chains, risks involved in awarding agribusiness loans, and how to structure financing mechanisms—all information that Financial Advisors need to build a company’s risk profile and reject or approve loan applications. The Trade Hub’s Finance and Investment team lead, Mr. Jean-Francois Guay, and international finance consultant Mr. Gerard Mariotte presented the modules, while Trade Hub partners, including representatives from Oikocredit, shared their experiences and lessons learned in assessing risk for agribusinesses.
Typically, bank managers in West Africa haven’t created products for agricultural businesses as the risks that affect production, from weather to unpredictable harvest size, make it difficult to effectively price loans.
“This training has helped me to understand the risks that surround agricultural products and how to price them into potential loans,” said Ms. Mariam Sidibe, who oversees Coris Bank’s branch managers. “After this training, I will be in a much better position to create products that meet the needs of agribusiness and approve loans to businesses in this sector.”
This training also brought Trade Hub Financial Advisors face to face with bankers. Part of a 20-person network across the region, these important intermediaries assist small and medium-sized exporters and processors to obtain loans and/or equity investments. Some Financial Advisors have previously expressed frustration that it sometimes takes months before a lender makes a decision after receiving the loan application.
“It’s really key to know who is who,” said Mr. Moctar Traore, one of the Trade Hub’s Financial Advisors. “At this training, I’ve met the bankers who are working with my clients to approve their loans. It should be easier now to find out the status of their loan for my clients and move on if necessary to another bank for financing approval.”
These trainings carry out the Trade Hub’s commitment to help Coris Bank and Oikocredit facilitate $20 million in financing for smaller agribusinesses throughout West Africa. In 2016, Oikocredit signed an agreement with USAID’s Development Credit Authority (DCA) to expand loan opportunities for smaller West African agribusinesses—as well as a technical assistance agreement with the Trade Hub to improve the banks’ institutional knowledge of agricultural value chains. Coris Bank is under due diligence to sign a DCA agreement this March. The agreements enable the bank and impact lender to extend more loans to West African small and medium-sized agricultural businesses, cooperatives and associations by sharing the loan risk and creatively bridging the gap in agribusiness lending.
“We’re not only providing technical training about the rice, corn and shea value chains, but we are creating a neutral space where bankers can brainstorm about new products that meet the need of Malian agribusinesses,” said Mr. Guay. “These credit risk trainings are a small but important step to transform small agribusinesses across West Africa into thriving businesses that create jobs and increase economic opportunities.”
The Trade Hub will next train Coris bankers and Oikocredit impact lenders in Senegal.
Find more information about the Trade Hub’s Finance and Investment activities here.