2012. JOHANNESBURG, REPUBLIC OF SOUTH AFRICA

Transcription

1 1 st JOINT CEO FORUM OF THE ASSOCIATION OF AFRICAN DEVELOPMENT FINANCING INSTITUTIONS (AADFI) AND THE ASSOCIATION OF DEVELOPMENT FINANCING INSTITUTIONS IN ASIA AND THE PACIFIC (ADFIAP) INDABA HOTEL & CONFERENCE CENTRE, 13 th -16 th NOVEMBER JOHANNESBURG, REPUBLIC OF SOUTH AFRICA A. Introduction EXECUTIVE SUMMARY 1. The Association of African Development Finance Institutions (AADFI) and the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP), held their 1 st Joint CEO Forum from 13 th -16 th November 2012 at the Indaba Hotel and Conference Centre, Johannesburg, Republic of South Africa. The theme of the Forum was Promoting South- South Cooperation among DFIs through Value Chain Financing in Africa, Asia-Pacific and the Caribbean. 2. The objectives of the joint CEO Forum were to: develop a closer working relationship among CEOs and senior executives of DFIs and their strategic stakeholders in Africa, Asia and the Pacific, share and learn best practices in development financing operations, develop a network for cross-border financing, investment promotion and capacity building by DFIs in the continents, support an effort at promoting inclusive socio-economic development in the continents through South-South cooperation among DFIs. 3. The joint CEO Forum was co-hosted by the Development Bank of Southern Africa (DBSA) and the Industrial Development Cooperation of South Africa (IDC) with support from the African Development Bank (AfDB) and financing from the India Trust Fund. The programme was attended by over 240 delegates comprising CEO and Senior Executives from the AADFI and ADFIAP DFI networks as well as representatives of multilateral development agencies from around the globe. 4. As part of the joint CEO Forum a TV programme referred to as IDC Dialogue a panel discussion on the theme of the Forum covered by the CNBC Africa, was held on 14 th November 2012 and a workshop on Enhancing Export Competitiveness through Value Chain Finance took place on 15 th and 16 th November 2012 at the event venue. 1

2 5. The TV Dialogue focused conversation on developing Africa s economy and fostering South- South Cooperation among DFIs for sustainable development in Africa, Asia-Pacific and the Caribbean. The dialogue was anchored by Mr. Godfrey Mtizwa of CNBC Africa and organized in two parts. The first part was made up of the following panelists: Mr. Geoffrey Qhena, Honorary Chairman, AADFI and Chief Executive Officer of Industrial Development Corporation of South Africa. Mr. Adebayo Jimoh, 1 st Vice Chairman of AADFI and Group Managing Director, Odu a Investment Company Ltd, Nigeria. Datuk Wan Azhar Wan Ahmad, Chairman ADFIAP and Chief Executive Officer, Credit Guarantee Corporation of Malaysia Dr. Christian Kingombe, Chief Regional Integration and Trade Department(ONRI 2) 6. While the 2 nd part of the TV Dialogue comprised the following panelists: Mr. Dlamini Patrick, Chief Executive Officer, Development Bank of Southern Africa (DBSA) Mr. James Karanja, Executive Committee Member AADFI and Managing Director of IDB Capital Ltd, Kenya Mr. Octavio B. Peralta, Secretary General of ADFIAP 7. The Forum workshop on the theme: Enhancing Export Competitiveness through Value Chain Finance was held on 15 th and 16 th November 2012 had the following objectives: Create a knowledge forum for Development Finance Institutions (DFIs) and their stakeholders to discuss challenges faced in integrating micro, small and medium sized enterprises (MSMEs) into global value chains (GVCs) from Asian and African perspectives; Build greater awareness of DFIs on the potentials and benefits of Value Chain Financing, and stimulate DFIs to support value chain finance; Learn more about the practical experiences with these models and approaches to value chain finance ; sharing and obtaining information on best practices; Discuss the requirements precedent for value chain financing to be successful; Share experiences on the economic development and poverty reduction brought about by integrating MSMEs in the existing GVCs; and Identify and promote best practices for scaling MSMEs up to GVCs across countries 2

