Presentation Fin4Ag S39 by kyanika abdul

1. INCREASING ACCESS TO
FINANCE FOR YOUNG AGRO
- ENTERPRENEURS
GOU YOUTH VENTURE CAPITAL
LOAN SCHEME
Revolutionizing Finance for Agri
-Value Chain
14th
– 18th
July 2014
Nairobi, Kenya

2. Outline
1. Background
2. Centenary Bank Information
3. Benefits to the CB
4. Eligibility Criteria
5. Design and Other Products
6. Performance
7. Management and Challenges

3. Youth Capital Venture Fund
 GOU established the Youth Venture Capital
Fund (YVCF) and Graduate Venture Capital
Fund (GVCF) in FY 2011/12
 The purpose of the fund was to support MSMEs
to enhance employment creation and widening
the tax base
 The Fund comprised of $ 5 Million from the
German Development Agency (KfW), with equal
contribution by three participating Banks
(Centenary, Stanbic, and DFCU Banks)

4. Youth Venture Capital
 Uganda has the Second World’s highest youth
population of about of about 7.4 million which is
about 55% of the total population
 Uganda has also the highest youth
unemployment of about 83%
 Rate is higher for those who have formal
education because of disconnect of degrees
achieved and skills needed in the job market
 Un employed youth will find their way into crime
like drugs, robbery and prostitution
 These youth are likely to become a source of
instability if government does not plan for them
early

5. The Urbanization
Phenomenon
Source: United Nations
5

7. Youth Population
Characteristic
s
Male Female Total
Population(18 –
30) Years
2,913,800 3,381,800 6,295,700
Place of
Residence
Urban 20.2% 22.9% 21.7%
Rural 79.8% 77.1% 78.3%
Age Groups
18 - 19 22.9% 20.2% 21.5%
20 - 24 36.3% 36.8% 36.6%

8. Population by Age Group

9. Youth Access to Finance
 Youth like women is one of the marginalized groups
in access to financial services
 They are considered very risky due to irrational
decision making because of lack of responsibility
 Most of the youth lack assets which can be pledged
as collateral in Traditional Financial Institutions
 This can be can be financed by lending to youth who
are involved in productive economic activities
 Lending to youth who are in JLG, Cooperatives and
Farmers’ association

10. CENTENARY BANK HISTORY
 The bank is one of the biggest local bank which
was started in 1983 as a Credit Trust.
 Operations began in 1985, registered as
Commercial Bank in 1993.
 Objective to serve the poor and contribute to
development of the country.
 Bank vision and mission is being the best
provider of microfinance services to people in
rural areas in a sustainable way.

11. Centenary Bank Ownership

12. CENTENARY BANK BRANCH
NETWORK

13. Bank Market Share
Item Banking
Industry
Centenar
y Bank
Percentag
e
Rank
Total No.
Accounts
3,167,900 1,240,077 39.00 1st
Borrowers 1,395,700 147,950 10.00 1st
Branch
Network
572 62 10.8 2nd
ATM
Network
714 147 17.00 2nd
Deposits $ 4.568 Bn $ 386 Mn 8.5 5th
Gross
Loans
$ 3.186 Bn $ 269 Mn 7.00 3rd
Assets $ 6.914 Bn $ 580 Mn 8.4 4th
Profits $ 169 Mn $ 23 Mn 13.8 3rd

14. AWARDS
 Best Bank in Top Fifty
Brands 2011
 1st
Runner-Up in 2013
Financial Reporting
Award
 People’s Choice Quality
Awards
 NSSF Employers
Awards
 KACITA Quality Awards
x 2
14

15. Benefits to Centenary Bank
 Fulfill its mission of reaching out to rural and
urban people
 Increase its market share by reaching out to the
biggest section of the population
 Recruiting new clients who couldn’t qualify for
accessing normal credit from the Bank because
of the collateral requirements
 Deposit mobilization through fund and deposits
by the clients

16. Eligibility Criteria
 Support business ventures by youth for expansion
 Youth should be holders of at least O – Level
Certificate later dropped for no education
 Client should be first time borrower
 Business financed should be licensed and registered
by Uganda Registration Services Bureau
 Business has been in existence for at least three
month
 Business able to employ at least four people
 Borrower must have been trained by identified
service providers by the project

