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− | {{SPIS Banner}}{{Back to Finance}} | + | {{Spis Invest}} |
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| + | | {{Back to SPIS Toolbox 2}} |
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| + | | {{Back to Finance}} |
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| + | | style="width: 150px; background-color: rgb(222, 226, 192);" | <span style="color:#000000;"><span style="font-size: 90%">'''[[SPIS_Toolbox_-_Loan_Assessment:_Determine_Financing_Volume_and_Profitability|►Go to the Next Chapter]]</span></span> |
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− | === '''<span style="color:#879637;">Credit Policy: Select/develop Suitable Financial Instruments</span>''' === | + | === '''<span style="color: rgb(135, 150, 55);">4. Credit Policy: Select/develop Suitable Financial Instruments</span>''' === |
− | [[File:Automated-irrigation-S.jpg|thumb|right|300px|Automated irrigation system in Morocco – largely subsidized by the state (Source: Lennart Woltering)]]
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− | When selecting or developing a loan product for SPIS it is important to ask the following questions:
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− | *'''who? '''Market oriented producers, no subsistence production, producer groups possible; | + | [[File:Automated-irrigation-S.jpg|thumb|right|300px|Automated irrigation system in Morocco – largely subsidized by the state (Source: Lennart Woltering)]] When selecting or developing a loan product for SPIS it is important to ask the following questions: |
− | *'''what? '''Finance for energy source and pumping system used for irrigation; energy and/or water saving technology; | + | |
− | *'''how much? '''Establish range of loan sum; % own-contribution of producer; % subsidy; | + | *'''Who? '''Market oriented producers, no subsistence production, producer groups possible; |
− | *'''when? '''Range of loan period (years); repayment frequency (months); disbursement in tranches; | + | *'''What? '''Finance for energy source and pumping system used for irrigation; energy and/or water saving technology; |
− | *'''interest rate? '''From..x..% p.a. to ..x..% p.a. (range); | + | *'''How much? '''Establish range of loan sum; % own-contribution of producer; % subsidy; |
− | *'''collateral? '''Equipment, mortgages, additional collateral (guarantee scheme), non-traditional collateral (future harvest, warehouse), leasing scheme with equipment providers. | + | *'''When? '''Range of loan period (years); repayment frequency (months); disbursement in tranches;<br/> |
| + | *'''Interest rate? '''From ..x..% p.a. to ..x..% p.a. (range); |
| + | *'''Collateral? '''Equipment (Solar Pumpset), mortgages, additional collateral (guarantee scheme), non-traditional collateral (future harvest, warehouse), leasing scheme with equipment providers. |
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| '''Loan products for financing SPIS usually:''' | | '''Loan products for financing SPIS usually:''' |
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| *have higher initial investment sums with consequently longer repayment periods and/or high installment rates; | | *have higher initial investment sums with consequently longer repayment periods and/or high installment rates; |
− | *need alternative guarantee schemes/ unconventional collateral; | + | *need alternative guarantee schemes / unconventional collateral; |
| *have higher interest rate payments due to higher credit risk and long investment period; | | *have higher interest rate payments due to higher credit risk and long investment period; |
− | *focus on innovative clients, usually investing in high(er) value crops; | + | *focus on innovative and progressive borrowers, investing in high(er) value crops; |
| *should be strictly oriented towards water capacity available and the farm’s specific requirements; | | *should be strictly oriented towards water capacity available and the farm’s specific requirements; |
− | *use no blueprint; every farm/enterprise is unique! | + | *use no blueprint; every farm / enterprise is unique! |
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| In order to '''prevent prohibitive loan transaction costs''', consider: | | In order to '''prevent prohibitive loan transaction costs''', consider: |
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| *group financing approaches for producer groups; | | *group financing approaches for producer groups; |
| *public subsidies and sponsoring; | | *public subsidies and sponsoring; |
− | *favorable refinancing options for the financial institution (e.g. subsidized interest rates offered by donors/public entities). | + | *favorable refinancing options for the financial institutions (e.g. subsidized interest rates offered by donors/public entities). |
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| In order to '''overcome the information gap '''in respect of the new technology, introduce additional activities such as: | | In order to '''overcome the information gap '''in respect of the new technology, introduce additional activities such as: |
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− | *encouraging (potential) clients to get informed and consult technical advice; | + | *Encouraging (potential) clients to get informed and consult technical advice through site visits and case studies of existing installations; |
− | *training and sensitization of loan staff on basics about the technology; | + | *Training and sensitization of loan staff on basics about the technology; |
− | *monitoring loan performance closely; | + | *Monitoring loan performance closely; |
− | *continuous dialogue with solar power sector. | + | *Continuous dialogue with solar pump suppliers. |
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| '''Note: '''SPIS clients could become future clients for other financial products (cross selling). | | '''Note: '''SPIS clients could become future clients for other financial products (cross selling). |
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| + | ===='''<span style="color: rgb(135, 150, 55);">Outcome/Product</span>''' ==== |
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− | === '''<span style="color:#879637;">Outcome/Product</span>''' ===
| + | *'''Guidelines and Procedures''' including assessment and decision guidelines, target key performance indicators (KPIs). |
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− | *'''Guidelines and Procedures''': including assessment and decision guidelines, target key performance indicators (KPIs).
