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Financial service for sesame value chain

SBN Support Programme organised a one day workshop on ‘financial service for sesame value chain’ for SBN stakeholders’ and partner projects in October 28, 2015 at Gondar. The objectives of the workshop were to: update information on the current situation regarding financing the sesame sector and value chains; introduce Rabobank International Advisory Services (RIAS) and ICCO Terrafina Microfinance (TMF) and their experiences; create common ground among sesame sector stakeholders to address the key challenges related to financial services for sesame value chains; and prioritisation and planning of practical actions.

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Partial view of the workshop

Participants were drawn from farmers’ primary cooperatives, unions, microfinance organisations, public and private banks, government organisations, Agricultural Transformation Agency (ATA) SNV and SBN Support Programme and the Netherlands Embassy in Addis Ababa.

The workshop was opened by Mr. Birhane Kidane, Senior Project Officer from Agricultural Transformation Agency (ATA). In his opening speech, Mr. Birhane emphasised on the need for high level of integration and coordination among the sesame value chain actors. To be successful in the value chain, he said, the various actors in the sesame sector need to have a clear role and commitment. He also mentioned about the importance of having a clear policy and strategy to tackle the challenges concerning ruler finance.

Mr. Ted Schrader, coordinator of SBN Support Programme, set the background for the workshop by giving presentation on general overview of the sesame sector in northwest Ethiopia and its potential for improvement; the SBN and its Support Programme; key challenge related to finance as identified by the SBN and its Support Programme; and he also highlighted the results of the production and credit cost study that the SBN Support Programme conducted.

Next Mr. Birhane gave a brief presentation on rural financial services (RFS). He mentioned that strategy was developed to address critical shortfall in financial services in Ethiopia’s rural sector.The strategy addresses current challenges with five “Service adoption solutions” and two “Structural solutions”. The five solutions are: access to rural adapted credit; mobilise rural savings; develop risk mitigation tools; improve delivery of services and increase financial literacy. The two structural solutions are: building strong rural financial institutions and ensuring liquidity in rural sector.

Mr. Kassew Keleb, from Commercial Bank of Ethiopia, presented interesting results of the study on the challenges of sesame`s production and marketing in North Gondar, Amhara region. The study identified the level of challenges of investor farmers on production inputs, finance, labour, agricultural practices, pests and diseases, storage, markets and marketing and infrastructure.

Mr. Pierre Schonenberg from Rabobank presented a historical account of the bank, the service provisions models and focus of agribusiness advisories, context of Rabobank development activities with practical examples of value chain models, warehouse financing etc.

Mariel Mensink presented about Terrafina Microfinance and how it works. In her presentation, she highlighted the strong focus that Terrafina has on agri-finance and value chain finance, She also shared Terrafina’s experience of value chain financing in Ethiopia and other countries.

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Participants discussing in groups

In the afternoon participants of the workshop sit in three different groups representing clients of the financial institutions; banks and financial institutions and government organisations and thoroughly discussed on practical issues of finance in the sesame sector. After the discussions, representatives presented discussion results. Among the points presented are demands for finance on the side of clients of financial organisations. The needs of both small and large scale farmers and their organisations such as input finance- (for fertiliser, weeding and harvesting) for machineries and advanced technologies, working capitals; agri- finance etc were presented. The other important point was about what financial service providers can do better or differently. Regarding this providing pre and after consultation with clients, awareness creation, effective service delivery, adapting timing of loan, arranging flexible interest rates according to seasons and risks, capacity building, arranging long term and short term financing at affordable interest rates, division of service between microfinance institutions and Banks were raised. Regarding enablers, providing loan guarantee scheme until the cooperatives get stronger, capacity building, working for enabling policy environment, improving infrastructure, arranging platforms are among the points discussed in the workshop.

Finally, Dr. Worku Tessema, senior policy officer, food security and sustainable development, from the Netherlands Embassy made a closing remark. In his remark, Dr. Worku remained participants the major points raised during the one day workshop. He appreciated the participants for brining important issues that can be used by Rabobank, Terrafina Microfinance and others.  He then mentioned the three pillars of the food security portfolio of the Netherlands Embassy: increasing production and productivity, creating access to market and agribusiness development and reducing vulnerability of food insecure households. He added that SBN Support Programme has been doing a lot in improving production and productivity of sesame and other crops. He expects the Support Programme and other projects to do more on finance, which is identified as a major challenge in the sesame sector. “To improve value chain development and promote quality export of sesame; bringing expertise of Rabobank and Teraffina on financial inclusion will add a lot for the sector.” He added “as we move from aid to trade, we motivate the involvement of the private sector to work in partnership with government and other stakeholders to bring change in the sesame sector. Dr. Worku finally appreciated all the participating bodies and remained all to think about the way forward.

 

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By Sesame Business Network, Gondar-Ethiopia