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Presented by:Presented by:Ms Marie Pascaline DIASSO

Operations director

THE EXPERIENCE OF RCPB IN RISKS MANAGEMENT

April 2009

RESEAU DES CAISSES POPULAIRES DU RESEAU DES CAISSES POPULAIRES DU BURKINABURKINA

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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

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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

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PRESENTATION OF RCPB

THE RCPB’s main statistics THE RCPB’s main statistics

555 000 members owners among whom 30 555 000 members owners among whom 30 % of women % of women

1 000 000 clients1 000 000 clients

87 million US dollars of local deposits87 million US dollars of local deposits

79,5 million US dollars of outstanding loan 79,5 million US dollars of outstanding loan among which 40 % in agriculture among which 40 % in agriculture

Permanent staff: 827 with 70 % of women Permanent staff: 827 with 70 % of women

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RCPB IN AGRICULTURE FINANCING

1.1. THE COVERED SECTORSTHE COVERED SECTORS

Cereal : storage, securing, pre-payment Cereal : storage, securing, pre-payment

Fruits and vegetables : truck farming, Fruits and vegetables : truck farming, transformationtransformation

Cattle : aviculture, geting fat, oxCattle : aviculture, geting fat, ox

Rice : production, sellingRice : production, selling

Cotton: production Cotton: production

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RCPB IN AGRICULTURE FINANCING

2.2. PRODUCTS AND AGRICULTURAL SERVICES PRODUCTS AND AGRICULTURAL SERVICES

LOANS PRODUCTS 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

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RCPB IN AGRICULTURE FINANCING

2.2. PRODUCTS AND AGRICULTURAL PRODUCTS AND AGRICULTURAL SERVICES (cont’d) SERVICES (cont’d)

SAVINGS PRODUCTS

Sight deposit

Term deposit

Savings with objective

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LE RCPB DANS LE FINANCEMENT DE L’AGRICULTURE

2.2. PRODUCTS AND AGRICULTURAL SERVICES PRODUCTS AND AGRICULTURAL SERVICES (cont’d) (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

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;  

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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;

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RCPB IN RISKS MANAGEMENT

Map of the agricultural risks

• Credit risks;

• Liquidity risks ;

• External risks

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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)

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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);

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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.

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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;

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RCPB IN RISKS MANAGEMENT

- CREDIT RISK MITIGATION (cont’d) (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.

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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;

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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 The research for markets for the drainage of certain farm produces.certain farm produces.

• The increasing of the producers capacities The increasing of the producers capacities building (agricultural training, equipment in building (agricultural training, equipment in advantageous payment terms , control of the advantageous payment terms , control of the water, the organization of the agricultural water, the organization of the agricultural sectors);sectors);

• Implementation of a fund of smoothing for Implementation of a fund of smoothing for landing in the decline of the costs of purchase landing in the decline of the costs of purchase of the cotton to the producers of the cotton to the producers

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PERSPECTIVES

Improve the access of the agricultural rural Improve the access of the agricultural rural populations to financial services in spite of populations to financial services in spite of the risks connected to the sector the risks connected to the sector

Contribute to the organization and to the Contribute to the organization and to the professionalization of the farmers of the professionalization of the farmers of the various sectors in their activities various sectors in their activities managementmanagement

Create a partnership with the non financial Create a partnership with the non financial service providers to support the farmers;service providers to support the farmers;

Create and agriculture financial center in Create and agriculture financial center in order to manage better the risks connectedorder to manage better the risks connected

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CONCLUSION

Microfinance: tool of financing of the Microfinance: tool of financing of the

farming sector In spite of the risks farming sector In spite of the risks

(operational, financial and climatic) (operational, financial and climatic)

better structured and organized Farming better structured and organized Farming

sector = condition of success of the sector = condition of success of the

financing financing

tripartite Partnership: Farmers - non tripartite Partnership: Farmers - non

financial Service providers – microfinance financial Service providers – microfinance

Institutions = Win-win solution Institutions = Win-win solution

Professionalization of the actors = security Professionalization of the actors = security

for the sector and for risks decreasefor the sector and for risks decrease

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