3 and institutions, establish baselines and monitor progress made. Promote South-South Cooperation between Africa and Asia in the areas of knowledge and technology transfer. B. OPENING CEREMONY 8. The event was officially declared open on 15 th November 2012 by Madam Mmakgoshi Lekhethe, Deputy Director General in the Ministry of Finance, representing the Minister of Finance, Government of the Republic of South Africa. Mr. Geoffrey Qhena, Honorary Chairman of AADFI and Chief Executive of IDC presented a Welcome Address on behalf of the host institutions, while Ms. Moono Mupotola, Manager, ONRI2, of the African Development Bank delivered an Opening Statement on behalf of the African Development Bank. Datuk Wan Azhar Wan Ahmad, Chairman of ADFIAP and Mr. Peter M. Noni Chairman of AADFI also presented Opening Addresses on behalf of their Associations. C. WORKSHOP PLENARY SESSIONS 9. The workshop was structured into 5 plenary sessions and each session comprised of panellists with a moderator. Eleven (11) presentations, panel and group discussions on the workshop theme covering different aspects of value chain finance in Asia and Africa were examined during the 2-day workshop. D. OBSERVATIONS, RECOMMENDATIONS AND CONCLUSION 10. Drawing from the presentations, panel and group discussions by delegates, the following observations were reached: a) Observations: 1. It was agreed that value chain financing is important for enhancing export competitiveness in Africa due partially to enhanced efficiency from Public-Private- Partnership (PPP) and reduced cost and risks from diversified financing arrangements. However much remains to be done for Africa that is still confronted with a lot of challenges from implementation. Africa lacks major human and physical capital formation in dealing with the complexity of agricultural value chains. 2. There was no one size fits all approach in agriculture value chain finance, suggesting the need for knowledge organizations that can lead innovations and product development to solve financial intermediation problems of MSMEs. 3. There was need for Structural changes in Agriculture from subsistence to commercial agriculture. This change requires support and enabling greater role of financial services which can best be achieved through Agriculture Value Chain Finance. 4. The best way of supporting the agricultural development by DFI s is through an Integrate supply of adequate and timely finance with value chain approach. DFI s should support nascent value chains until they grow and are able to attract funding from other financial intermediaries. 5. Banks most especially DFI s should endeavor to design appropriate financial products 3

4 that can enable access to funds by the largely unbanked MSMEs. This was because poorly designed products are of limited use to the value chain players and severely limit the growth of the sector. 6. Technical assistance and financial literacy for smallholders and MSMEs are required in terms of extension services for smallholders and management support for SMEs that will help strengthen individual players and also the overall value chain. 7. Backward and forward linkages and Market Access are key to value realization for all the players in the Value Chain. The linkage of the chain to the market will determine the price realization and hence the revenue that will flow to different players down the chain. 8. Efforts should be put in preventing Information Asymmetry. African countries can try and address the problem of information asymmetry by utilizing information technology to enable value chain players to get access to real time information on markets. Such as the Integrating Mobile Money application in India which has immense potential to smoothen the flow of value across the chain, in real time and at a lower cost than conventional banking and/or cash transactions. Coupled with ICT based information dissemination, such a model can address some of the challenges of flow of value across the chain. b) Recommendations Consequent on the panel discussions and active participation in general discussions, the participants reached consensus on the recommendations for the African governments, Regional and National DFIs, and development partners as follows: Way forward for DFIs DFIs should be very innovative in developing financial products taking cognizance of the peculiarity of their operating environment. In addition, they should adopt the use of ICT in delivering their services as the Indian experience has shown that it has helped in minimizing cost of transactions and risk of diversion of funds. DFIs should continually build their capacity in line with the dynamics of their operating environment. DFIs as catalyst to development should adopt integrated approach to value chain finance as best way of supporting the agricultural development. Importantly, they should define their space by financing the chain aspects that are less attractive to the purely commercial players. DFIs should create dedicated units with appropriate staffing to promote agricultural investments as a means to promoting value chain finance model. DFIs in Africa and Asia should sustain inter- institution learning and experience sharing in building their capacities. 4

5 Way forward for development partners Development partners should support capacity building in DFI s in addition to providing lines of credit for value chain financing. The AfDB is requested to assist in providing regular capacity enhancement activities including knowledge sharing programmes for AADFI member - DFIs on value chain finance. Donor institutions including MDBs such as AfDB should support the efforts toward drafting a general guideline for value chain financing particularly for African DFI s in AfDB regional member countries. Way Forward for Governments Going by the Asian experience, African governments should create an enabling environment that will support sustainable operations of the DFI s in delivering their catalytic role of stimulating development. Governments should make initial investments in Infrastructure and finance for the aspects of AVC that may be disincentive to commercial players in the short run. Government should invest in critical infrastructure that will enhance the export competitiveness of agricultural products by building storage facilities and other important infrastructures. Governments should be consistent with their agricultural policy to encourage private sector to make long term investment decisions that will have positive impact in the agricultural sector. The lessons from the Asian continent show the vital role of the central Bank and other regulatory authorities in directing the financial system that promotes inclusiveness. Therefore African Central Banks should develop policies that will encourage lending to the Agricultural sector. E. APPRECIATION The Forum workshop expressed appreciation to the Government and people of South Africa, particularly to the host institutions for their hospitalities. It thanked the AfDB and the Indian Trust Fund for their support and to ADFIAP for partnering with AADFI. Appreciation plaques were awarded to all the partners in recognition of their support toward the successful conduct of the Forum. Dated: November 16, 2012 Note: The Official Record may be downloaded from AADFI website: 5