1. 1 Presented by: Ms Marie Pascaline DIASSO Operations director THE EXPERIENCE OF RCPB IN RISKS MANAGEMENT April 2009 RESEAU DES CAISSES POPULAIRES DU BURKINA *********************************

2. 2 PLAN I.Presentation of RCPB II.RCPB in agriculture financing III.RCPB in risk management 1. The identification and the evaluation of risks 2. The main agriculture risks 3. Risks mitigation IV. Perspectives V. Conclusion

3. 3 PRESENTATION OF RCPB WHAT IS THE RCPB?  Mutualist movement governed by the law 59 ADP of 15/12/94;  The 1st branch created in 1972  Its structured at 3 levels: - branch= place of services (saving and credit ) - regional Union = center of services for affiliated branches (follow-up, training, management of liquidity, support advice ) - Federation = orientations, development coordination, financial survey, representation, etc.  Setting-up in 42/45 provinces of Burkina Faso;  160 places of services delivery among which 2/3 in rural areas

4. 4 PRESENTATION OF RCPB THE RCPB’s main statistics  555 000 members owners among whom 30 % of women  1 000 000 clients  87 million US dollars of local deposits  79,5 million US dollars of outstanding loan among which 40 % in agriculture  Permanent staff: 827 with 70 % of women

5. 5 RCPB IN AGRICULTURE FINANCING 1.THE COVERED SECTORS  Cereal : storage, securing, pre-payment  Fruits and vegetables : truck farming, transformation  Cattle : aviculture, geting fat, ox  Rice : production, selling  Cotton: production

6. 6 RCPB IN AGRICULTURE FINANCING 2.PRODUCTS AND AGRICULTURAL SERVICES  LOANS PRODUCTS  Truck farming: input and equipment  Getting fat : trading, equipment  food production : input and equipment  Transformation of farm produces: Working capital, equipment  Pre-payment of cereal: Working capital, input, equipment  Cotton: equipment and input  Storage: trading  Securing: pledging cereal’s attics

7. 7 RCPB IN AGRICULTURE FINANCING 2. PRODUCTS AND AGRICULTURAL SERVICES (cont’d)  SAVINGS PRODUCTS  Sight deposit  Term deposit  Savings with objective

8. 8 LE RCPB DANS LE FINANCEMENT DE L’AGRICULTURE 2.PRODUCTS AND AGRICULTURAL SERVICES (cont’d)  THE NON FINANCIAL SERVICES  Support advice: organizing producers associations in partnership with the suppliers of the non financial services  Increasing producers awareness on the services offered by the branches  Training: with the contribution of technical partners  Lead up producers to open accounts

9. RCPB IN RISKS MANAGEMENT The used method is: -Risks identification and evaluation; -The implementation of a mechanism to manage and to mitigate the risks; - The evaluation of the efficiency of the set up device; 9

10. RCPB IN RISKS MANAGEMENT 1. THE IDENTIFICATION AND THE ESTIMATE OF THE RISKS - The identification of the risks is made through the analysis of the external and internal environment by taking into account forecasts of medium and long-term transformation. - The evaluation to measure the importance of the risks following the frequency, the impact, the efficiency of the procedures and the existing control. - The major risks are in the strategic planning; 10

11. RCPB IN RISKS MANAGEMENT  Map of the agricultural risks Credit risks; Liquidity risks ; External risks 11

12. RCPB IN RISKS MANAGEMENT CREDIT RISK Risk of Arrears payments which can recover from the diversion of the purpose of the credit, the over evaluation of the quantities of input wich are necessary, etc. Risk of concentration (8,5 billion financing of cotton input is 27,6 % of the total of the outstanding loan in 2005) 12

13. RCPB IN RISKS MANAGEMENT LIQUIDITY RISKS Difficulty of matching of the terms of applications and resources; Inadequacy between the volume of Loan disbursement and the volume of raised savings with the producers ( very tiny savings); 13

14. RCPB IN RISKS MANAGEMENT EXTERNAL RISKS Climatic chances (uncertainty of rains); Risks of instability of the world courses; Lack of outlets at the level of most of the agricultural sectors; Risk of dysfunction of the Producers organizations; Quality of inputs. 14

15. RCPB IN RISKS MANAGEMENT CREDIT RISK MITIGATION -Creation of a fund to ease the cotton sector’s risk, wich represent 20 % of the interest income from the financing of the cotton sector; - Participation in the process of identification and validation of the needs of the producers; 15

16. RCPB IN RISKS MANAGEMENT (cont’d) -CREDIT RISK MITIGATION (cont’d) -To ease concentration risk : Cofinancing with a bank to mutualize the risks; reduction of the amount of financing of the cotton inputs credits; implementation of a strategy of diversification of the credit portfolio in particular on the other agricultural sectors. 16

17. RCPB IN RISKS MANAGEMENT -LIQUIDITY RISK MITIGATION The increasing of the producers awareness to the culture of savings; The promotion of the savings middle term and capitalization; 17

18. RCPB IN RISKS MANAGEMENT To encourage the financing of the agriculture to the national level, Burkina state proceeded in: The research for markets for the drainage of certain farm produces.The research for markets for the drainage of certain farm produces. The increasing of the producers capacities building (agricultural training, equipment in advantageous payment terms, control of the water, the organization of the agricultural sectors); The increasing of the producers capacities building (agricultural training, equipment in advantageous payment terms, control of the water, the organization of the agricultural sectors); Implementation of a fund of smoothing for landing in the decline of the costs of purchase of the cotton to the producersImplementation of a fund of smoothing for landing in the decline of the costs of purchase of the cotton to the producers 18

19. 19 PERSPECTIVES  Improve the access of the agricultural rural populations to financial services in spite of the risks connected to the sector  Contribute to the organization and to the professionalization of the farmers of the various sectors in their activities management  Create a partnership with the non financial service providers to support the farmers;  Create and agriculture financial center in order to manage better the risks connected

20. 20 CONCLUSION  Microfinance: tool of financing of the farming sector In spite of the risks (operational, financial and climatic)  better structured and organized Farming sector = condition of success of the financing  tripartite Partnership: Farmers - non financial Service providers – microfinance Institutions = Win-win solution  Professionalization of the actors = security for the sector and for risks decrease

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