Asset Financing at the BOP Lessons from microleasing

Asset Financing at the BOP Lessons from microleasing

Introducing the panel Ariane Appel, Client & Partner Relationships, Swisscontact Dr. Victoria Kisyombe, Founder & Managing Director, SELFINA Anitha Mongi, Underwriting Manager, Bumaco Insurance Moderator: Manuel Hörl, Head Microfinance Capacity Building Initiative, Credit Suisse

Our Mission The Credit Suisse Microfinance Capacity Building Initiative Market development and innovation by strengthening microfinance institutions (MFI) s ability to serve the increasingly diverse financial needs at the base of the pyramid through: Enabling product and services development and innovation across sectors beyond traditional microfinance products Developing strong industry partnerships and knowledge sharing Effectively leveraging Credit Suisse s skills, expertise, financial and social capital Continuous measurement and optimization of impact Our Programs Finance Innovation Women s Empowerment Education Agriculture Venture Lab, early-stage start-ups in financial services innovation Center for Financial Inclusion: Founding partner of the CFI, a unique solutions lab for the industry, including the leading industry initiative on consumer protection Leadership and Diversity for Innovation Program Equipping 120 leaders of 60 microfinance institutions, during 3 years, with the training and tools to better serve the women s market Empowering Generational Change through Education Finance Strengthening and expansion of education finance through school improvement and school fee loan products in Africa, Latin America and South East Asia Microleasing expansion and replication from Africa to Latin America Sustainable Agriculture Finance Initiative Our Partners

What is microleasing Video

Lessons from Microleasing Ariane Appel, Client & Partner Relationships, Swisscontact Luxembourg, 1 st December 2017

Why & how Role of Swisscontact o Support local actors to develop new products and services to achieve broad economic development on an independent basis. Pilot & proof business case to ensure buy-in of local actors and crowding-in at a later stage Knowledge transfer

Why & how Point of departure o Lack of tailor made financial products in line with cash flow of smallholder farmers and micro entrepreneurs o Inadequate offer for asset finance products for smallholder farmers and micro entrepreneurs o Lack of collateral to acquire credit o Lack of credit history

Why & how Features of Microleasing to address these issues o Lease to finance the purchase of a productive asset (e.g. livestock, basic agricultural tools) o Insurance for lessee and asset (mitigate risk for the financing institution & lessee) o Training for lessee in use and maintenance of the asset (achieve optimal results and increased production) o Leases are based on cash flow o Transfer of ownership at the end of the transaction period

Why & how Microleasing in East Africa o 2005: K-rep Development Agency approached Swisscontact o 2006: Microleasing concept was developed with K-Rep and Credit Suisse o 2006-2008: Piloting in Kenya (Dairy, Poultry, Irrigation, Beekeeping) o 2009-2017: Rollout to other parts of the country (Kenya) o 2009: Creation of a full fledge leasing organization (Juhudi Kilimo Limited) o 2011-2017: Expanding microleasing project into to Uganda (2012), Tanzania (2014), El Salvador (2014, SCBF), Nicaragua (2014, SCBF), Peru (2014, SCBF) and Rwanda (2015)

Challenges o Limited capital for pre-financing of assets o Lack of quality asset suppliers o Specific sector challenges & related risks o Regulatory challenges o Limited funds for additional technical assistance to train farmers and support partners

Successes o Juhudi Kilimo (spin-off and debt/equity investments) o Expansion in Kenya and transfer to Tanzania, Rwanda, Uganda o Pilot in Latin America with Swiss Capacity Building Facility (SCBF) Peru Cabanillas Mañazo Nicaragua FFDL (Lafise & Fundeser) El Salvador Credicampo

Successes East Africa 2017 Countries Kenya (2006) Rwanda (2015) Tanzania (2014) Uganda (2012) Asset types Dairy, Poultry, Bee Keeping, Irrigation, Transport and other Assets for Agriculture Dairy, Irrigation, Transport and other Assets for Agriculture Dairy, Irrigation, sewing machines, Transport and other Assets for Agriculture Dairy, Irrigation, bee keeping, Transport and other Assets for Agriculture Financial partners 4 3 4 13 Number of microleasing Volume of microleasing (USD) 46,793 191 1,913 2,210 29,030,470 384,927 1,840,420 1,973,274

Microleasing quo vadis? o Integration into skills development and SME projects o Share learnings

Microleasing how does it work? Financial Service Provider Training banks on features of agricultural sector / microleasing Training provider Payment of asset Training farmers in management of asset / microleasing Lessee group Lessee Insurance for lessee & asset Insurance company Supply of asset to farmer Technical assistance Coordination of processes & activities between stakeholders Asset Supplier Service Financial flow Provision of goods

THE CASE FOR MICRO- LEASING SELFINA - TANZANIA December 1, 2017 Dr. Victoria Kisyombe, Founder and Managing Director SELFINA

SELFINA: OUR COMPETITIVE EDGE SELFINA provides exclusively microleasing to women SELFINA reaches into the untapped, large rural area while most banks and MFIs in Tanzania remain rooted in urban areas SELFINA FINANCES WOMEN UNTAPPED MARKET SELFINA s micro-leasing product is a distinct financial product, compared to standard micro-loans offered by other organizations WE GO TO THE RURAL AREAS DISTINCT PRODUCT

