1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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