Rural Credit Gurantee Schemes Workshop, Budapest 12-13 January 2006

SWISS COLLATERAL FACILITY PROGRAMME

Rural Credit Gurantee Schemes Workshop, Budapest 12-13 January 2006

1999

SWITZERLAND HAS CONSTITUTED OF A REVOLVING FUND

PROVIDING COLLATERAL WARRANTIES FOR INVESTMENTS CREDITS

• FOR MICRO AND SMALL ENTERPRISES IN RURAL AREAS• FOR FARMERS SHIFTING TO ORGANIC AGRICULTURE

Available CHF 1’500’000 ( about EUR 1’000’000 )

Rural Credit Gurantee Schemes Workshop, Budapest 12-13 January 2006

PURPOSE OF SWITZERLAND COLLATERAL FACILITY

Switzerland Collateral has the purpose of facilitating the access to credit of “marginally bank-able” rural MSEs and Organic Farmers, by making them eligible for bank loans, and thus enabling them to become sustainable and competitive enterprises.

Rural Credit Gurantee Schemes Workshop, Budapest 12-13 January 2006

UNDERLYING STRATEGY

To privilege MSEs credits, which are conducive to employment creation in rural areas

To identify and encourage farmers to move from “traditional” to “organic” production methods

To familiarise Banks’ credit staff with micro and small credits

To increase the skill of BDS providers in supporting the credit formulation

Rural Credit Gurantee Schemes Workshop, Budapest 12-13 January 2006

Beneficiaries:=micro and small enteprises in rural area=farmers involved in organic farming

Partners:

= 3 Banks (ProCredit bank Plc., Hebros Bank Plc.,UBB Plc.)

= BDS providers

Rural Credit Gurantee Schemes Workshop, Budapest 12-13 January 2006

THE ROLE OF THE BANKS

=to analyse the applications according to the procdures agreed with SDC

=to manage the credits and monitor the repayment of the loans and the realisation of the investment projects in co-operation with the service providers.

Rural Credit Gurantee Schemes Workshop, Budapest 12-13 January 2006

THE ROLE OF THE BDS PROVIDERS

=They support the Applicants in formulating their applications (business plans , cash flows)

=The BDS Providers submit the MSE’s or Farmers’ credit applications, fully documented according to standardised format :- to the banks and the Co-operation office- with a written recommendation formulated on a standardised format

=They are entrusted with the monitoring of their respective borrowers

Rural Credit Gurantee Schemes Workshop, Budapest 12-13 January 2006

THE ROLE OF SDC CO-OPERATION OFFICE

= It approves the applications for collateral of eligible credits

= It organises training to Credit of Bank Officers

= It organises training to BDS Providers

= It promotes the interaction between BDS Providers and Banks

Rural Credit Gurantee Schemes Workshop, Budapest 12-13 January 2006

Results achieved so far:

= The programme has reached a larger segment of eligible borrowers;

= More than EUR 2’500’000 have been provided as loans;

= Till today 3 guarantees were mobilised

= The awareness of the selected banks has increased;

= The role of the BDS providers has improved;

Rural Credit Gurantee Schemes Workshop, Budapest 12-13 January 2006

Challenges:

= The full potential of the SCF has not been mobilized yet

= There is still lack of financing for start ups and farmers

= In view of Bulgaria’s EU accession by 2007 SDC is looking for handing over the avaialble funds