SELFINA: PRODUCTS AND SERVICES LEASING OF ASSETS SALE AND LEASEBACK WOMEN EMPOWERMENT Small tractors Corn milling machines Rice milling machines Irrigation equipment Water pumps Sunflower pressing machines Freezers Refrigerators Greenhouses Facility for working capital loans We buy the asset from the woman, giving her cash, and lease it back to her. Knowledge sharing Training in business management Entrepreneurship skills Paralegal skills Counseling on HIV, AIDS, and gender issues At the end of the lease term, we pass on the ownership to the women. The cash-flow created allows the business to continue Helping to build a balanced human capital

1. Financial leasing of tractors, sunflower pressing machines, corn mills, irrigation equipment, solar 2. Sale and Leaseback facility for working capital loans

REHEMA MWAKA WITH HER LEASED INCUBATOR /HATCHING MACHINE

REHEMA MWAKA WITH HER NEW INCUBATOR AT WORK

NEEMA, FROM A SMALL NURSERY SCHOOL TO A BIG PRIMARY SCHOOL

DAGE, A PROUD OWNER OF A BEAUTY SCHOOL AND CAR HIRE COMPANY

HOW ARE PROFITS USED?

EMPOWERING SELF AND SOCIETY A vast majority of women are now able to employ themselves and some even create jobs for others. 3 to 6 Employee, 5% Self Employment 40% 1 to 3 Employee, 55%

Demand for our product far exceeds the supply CHALLENGES OF MICRO-LEASING We need funds to pre-finance the assets that we lease Protection of the funds (solution: insurance) To find the right partner to work with

Since 2002 SELFINA has had strong presence in 5 regions (12 districts) in Tanzania & its impact is summarized below: SUCCESSES OF MICRO-LEASING TRACTION TO DATE

Swisscontact Capacity building Bumaco Insurance SUCCESSFUL PARTNERSHIPS Advanced Technologies Austria (ATA) ATA will procure for SELFINA high quality agricultural machines for potatoes, onions and cassava ATA will also finance a cassava factory in Tanzania

TRACTORS LOADWAGONS TRAILERS Agriculture machines from ATA for Leasing To be defined: N of cylinders Power Type of transmission To be defined: Weight Loading volume To be defined: Capacity of the trailer N of axes Type

AWARDS World Economic Forum Vital Voices whose Founder is Hon. Hillary Clinton The International Women s Alliance (Canada) Women of courage Tanzania s 50 years of independence Profiled by the World Bank, CNN, Deutsche Welle, Lionesses of Africa Profiled by Fetzer Institute, Michigan TEDxBerkeley (2015)

Founder of Vital Voices, Hon. Hillary Clinton Honoring Victoria with Economic Empowerment Award

CORPORATE BACKGROUND IN 1980 BUMACO INSURANCE WAS INCORPORATED AS INSURANCE AGENCY IN 1999 THE AGENCY WAS TRANSFORMED TO BECOME INSURANCE BROKER IN 2008 WE BECAME A FULLY-FLEDGED INSURANCE COMPANY

EQUITY With over 30 years experience in Insurance, Bumaco Insurance Company Ltd is duly registered, with 100% of its equity in Tanzania. Our Vision Insurance Services with Certainity Our Mission To provide quality insurance information and insurance product choices with certainty to Tanzania Community

OUR BUSINESS MODEL WE ARE LICENSED FOR PROVISION OF NON-LIFE INSURANCE CLASS. OUR PRODUCTS CATERS FOR GENERAL INSURANCE COVERS i.e Auto, Fire, Buglary,Machines & Engineering, Marine, Aviation Personal Accident etc MICRO-INSURANCE COVERS. i.e Credit Life, Credit Insurance Property, Personal Accident, Funeral last expense etc.

OUR BRANCH NETWORK. 12 BRANCHES WITH OVER 400 INTEMEDIRIES ACROSS THE COUNTRY

OUR INSURANCE PRODUCTS WITH MICRO-LEASING. - Credit Insurance cover. - Leased Property Insurance Cover. - Personal Accident. - Workmen Compensation Cover. - Fire & Theft Cover.

VALUE ADDED SERVICES PREMIUM FINANCING PREMIUM INSTALLMENTS PREMIUM COMMISSION EXCLUSIVE PROTECTION OF A LESSEE RIGHTS UPON A CLAIM

ROLE OF INSURANCE IN MICRO-LEASING RISK MITIGATION ECONOMY GROWTH CLIENT VALUE FINANCIAL PROTECTION AND SECURITY GEOGRAPHICAL SPREAD DISTRIBUTION

EXPERIENCE WITH MICRO-LEASING. OUR CLIENTS DATABASE STANDS AT 1 360 INSUREDS SUM INSURED OF LEASED PROPERTIES IS 197,850,000 CLAIMS INTIMATED FOR THE PERIOD ENDED 30 TH JUNE 2017 WAS 845,000

CHALLENGES LACK OF AWARENESS LOW LEVEL OF INSURANCE PENETRATION REGULATORY ISSUES MIGRATORY NATURE OF THE CLIENTS PREMIUM REMMITANCE

FUTURE PROSPERITY MORE PRODUCTS DESIGN FOR MICRO- FINANCES/MICRO-LEASING. IMPROVEMENT OF VALUE ADDED SERVICES. RAISING PUBLIC AWARENESS ON INSURANCE. INCEASE PARTNERSHIPS WITH VARIOUS MICRO INSTITUIONS FOR PRODUCTS FORMATION AND ISSUANCE.

THANK YOU