Completion dates: February-June 2019
Partners: JSCB “Kyrgyzstan”, https://mbank.kg , Has a wide branch network and a special product developed for value chains.
Target regions : Osh, Batken, Jalal-Abad and Naryn regions (9 pilot enterprises).
Project goal: Improving access to finance through innovative financial products for farmers and processors, as well as in the implementation of value chains in the territory of the target group, within the framework of the USAID project Agro Horizon ” Improving access to finance through innovative financial products of the Agro Horizon Project”
Project objectives:
- Discuss with the partner bank their expectations and scope of tasks;
- Revise as necessary:
– standard contract for the supply of raw materials between the processor and the farmer,
– a standard agreement or memorandum of cooperation between the bank and the processor,
– procedure/instructions for CDS for working with farmers and the bank;
- Assist the partner bank in concluding agreements with processors on VAC financing, in concluding agency agreements with suitable processors for the provision and promotion of bank services;
- Develop a technological map and forecast cash flow report for farmers receiving loans from the bank;
- Provide assistance in attracting farmers interested in financing the VAC and create a register of farmers for each processor;
Results achieved:
Spot On Consulting carried out work on the development of value added chains (VAC) by conducting seminars for farmers and processing enterprises to explain the mechanisms of financing through the bank;
With the management of each pilot enterprise, Company experts discussed financing needs, raw material requirements, quality of work with product suppliers/farmers;
A meeting was held with JSCB Kyrgyzstan to discuss the Bank’s expectations and the introduction of this loan product in target regions, as well as expanding the number of enterprises that will be covered by the bank’s services;
Work has been carried out to train multipliers (7 specialists) so that they inform farmers about the possibilities of concluding contracts for the supply of agricultural products produced by them to processing enterprises and obtaining a preferential loan based on such an agreement and cooperation with factories;
Forms of contracts have been developed:
– between farmers and enterprises for the purchase of agricultural products. The contract data was transferred to 6 enterprises;
– between farmers and milk producers, between producers and milk processing enterprises. These contracts were sent to 3 enterprises;
The Company’s experts conducted remote consulting on the process of signing agreements between farmers and enterprises (about 300 agreements), factories and milk producers (about 70 agreements);
Technological maps (6 maps) were developed for each pilot enterprise for each type of product, which were used to calculate the loan amount and assess the cash flow of farmers;
More than 700 farmers were trained and informed:
– on issues of agricultural technology of crop production and livestock breeding,
– on the principles of work within the framework of the VAC, as well as on the conditions of lending and financing within the framework of the VAC;
6 unified agreements between the Bank and enterprises were revised and signed, taking into account the nuances of the terms of agricultural products supplied by farmers;
Calculations of schedules for issuing and repaying bank loans have been prepared for farmers. These schedules are necessary to explain to farmers about the upcoming flows of funds for the use and repayment of loans;
Another enterprise was involved in the project, which entered into a supply agreement with SCS Jalal-Abad, and SCS involved 150 farmers in the cultivation and supply of vegetables. To implement financing for this VAC, a tripartite agreement was developed;
A series of meetings were held with responsible employees of the head office of AKB Kyrgyzstan Bank, where the main mechanisms and exchange of information between enterprises and the Bank within the framework of CDS financing were discussed;
Work was carried out with bank branches to coordinate issues of lending to farmers in the regions.