By Claude Urbain PLAGBETO,

Seven banks and fifteen decentralized financial systems (Sfd) signed, last Tuesday, September 8 in Cotonou, agreements with the National Fund for Agricultural Development (Fnda) to finance the agricultural world. On the occasion, Valère Houssou, Managing Director of the Fund explained the ins and outs of this partnership which aims to boost priority sectors, which require some 2,374 billion CFA francs for the period 2021-2030.

La Nation: What is the place of agriculture in the Beninese economy?

Valère Houssou: Seven Beninese out of di live from agriculture, because it employs 70% of the working population and contributes 34% of the Gross Domestic Product (GDP). Since the advent of the New Start government, Benin has opted for the territorialization of its agriculture. The country has been divided into seven agricultural development poles (Pda) managed by the Territorial Agricultural Development Agencies (Atda), which are responsible for the promotion and development of a certain number of priority sectors. For all seven PDAs, we have around ten priority sectors, which are: cotton, pineapple, cashew, rice, soy, corn, palm oil. Each of these sectors has a national development program which clearly defines the structure of this sector as well as the various links and then the niches of opportunities and investment for those who might be interested in this sector.

What is the role of the National Agricultural Development Fund (Fnda) in financing value chain development programs?

The Fnda is the major public instrument for financing the agricultural sector designed within the framework of the Strategic Plan for the Development of the Agricultural Sector (Psdsa 2017-2025) and enshrined by Decree No. 2017-304 of June 21, 2017.

The Government's Program of Action (Pag) has positioned the Fund as the catalyst for private investment in the agricultural sector. For all the sectors with regard to the diagnosis that has been made, for the period 2021-2030, the financing need is estimated at 2374 billion F Cfa. This means that the next decade is that of massive investment in the agricultural sector. For financial institutions, there is therefore an opportunity to be seized and the National Fund for Agricultural Development is there to help. It thus appears as a growth opportunity for the agricultural portfolio of banks and decentralized financial systems.

How is the Fnda structured?

The Fnda is structured around three counters. The first concerns agricultural investments in the form of subsidies.

The second is that of subsidies for non-financial services: capacity building, access to markets.

The third window is that of facilitation of financial services.

During its meeting on Wednesday July 29, the Council of Ministers decided on a certain number of specific and incentive measures for the benefit of the agricultural sector to mitigate the effects of the Covid-19 pandemic. What is it concretely?

The measures taken relate exclusively to Window 3 relating to access to financial services and consist of a matching contribution of FCfa 100 billion. This is a first in the zone of the West African Economic and Monetary Union (UEMOA). In the sense that it is for the first time that a public fund dedicated to agriculture will directly refinance the banks and the Sfd which would be short of resources.

The measures are divided into three parts, each corresponding to the three sub-windows of Window 3 of the Fnda. The first measure is the refinancing of banks and Sfds at a rate of 2% per year and these institutions undertake to operate an exit for the benefit of beneficiaries at a ceiling rate of 12%. Of course, it is to come to the aid of banks and Sfd which would be in difficulty of resources faced with the financing needs of the sector.

The second is the guarantee fund with an amount of FCfa 35 billion which guarantees up to 50% of the loans that banks and Sfds would be required to make for the benefit of agricultural producers.

And finally the third measure is the bonus of the interest rate by which from now on the beneficiaries will access a ceiling rate of 2% of the credits put in place. This window has a supply of 15 billion CFA francs. With regard to the 2% interest rate subsidy measure, the eligible beneficiaries are those who will present investment needs or operations to purchase equipment or agricultural inputs for resale. The ceiling amounts on which the subsidies will relate are 500 million CFA francs at the level of the banks and 30 million at the level of the Sfd. The maximum bonus period is five years. There, it is necessary to distinguish the duration of the subsidy of the loan. A loan can have a duration of five years, but we can decide to make the subsidy over two years, the subsidy depending both on the nature of the project and on the decision of the evaluation committee.

In the partnership, what is expected from the banks?

What is expected of the seven banks that are committed with the Fnda is the financing of small and medium-sized enterprises and agricultural industries (SMEs and SMIs). There are a number of files that they will have to mount. The Fnda will ensure the good quality of the business plan, financial statements and supervision provided by the support and supervision structures (Sae) set up by the Central Bank of West African States. (Bceao). The amounts agreed with the banks vary from one bank to another depending on its policy. The ceiling amount is set at CFAF 500 million for the SME or PMI who will contact the bank. The maximum tau is 9% per year. And the term of the loan will be five years. It is requested that we be flexible in the repayment schedules which will have to adapt to the agricultural calendars and to the realities of the products that each beneficiary brings to the bank.

What about the 15 Sfd partners?

For the partner decentralized financial systems, they position themselves on the financing of small producers and operators for ceiling amounts of 30 million CFA francs per applicant. The ceiling rate is 12% per year and the maximum repayment period is fixed at three years. Here too, repayment schedules must be aligned with the policy of each institution and with agricultural schedules and products.

What does the Fnda bring then?

The Fnda first provides resources in the form of full refinancing at a rate of 2%, to cover the liquidity risks that banks and Sfds could face.

The Fund guarantees client loans at 50%. Then, we provide supervision for agricultural SMEs/SMIs who will present themselves to banks via support and supervision structures (Sae) and accounting firms to reassure the quality of the financial information produced by these credit applicants.

For small producers, we have supervision via NGO firms approved by the Ministry of Agriculture, Livestock and Fisheries (Maep) which are already in this field of activity.

What is the beneficiary access process?

The file examination process involves three types of actors, namely the beneficiaries, the financial institutions and the Fnda. The beneficiary builds his file with the support of a Sae or a firm and deposits in a bank or a partner Sfd of his choice. The financial institution examines the file, taking the financing decision in complete freedom, then seizes the Fnda on the file that interests it. The Fnda, which has already done sufficient work upstream on the beneficiary, sets up the guarantee and confirms the bank or the Sfd to disburse the loan for the benefit of the producer.