Défis financiers des agro-entreprises en Afrique de l'Ouest A2F Forum Burkina March 2018 Défis financiers des agro-entreprises en Afrique de l'Ouest Finance challenges facing agri-businesses in West Africa Judson B. Welsh Independent Consultant

Access to Finance for Agro-enterprises in West Africa Acces Financier pour les Agro-entreprises en Afrique de l’Ouest This Presentation Focuses on Agro-processing firms that: Add Value to products and either Export to Generate Foreign Exchange and/or Provide Needed Import Substitutes. Reference throughout this presentation will be to 4 projects in process in West Africa: Shea ($800,000), Coffee ($1,500,000), Cashew ($5,600,000), and Catfish ($2,000,000) French Translation Judson B. Welsh Independent Consultant

Access to Finance for Agro-enterprises in West Africa Acces Financier pour les Agro-entreprises en Afrique de l’Ouest Finance is the engine to Development – Financing Agro-business is like rigging; It must constantly be adjusted to the winds in order to keep moving forward French Translation

Appropriate Funding and Timely Implementation Access to Finance for Agro-enterprises in West Africa Acces Financier pour les Agro-entreprises en Afrique de l’Ouest Finance Tools – Knowledge of Products, Binding Contracts, Leverage, Blending, Appropriate Funding and Timely Implementation French Translation

The value chain – a gentle reminder Access to Finance for Agro-enterprises in West Africa Acces Financier pour les Agro-entreprises en Afrique de l’Ouest The value chain – a gentle reminder Sorting to Grade Quality Controls Production Yields and Quality of Produce Harvest –Post Harvest Handling Minimize Losses up to 30% Proper Drying/Storage Value of Good Stock Controls Transport to Processing Plant. Minimize Damage Processing with Trained Labor Increase Efficiency Compliant Packaging & Labelling Attractive, informative, Accurate Shipping & Compliance Packing Containers Grading and Humidity Controls Control Processing at Outset Compliance with Customs Regulations Incentives Government Foreign Government Invoicing and Payment Timing to Service Debt Agricultural Processing Tools: Knowledge 0f Seasonality, Yields & Cost of Raw Materials, Raw Material Procurement Arrangements, Processing Cycles, Markets, Marketing, Factory Capacity, Constraints and Government Programs French Translation

Challenges Created by Financiers’ Policies Access to Finance for Agro-enterprises in West Africa Acces Financier pour les Agro-entreprises en Afrique de l’Ouest Challenges Created by Financiers’ Policies Untimely Disbursements focused on Financiers’ Credit Administration without regard to seasonality: - results in white elephants because no raw materials for processing plants; French Translation Under Capitalized Businesses sponsors with visions get diluted out of control by investors: - need for mezzanine products to protect their interests and retain their motivation; French Translation Greenfield Projects not considered regardless of Management Experience, Knowledge and Capacity: – results in lost good opportunities; French Translation

Challenges Created by Funds' Policies Access to Finance for Agro-enterprises in West Africa Acces Financier pour les Agro-entreprises en Afrique de l’Ouest Challenges Created by Funds' Policies Current Assets should be used as collateral not fixed assets: – inventory, work in process. finished goods, receivables. They are easier to liquidate; French Translation Over-control by investors weakens business must be curbed with management contract: -Strengthens management to minimize micro-management; French Translation Exit Strategies contingent only on success should include assist business to attain OTC: - strengthens business may increase return. French Translation

Challenges Created by Funds' Policies Access to Finance for Agro-enterprises in West Africa Acces Financier pour les Agro-entreprises en Afrique de l’Ouest Challenges Created by Funds' Policies Funding out of context of environmental requirements. GMO impact is uncertain and the food security is fragile: Best to go into improvements of traditional seed production with no risk of corrupting of local seeds. French Translation Cooperative financing (Blending) – requires a leadership as in syndications: No good leadership will result in failure. Roles and responsibilities must be well defined. French Translation

Use Equity to finance Permanent Working Capital requirements: Access to Finance for Agro-enterprises in West Africa Acces Financier pour les Agro-entreprises en Afrique de l’Ouest A NOTE on Structure in Developing Countries with expensive commercial bank debt French Translation Use Equity to finance Permanent Working Capital requirements: If company is efficient it grows with profits, working capital assured for next season raw materials French Translation Use debt to finance Plant and Equipment - If Plant and Equipment are tied together with amortization/depreciation reflects value of the company French Translation

THANK YOU Judson B. Welsh Financial Consultant Accra, Ghana Access to Finance for Agro-enterprises in West Africa Acces Financier pour les Agro-entreprises en Afrique de l’Ouest THANK YOU Judson B. Welsh Financial Consultant Accra, Ghana aimsrw@yahoo.com +223 24 476 7063