| + | ==== '''<span style="color: rgb(135, 150, 55);">Data Requirements</span>''' ==== |
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− | === '''<span style="color:#879637;">Data Requirements</span>''' === | + | |
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| *Comparable clients liquidity pattern in current agricultural portfolio. | | *Comparable clients liquidity pattern in current agricultural portfolio. |
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| *list of eligible crops; | | *list of eligible crops; |
| *list of eligible irrigation systems and average investment cost per component; | | *list of eligible irrigation systems and average investment cost per component; |
− | *list of eligible SPIS configurations and average investment cost per component (see '''[[SPIS_Design|DESIGN]]''' and '''[[SPIS_-_Get_Informed|GET INFORMED]]'''; | + | *list of eligible SPIS configurations and average investment cost per component (see '''[[SPIS Design|DESIGN]]''' and '''[[SPIS - Get Informed|GET INFORMED]]''');<br/> |
| *list of eligible types of collateral. | | *list of eligible types of collateral. |
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− | === '''<span style="color:#879637;">People/Stakeholders</span>''' === | + | ==== '''<span style="color: rgb(135, 150, 55);">People/Stakeholders</span>''' ==== |
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− | *Management level of financial service providers; | + | *Management of financial service providers; |
− | *Experienced credit staff (senior, agrifinance); | + | *Experienced credit staff (senior, agri-finance); |
| *Associations of producers / potential borrowers; | | *Associations of producers / potential borrowers; |
| *Agricultural extension services; | | *Agricultural extension services; |
− | *Research and training institutes (e.g. environmental agency); | + | *Research and training institutes (e.g. environmental agencies); |
| *Providers of service, technology and inputs. | | *Providers of service, technology and inputs. |
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− | === '''<span style="color:#879637;">Important Issues</span>''' === | + | ===='''<span style="color: rgb(135, 150, 55);">Important Issues</span>''' ==== |
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| *Prevent prohibitive transaction costs for borrowers; | | *Prevent prohibitive transaction costs for borrowers; |
− | *Overcome information gap of financial operator; | + | *Overcome information gap of financial operators;<br/> |
− | *Note that standardization potential is limited. | + | *Note that standardization potential is limited;<br/> |
− | *Select excellent loan staff for this segment with corresponding background and experience (train them!). | + | *Select capable loan staff for this segment with corresponding background and experience (provide training if required). |
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− | {{SPIS Reference}} | + | {| cellpadding="1" |
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| + | | {{Back to SPIS Toolbox 2}} |
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| + | | {{Back to Finance}} |
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| + | | style="width: 150px; background-color: rgb(222, 226, 192);" | <span style="color:#000000;"><span style="font-size: 90%">'''[[SPIS_Toolbox_-_Loan_Assessment:_Determine_Financing_Volume_and_Profitability|►Go to the Next Chapter]]</span></span> |
| + | |}{{SPIS Reference}} |
When selecting or developing a loan product for SPIS it is important to ask the following questions: