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Introducing World Vision - dfat.gov.au

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Work in over 90 countriesThe world’s largest NGO375,000 Australian donorsArea Development Program - community development modelSEED unit: ag value chains, MSME development, youth livelihoods& savings
Builds on WVI and VFI capabilitiesNew financial product which serves underserved market segmentTesting hypotheses about impact potentialPotential appeal to impact investors
The market failure and impact opportunity
Investments of83 billion USDa year are necessary in agriculture to meet the world’s food consumption needs by 2050
Source: FAO, High Level World Expert Forum, How to Feed the World:2050, 2009.
The totalunmet need for creditin non-industrialised markets for SMEs is between2.1 and 2.5 trillion USD
Source:Mckinsey& Co and IFC: Two Trillion and Counting, 2010.
Only2-3%of investment fromcommercial financeis in agricultural SMEs
Source: UNDP, Inclusive Finance Field Guide: A Handbook on mobilising finance and investment for MSMEs in Africa, 2012.
Investment allocation islikelyto be directed towards thefood and agriculturesector in the future
Source: 1. Miller, Richter,McNellis, Mhlanga. AgricultureInvesmtneFunds for Developing Countries, FAO, 2010.2.Saltuk,Tasemin.Idrissi, Ali E.Spiotlighton the Market: The Impact Investor Survey. J. P. Morgan, 2014.
Missing Middle
Capital Need
>$2m
$5k
$0
Early Stage Enterprises (5k – 250k)
Commercial Finance
Rural
Urban
Microfinance Institutions
Rural Finance Gap
Location
Scalable Enterprises (250k – 2m)
Missing Middle
Target of ARISE project
Background to the Project in Sri Lanka
Challenges facing agricultural SMEs:Inconsistentaccess to financeLimited use of technology and lack of appropriate technical skills for farmingLack of business management skillsOrganizational structures that inhibit growthLack of skilled and unskilled laborLimited market access and ability to know daily market price information
MarketResearch findings in Sri Lanka
VisionFundLanka (VFL)should commence catering to emerging SMEfinanceAgri-based SME clients require access to finance for working capitalNon-financial needs (business planning, business management skills, market analysis) ofthe clients’ shouldalso beaddressedVFL shouldprovide short term ($5,000 to $10,000 - 12 to 24 months) and mediumterm ($10,000 to $20,000 - 12 to 36 months) loans.There are otheropportunities to improve the market chain and financing SMEs will bring aboutimportant socialimpactoutcomesVFL shouldassess the social impact outcomes arising from financing the agriculture andagri-based SME sector
Market Research findingsin Sri Lanka
Improved economic well-being of small-scale agricultural entrepreneurs and producers in the target region, especially women, youth and marginalised people living in poverty
1) Improved business, technical and financial practices by agricultural MSMEs
a. Trainings on business advisory knowledge and skills for agricultural MSMEs
b. Technical and industry specific trainings to help MSMEs adopt new technology, quality control processes, and other value-adding initiatives
2) Improved Business Environment that actively supports the development of agricultural MSMEs
b. Knowledge sharing and advocacy to help MSMEs raise potential areas of business support with relevant industry, government, and civil-society stakeholders
4) Increased Market Linkages
a. Formation and mobilisation of agricultural Producer Groups
Increased productivity, sales, and income by agricultural MSMEs
a. Financial lending to meet the development needs of agricultural MSMEs
a. Peer networks and support groups established among agricultural MSMEs
b. Facilitation of transactions between MSMEs and agricultural value chain actors
3) Improved Access to Finance
Outputs
Outcomes
Goal
ARISETheory of Change
Need good visual here
Source:Councilon Smallholder Agricultural Finance, Impact Theory of Change, http://www.csaf.net/impact/theory-of-change/




Currently undertake
ARISE Project
$
$
$
$
DFATAFTProgram Logic
An example
Agri-inputSupplier
SmallholderFarmers
Buyer
Purchasesproduce/Provides Employment
Provides inputs/ Knowledge/Employment
Progress to Date
Achievements to Date
InceptionStaff hiredFull design workshop and finalisation of design docsStaff trainings on business facilitation and market linkagesM&E framework developedShujogcontracted to advise on M&E framework that reports on social impact, environmental impact and financial viabilityIRIS metrics, Wellbeing metrics, Financial metricsNew credit policy & origination processDevelopment of new standards, decision processes and risk assessmentPipeline DevelopmentClient screening and business advisoryBusiness plan developmentLoan application process11 approvalsOn track for 20+ end of June
Key Activities:Client repays loan in monthly installmentsSGB LOcollects post-dated cheques quarterly
Key Activities:BusinessHealth Check-upIdentification ofareas for improvement& growthOn-going coachingImpact data collection
Responsibility:SGB Loan Officer
Responsibility:Business Advisor
Forms/Tools:Internal finance system
Forms/Tools:Business Health Check-up ToolOther BF tools as needed
Key Activities:Collection of impact data as per M&E frameworkUsing ODK on android devicesPPI data in the future?
Responsibility:SGB Loan OfficerBusiness Advisor
Forms/Tools:Business Health Check-up ToolOther BF tools as needed
Ongoing Activities
Ongoing Data Monitoring
Key Activities:Collection of impact data as per M&E frameworkUsing ODK on android devicesPPI data in the future?
Supporting Producer Groups
Key Activities:Identifying producer groups working alongside SGB clientsMobilizing producer groups in selected value chains with SGBsLinking with extension services to help producers improve quality and quantity to meet SGB's requirementsEnsuring minority groups among producers groups are included in activities and linked with SGB clients (to meet ARISE objective)
11 approvals in past 3 months (on track for target of 20)Avgloan size approx. $6,600 (lower than anticipated ~$10,000)Mix of businessesRice millers, grain processors, horticultural nurseries, spice processor, coconut products processorMajority women run businessesAll 5-10 employees
Investments to Date
Challenges
Bringing together two different entitiesVFL and WVL to create a new productWho does what? And how does money flow?Re-designing an origination process for new loansCredit policy aligned with risk profileUp-skilling of staff and loan officersDeveloping a pipeline of businessesBusiness analysis and evaluationHarnessing locally available business advisory servicesLack of players in remote areas, high cost of travel and servicing
5% return for impact capital5 year term deposit15% growth in number of loans distributed year on year
Capital (USD)
# of loans distributed
Year
Philanthropic Capital80%
Impact Capital20%
$5.5m
Illustrative
Thank youAny Questions?

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Introducing World Vision - dfat.gov.au