PEAC. Overview Presentation

Transcription

1 PEAC Promoting Enterprises Access to Credit or How to develop the market for credit- related business Overview Presentation Introduction: BDS and Finance: an new old topic Indonesian experience: banks want, need, but it doesn t work. Developing a market for credit related Understanding constraints Linking How to facilitate linking Pilot project: set-up, certification and first results Issues for discussion 1

2 BDS and finance: a new old topic Financial Non financial 70ies to 80ies Micro finance revolution : Nonfinancial and financial as package Financial Non financial 90ies BDS revolution : Separation between financial and non-financial Financial Non financial Future Can financial and non-financial come closer together? Indonesian Background Major constraints in Indonesia Access to markets Access to finance Business Environment Swisscontact approach in Indonesia Focus in the past on BDS market development (generic, sector approaches) Future focus: Business Services related to lending 2

3 lending: The Bank side Lending statistic 2003 (Triliun Rupiah) GAP 26.9 Total lending 2003 Planned M lending Effective M lenidng lending: The side Need credit 64% 20% Have received credit 14% Credit not approved Don t need credit 36% 30% Never tried to access a bank 3

4 The Issue Risk Is there a specific role for service providers with significant potential to reduce risk and/or transaction cost for lending? Transaction Cost How to make the triangle work Bank Micro- and Small Enterprises Facilitating Links Service Provider 4

5 1 st step: Knowing each others BDSP perception of banks Banks are not interested in customers Banks are not interested in cooperation with third parties BDSP expectations Banks should work closer together with BDSP Banks should provide better information on financial Banks could outsource to BDSP and pay for such Bank perception of BDSP What are BDSP? NGO touch: social orientation Limited commercial understanding and professionalism Partly negative experience with pre-credit provided by BDSP Bank expectations Banks are willing to test cooperation with BDSP BDSP should have good technical and sector know how (not accountants!) BDSP should provide not only credit delivery but also and monitoring Type of providers and banks are looking for Provider Specialized on specific sectors Good and existing access to clusters Long-term relation with clients Technical know-how Good links within value chain Reliable and professional Services Identification of potential customers Pre-credit, such as feasibility studies, collection of financial data, business plans Post-credit : credit monitoring (early warning system), technical support during lending period 5

6 2 nd step: How to facilitate links Two possible approaches Institutional Approach: Linkage as commercial, offered by a specialized service provider (facilitation unit) Open to all banks and BDSP Assumption: sufficient market size for credit-related Sustainability on two levels: Facilitation unit BDS provider Direct link approach Project as a temporary facilitation unit provides linkage between individual banks and BDSP Linkage with individual banks, based on their specific needs Number of participating BDSP limited Sustainability on level BDSP only Institutional Approach: Range of Facilitation Services Potential provided by a facilitation unit: Services to BDSPs Facilitating cooperation with banks Information on financial Training on credit related Certification Facilitation of business linkages Networking among BDSP Services to Banks Facilitating cooperation with BDSP and Identification of potential BDSP Information on potential sectors Training for account officers Certification for BDSP Information to s 6

7 Pilot Project: SPMC Bandung Certification Process 7

8 SPMC: Results after 1 year Number of BDS providers accredited Number of participating banks Number BDSP with contracts with banks No of BDSP successfully facilitated credit Total amount of credit facilitated through BDSP Mio US$ % small business credit (> US$ 5 000) % micro credit (group lending) (< US$5 000 per customer) Number of receiving credit Number of BDSP staff trained for specific Pass rate for skill test ,94 % 96,06 % % Issues for Discussion Effectiveness of BDS-Finance link as instrument for improved lending? Commercial viability of facilitating? Certification of BDSP: potential or hurdle for market entry? Conflict of interest: BDSP between bank and interests? 8