Coaching programme to boost agricultural finance
Coaching programme to boost agricultural finance
Laos is seeking more effective ways to promote access to finances for businesses in the agricultural sector as the sector has been recognised as an important element in the country’s economic growth.
As part of the government’s business promotion efforts, the Bank of the Lao PDR (BOL) in collaboration with the Lao Microfinance Association (MLA), the Food and Agriculture Organisation (FAO) and ADA Luxembourg are co-hosting an initial workshop to sharpen the awareness of the fundamental issues of financing agriculture.
The five day long workshop being held from April 24-28 is entitled ‘First Step: the Agricultural Finance Training Workshop’ which falls under the larger “Agricultural Finance Coaching Programme.”
BOL’s Financial Institution Supervision Department Director General Dr Akhom Praseuth told the media at the opening ceremony in Vientiane yesterday that the Lao economy is heavily reliant on agriculture and it is also one of the nation’s strengths.
“We already know that agriculture is important, the financial institutions have to seek ways to support financial access for the agriculture sector,” he said, adding that the institution itself is also required to learn about the evolution of risk in providing funds.
He further explained that workshop participants from various institutions will be able to adopt the lessons learnt from the workshop to their actual workplaces.
The Rural Finance Specialist at the FAO under the United Nations Mr Akos Szebeni said the programme is recognised as a very interesting opportunity to promote the agriculture finance sector in Laos.
“We understood that there has been quite a bit of progress made in terms of creating and enabling an environment at the macro level supporting these institutions. One of the key barriers to promoting industry is the potential lack of understanding of the agriculture sector and what the risks of financing the sector are.”
He noted that one of the key objectives of this programme is to guide financial institutions through the process of developing the necessary domain expertise to be able to tackle typical challenges and develop sustainable and profitable agricultural finance products including credit products, saving products and payments.
Meanwhile the Head of Unit at ADA Luxembourg Mr Matthew Genazzini said “We are looking to select the number of finance institutions that will participate in the programme and the institutions will receive a coach to develop the project that they define themselves after this training.”
He added that this coaching approach is much more collaborative based on coordination between a coach and the institutions to develop and implement the project that will be defined by the institutions themselves.
The training provides an understanding of the opportunities, gaps and challenges of agricultural finance, as well as an introduction to key market assessment and product design principles and tools that can help financial institutions to estimate the demand for products specifically related to agricultural finance.
This also identifies and operationalises good practices in the design and delivery of financial products that focus on the needs of the customer as well as identifying the various strategies for managing the risks and the distribution of these products.
The training is enriched by group work and the analysis of case studies which document the experience of financial institutions that have successfully increased their loan portfolio in agriculture, in an innovative, risk-mitigated and profitable manner.
The selected case studies take into account the diversity of the institutional portfolio and the capacity of institutions to maintain it over time in the context of developing countries. Potential areas of collaboration between the public and private sectors to launch agricultural finance products will also be discussed.
