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Financing Options for Smallholder Producers/Entrepreneurs in T he Gambia

Financing Options for Smallholder Producers/Entrepreneurs in T he Gambia. Presented by Reliance Financial Services AFRACA Workshop Ghana, August 2010. Country Background. The Gambia is located in the West Coast of Africa (Neighbours: Senegal) Size: approx 11,300 miles square (very small)

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Financing Options for Smallholder Producers/Entrepreneurs in T he Gambia

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  1. Financing Options for Smallholder Producers/Entrepreneurs in The Gambia Presented by Reliance Financial Services AFRACA Workshop Ghana, August 2010

  2. Country Background • The Gambia is located in the West Coast of Africa (Neighbours: Senegal) • Size: approx 11,300 miles square (very small) • The Gambia, a smallholder nation • Population 1.7 million • Economic status – poor & developing country (ranks 155 out of 177 in the UN HDI & 81 out of 95 developing countries)

  3. Country Background • Real sector employment • Agriculture (Largest employer 75%) • Commerce (Largest urban employer 19%) • Service sector (Largely underdeveloped 6%) • Average # employees per business is 2.6

  4. Context • Agriculture is the mainstay of the economy • Status of smallholder producers/entrepreneur • Government development programs • Donor agencies • The financial services sector

  5. Financing Options • Financing options like most financial services are similar all over the world. The differences lie in the opportunities to access the various options by individuals and economic units. • In the Gambia, access is largely determined by geographic location and economic situation…. • 56 out of 65 bank branches are located in the urban areas • 3 out of 14 banks account for 49% of the industry’s total assets • 77% of businesses are located in the city and municipalities • 80% of the bankable population is unbanked

  6. Financing Options Classified into two: • Traditional Options • Market Based Options

  7. Financing Options Traditional smallholder financing options were mainly provided by the Government and civil society. • Specialised state financial institutions • Credit unions and cooperatives • Marketing agents • Informal credit and savings schemes

  8. Financing Options Market based options are a recent phenomenon following the discovery of gold at the bottom of the economic pyramid. “After all, financing the poor is now seen as a manageable business risk and a very lucrative business” • Traditional commercial bank finance • Available only to corporate entities and HNIs • Services offered are not geared towards the smallholder producer (there are no agricultural financing option) • The only services on offer are usually risk free, such as remittances • They are beginning to participate in the smallholder sector through linkage banking by making wholesale funds available to MFIs

  9. Financing Options • Microfinance • Traditionally provided by NGO’s with a view to lift smallholders out of poverty and graduate them to the formal financial system • Smallholder ventures are now regarded as commercially viable, they are being mainstreamed in the formal financial system • Traditional providers were very limited in outreach and product suites • New GoTG policy is attracting formal and professional practitioners to serve the smallholder producer/entrepreneur

  10. The RELIANCE Story

  11. The RELIANCE Story • 1 0f 4 NBFIs founded less than 4 years ago • Mission: Financial inclusion • Democratise financial services by lowering the access barriers • Take services to the doorstep of the poor (largest network of outlets) • Range of financial services products (new agricultural finance product)

  12. The future of smallholder finance • Continued Government & Regulator support • Availability of a wider host of products and services (e.g. Micro insurance, micro leasing and micro housing) • More private sector participation through Linkage Banking

  13. Conclusion “The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector…Together, we can and must build inclusive financial sectors that help people improve their lives.” UN Secretary-General Kofi Annan, 29 December 2003, following adoption of 2005 as the International Year of Microcredit

  14. Conclusion “ As the boundaries between business and the non-profit sector erode, adversarial relationships will become cooperative. A consensus will emerge that we are all responsible for our world and must work together to make it better – and we will all wonder how we could ever have thought otherwise” Harvard Business Review Article “Leadership in the age of transparency”, April 2010. By : Christopher Meyer and Julia Kirby.

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