Roger T.

Brou -West Africa Trade Hub Jean-Guy Biley- CFS

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Risk Analysis
RISK ASSESSMENT

ENVIRONMENT SECTOR

QUANTITATIVE ANALYSIS

CAPITAL PROFITABILITY CASHFLOW RESOURCES

COMPANY

QUALITATIVE ANALYSIS

SHAREHOLDERS MANAGEMENT PRODUCTS STRATEGY

NEEDS OPPORTUNITIES

Credit Proposal
RISK ASSESSMENT CREDIT FILE OPERATIONAL RISKS AMOUNT SUBJECT CREDIT TYPE STRUCTURE FINANCIAL RISKS QUALITATIVE ANALYSIS SHAREHOLDERS MANAGEMENT REPAYMENT SURETY PROFITABILITY CAPACITY/SOLVENCY

QUANTITATIVE ANALYSIS

CAPITAL
PROFITABILITY CASHFLOW RESOURCES

PRODUCTS
STRATEGY

RECOMMENDATION

NEEDS OPPORTUNITIES

RISKS/OTHERS

VOLATILITY AND LACK OF PRICE TRANSPARENCY OPAQUE QUALITY CONTROL DOCUMENTARY RISKS

RISKS/OTHERS

IN AFRICA, THESE RISKS HAVE, OVER THE YEARS, REDUCED THE APPETITE OF COMMERCIAL BANKS. CONSEQUENTLY, IN THE BEST OF CASES, THEY HAVE KEPT THEIR SUPPORT FOR COMPANIES WITH LARGE FINANCIAL PLATFORMS AND STRONG MANAGERIAL SKILLS.

EXAMPLES OF SME FINANCING SOURCES

Buyer Prefinancing

Mfi/ Social Funds/ Commercial banks financiang schemes Advances/Purchase orders

Collateral Management Agreement Advances on CMAs issued by a certified operator

Credit proposals
RISK EVALUATION CREDIT FILE OPERATIONAL RISKS AMOUNT SUBJECT CREDIT TYPE STRUCTURE FINANCIAL RISKS QUALITATIVE ANALYSIS SHAREHOLDERS MANAGEMENT PRODUCTS STRATEGY NEEDS-OPPORTUNITIES REPAYMENT SURETY PROFITABILITY CAPACITY/SOLVENCY

QUANTITATIVE ANALYSIS

CAPITAL
PROFITABILITY CASHFLOW RESOURCES

RECOMMENDATION

FINANCING NEEDS
BANKING PRODUCTS NEEDS Purchasing inputs Equipment/expansion Investments Short-term credits from 3 to 12 months Medium-term credits from 2 to 3 years Equity participation

OPERATING CYCLE

Distribution

Supply

Production Export
Storage

/ packaging
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KEY SUCCESS FACTORS SUPPLY

COMPETITIVE MEDIUM PRICE QUALITY QUANTITY

KEY SUCCESS FACTORS / LOCATION

INDUSTRIAL or DEDICATED AREA CLOSE TO INPUTS SUPPLY SOURCES AVAILABILITY OF LABOUR ACCESS TO WATER AND ELECTRICITY EASILY ACCESSIBLE AVAILABILITY OF SPACE FOR FUTURE EXPANSION

KEY SUCCESS FACTORS- PRODUCTION

KNOW-HOW INDUSTRIAL CULTURE INFORMATION ON THE VARIOUS LOCAL AND INTERNATIONAL LEGISLATIONS ON THE USE OF WOOD AND CHEMICALS MANUFACTURERS AFTER-SALES SERVICE SOCIAL RESPONSIBILITY

MAIN CONTRACT CLAUSES

PRICE CURRENCY AND EXCHANGE RISK QUALITY

WEIGTH CLAUSES
MODE AND PLACE OF PAYMENT DELIVERY CLAUSES (FOB, CAF)

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TRANSACTION CYCLE
Purchase Order: Purchase of inputs: Processing: Deliveries: Payments: Payment terms: Payment method: 1 DAY 30 DAYS 60-90 DAYS 15-20 DAYS 30 DAYS at each delivery FOB Letter of Credit preferred

GUARANTEES
GUARANTEES

RISKS
Price Performance Documentary Counterpart

Assignment of contract, Personal (surety bond) Real (mortgages, security, Cash collateral, on the product, delegation of insurance, etc.) Other guarantees (first application guarantees, letters of credit with green or red clauses, ) GARI / ARIZ / DCA
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BACKUP

Several institutions and partners as well as the State are willing to support the sector
Purchase of inputs Transport and storage Primary processing

Great concern Secondary relevance

Secondary processing

Export

Private sector

Public sector and NGOs

USAID

Source: Plan dAffaire ABC, TechnoServe, 2009

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CONCLUSIONS
THE HANDICRAFT SECTOR IS A POTENTIALLY LUCRATIVE ACTIVITY THE PERFORMANCE RISK COULD BE BROUGHT DOWN TO ACCEPTABLE LEVELS THROUGH THE SUPPORT OF PARTNERS SUCH AS THE USAID WEST AFRICA TRADE HUB. A FINANCING STRATEGY BASED ON RISK SHARING AMONG SUBREGIONAL FINANCING, DEVELOPMENT INSTITUTIONS, COMMERCIAL BANKS, SOCIAL IMPACT FUNDS, COULD ENABLE TO:
IMPLEMENT THESE PROJECTS CREATE NEW POOLS OF GROWTH BOTH FOR THE PRODUCTIVE AND FINANCIAL SECTORS CONTRIBUTE TO POVERTY ALLEVIATION WHILE PROTECTING THE ENVIRONMENT

THANK YOU FOR YOUR ATTENTION

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REFERENCES AND USEFUL LINKS

www.watradehub.com www.africanow.com