17. Design of the YVC
PRODUCT SPECIES DESCRIPTION
Target Clients Youth (18 -25) Years
Amount to be Financed $ 3.32 Million
Sectors Manufacturing, Agro Processing, Primary
Agriculture, Fisheries, Livestock, Health,
Transport, Education, Tourism, ICT,
Construction , Printing and Construction
Services
Loan Amounts $ 40 – 10,000 ( Individual $ 2,000 &
Registered Grps – $ 10,000)
Grace Period Maximum One Year
Own Contribution 10%
Loan Periods Maximum 4 Years
Acceptance Commission 1%
Interest Rate 15%
Penalty 0.5% per day

18. Other Youth Products
PRODUCT FEATURES
Cente Junior Account Children Savings Account operated by
parent or guardian
Targeting of toddlers to a maximum of
17 years
Purpose is for parents/guardian to save
early for their siblings future and
introduce them to banking
Benefits of Cente Account High interest rate
Free Account statements, standing
orders, no withdraw charges, account
statements,
Life Assurance covering life and
disability

19. CenteVolution Youth Account
PRODUCT FEATURES
Cente Volution Youth Account CenteVolution Youth Account will be
operated by youth in tertiary educational
institutions
Targeting of toddlers to a maximum of
18 – 26 years
CenteJunior account holders to graduate
to CenteVolution Youth Account and
start operating their account
Targeting Students in Tertiary
Institutions soon joining the working
classBenefits of Cente Account Attractive interest rate
No account maintenance fee
Free Bank drafts for school fees
payment
Free account statement issued once a

20. Achievements
 The Bank was able to disburse all
funds(USD 3.32 Mn) including its
contribution within five months
 The Bank was allocated additional USD
1.2 Million, from other participating
institution,
 Another government body KCCA placed
Youth Venture Fund of USD 1.32 Million
in October 2012 with CB

21. Performance of NYVC
No. Parameters Numeric
1 Total Disbursement $13.517 Million
2 Total Number of
Beneficiaries
8,789 Youth
3 Total Outstanding Loan
Balance
$ 5.28 Million
4 Current Clientele 5,607
5 NPR 5.8%

22. Performance of NYVC

23. Sectors Financed
No. Sector Enterprises Finance Percentag
e
1 Agriculture Poultry farming, Cattle
Keeping, Diary Farming,
Honey Processing, Goat
Rearing, Nursery Beds,
Banana Farming, Coffee
Farming
23.4%
2 Trade and
Commerce
General Merchandise,
General Supplies, SACCOs,
Art and Design
53.1%
3 Service Industry Saloon and Barber shops,
Clinics, Internet Café, Events
Mgt, Tour and Travel,
16.1%

24. Management of Youth Loan
Portfolio
 Assignment of specific Credit Supervisor to
manage the Bank Youth Portfolio
 Assigning of the specific code in the MIS for
close monitoring on utilization, portfolio growth
and quality
 Efficient client selection using existing account
information, use of recurrent clients, groups,
market authorities, and associations
 Sound underwriting of youth loans with efficient
analysis and appraisal

25. Management of Youth Loans
 Efficient credit supervision of branches for
compliance to credit policies and procedures
 Partnering with other stakeholders like training
institutions, NGOs like ILO, GIZ, SSLOA,
KAMBA, VERMA Co and Associations
 Aggressive recovery of non performing youth
loans by the Bank

26. Challenges
 Poor attitude of Bank Staff towards the scheme
due character of youth and politicization of the
scheme
 Politicization of the scheme by some government
leaders like MPs, Local Government Youth
representatives
 Lack of additional funds after exhaustion of
allocated funds leading stoppage of disbursements
 Lack of entrepreneurship skills by youth which
leads to high rate of collapse of business leading to
default

27. Challenges
 High taxes levied on youth enterprises by
government authorities which eliminates
some clients who fail to qualify on
eligibility criteria

28. Way Forward
 Increased supervision of Youth Portfolio to
ensure sound under writing of loans for a
quality portfolio
 Development of new credit products
targeting youth i.e. CenteYouth Individual
Loan Product, Group Loans and Asset
Financing
 Financial Literacy for young agro-
entrepreneurs to equip them with

29. Way Forward
 Capacity building for credit staff in
evaluation of youth clients and groups to
enable them mitigate risks associated with
this age group
 Establishing partnerships with other
stakeholders like NGOs, Companies,
Associations, Government and Training
Institutions for complementing financial
services with appropriate services and
funding.

30. Thanks