ZHC CREDIT SCHEME WORKSHOP

 

Building upon the successful consultancy to ZHC by PROINVEST, where a detailed analysis of both the apiculture sector and the role that ZHC can play in helping develop this industry was undertaken. One of the key constraints identified was the lack of accessible finance to different business entities identified along the value chain. So as to avoid bottlenecks in the supply of honey to the consumer it was felt that by following and supporting all players along the value chain, this will be a successful strategy. This type of support is already being effectively implemented by other associations such as ZNFU and the Cotton Association of Zambia. It is from this position that ZHC has taken up the initiative to source funding support to introduce credit management assistance  along the value chain to its members with the ultimate objective of improving access to finance by ZHC members.
The workshop targeted honey processors and traders as a sample group with representation from the honey producing districts.

The workshop is part of the planned support to ZHC members in improving services to members. This particular need “Lack of Adequate Access to Finance” by members was identified in a previous study undertaken by ZHC in the first quarter of 2011. ZHC will charge a small fee to members for facilitating financial linkages which are to help towards increasing the council’s sustainability.
The main workshop output was to help with improved access to finance for players supporting the value chain and in particular producers and processors. From previous studies one of the major constraints identified was poor access to finance by producers and processors thus limiting their capacities to grow their businesses.

The methodology used was in a consultative process where a short summary concerning the industry status was presented highlighting:

• Key aspects

• Value chain categories

• Needs of the value chain players

• Producer business constraints

• Processor business constraints

• Business characteristics of the different value chain categories

• Who needs to access loans in the value chain

• What do Banks look for when lending money?

• Good small scale producer borrowing characteristics

• Good processor borrowing characteristics

The training materials and models will be deigned using information from previous studies, interviews with both potential borrowers and suppliers of finance while being in compliance with the regulatory laws as guided by the Bank of Zambia.
Specific financial related identified needs captured in the meeting were:

• Participants are looking for loan amounts of between K500,000 to K2 billion 

• Producers are looking for group structured loans

• Processors are more inclined to request individual loans of larger amounts

• Processors have secured successful supply contracts with the bigger supermarket chains but are still facing problems in sourcing adequate raw material supplies from producers

• Processors are looking for innovative business models with which to work with producers so as to be able to increase the supply of quality produce

• CETZAM does not have specific loan products for bee producers

• Some Mpongwe producers are failing to sell their produce due to poor quality (require equipment and capacity building)

  CETZAM’s Services

• Supplies agriculture loans to groups of small scale farmers without fixed asset security

• Supplies loans to Small to Medium Enterprises operating as companies from K50 million to K250 million from 4 to 24 months; normally some form of fixed asset security has to be prepared

• The processing fee is 3.8% for all loans

• Deposits of 10% to 20% of the loan amount have to be made to the Loan Security Fund

• Planning to reduce interest rates from 4% to 3% / month on loan amounts

• Key man insurance is taken out which is charged at 1.44% interest

• Prepared to act as a facilitator to help businesses access cheaper long term finance

• Proposed that information should be collected in a structured way from potential clients

• Has qualified credit officers in agriculture that are able to offer technical support to customers

• Willing to offer an Invoice Discounting service to ZHC members at a favourable rate

• Does not support start-up businesses; applicants must have some minimum business skills in the areas of activity

• Is now able to accept cheques from customers due to its new arrangement with Stanbic Bank

• Offers mortgages up to a period of 6 years

• Is working with Cell Pay in enhancing electronic payments but has no agreement with Airtel Money service.

  Recommendations / Way-forward

• ZHC to provide a loan request desk for members looking to access financial support for processors and for producers supplying these processors

• ZHC to help identify and screen suitable members to qualify for CETZAM loan support

• ZHC/CETZAM to develop a loan application template specific to the honey value chain for applicants

• Letters from ZHC lobbying government to help institutions (CETZAM) access development funds

• Sharing of information concerning ZHCs service of improved access to finance to the greater ZHC membership

• ZHC to negotiate with CETZAM on loan facilitation fees to help in enhancing ZHCs sustainability (part of the MOU)

• All applicants applying  for honey value chain financial support to CETZAM have to be paid –up members of ZHC

• ZHC/CETZAM to develop and sign an MOU listing the responsibilities and key characteristics of the relationship including the specific loan agreement template

• Negotiate invoice discounting package for members.

 

ZHC ENCOURAGING WOMEN .....

Interest in bee keeping for many woman has been influenced by what members of the communities in various districts have heard about what bee keeping can do in changing people's lives and how to sustain a living.... read more

Designed by simonect 2011