PUTTING IN PLACE THE CONDITIONS TO SET UP A CREDIT GUARANTEE SCHEME FOR AGRIBUSINESS SMEs IN UKRAINE Credit Guarantee Schemes: Regulation and Management Capacity Building Seminars 22-24 February 2016 Ministry of Agrarian Policy and Food Khreschatyk str., 24, Kyiv 3rd floor room #308 1
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where governments work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The European Union takes part in the work of the OECD. www.oecd.org OECD EURASIA COMPETITIVENESS PROGRAMME The OECD Eurasia Competitiveness Programme, launched in 2008, helps accelerate economic reforms and improve the business climate to achieve sustainable economic growth and employment in two regions: Central Asia (Afghanistan, Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan, Turkmenistan and Uzbekistan), and Eastern Europe and South Caucasus (Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova and Ukraine). The Programme contributes to the OECD outreach strategy implemented by the Global Relations Secretariat. www.oecd.org/globalrelations/eurasia.htm PUTTING IN PLACE THE CONDITIONS TO SET UP A CREDIT GUARANTEE SCHEME FOR AGRIBUSINESS SMEs IN UKRAINE The project Putting in place the Conditions to Set up a Credit Guarantee Scheme for Agribusiness SMEs in Ukraine (CGS project) emerges out of the OECD Sector Competitiveness Strategy for Ukraine, which identified high-potential sectors in the Ukrainian economy and competency-based barriers that were hindering their development. Agribusiness is a key sector identified in this work, and access to finance for agribusiness SMEs was identified as a major constraint hampering the sector s development. Within the frame of the CGS project, the OECD will design an instrument to guarantee a proportion of loans to agribusiness SMEs of 100-2000 ha. The scheme will be designed on the basis of a pilot covering four Oblasts (Cherkassy, Vinnytsia, Poltava and Kharkiv), before being scaled up as results are revealed. This project was launched in September 2013 and will conclude in February 2016. It is fully financed by the Government of Sweden. www.oecd.org/globalrelations/ukraine-cgs.htm 2
ABOUT THE SEMINAR The training modules on formation, oversight and management of Credit Guarantee Schemes (CGS) are designed to convey knowledge and skills to government institutions and private-sector actors involved in the establishment and strategic support of the CGS that will be established to increase lending to the agricultural sector. Appropriate understanding and oversight of credit guarantee schemes in the context of best practices will be crucial to the launch of the CGS and to the achievement of the mission of the UKR CGS Task Force. Training will be provided on how a CGS is established, how it functions, and what is needed to ensure its success. Focus will be on EU best practices and on relating the CGS activities to an overall strategy and mission. Training on how additionality is calculated for the CGS as relates to the vision and mission of the UKR CGS will also be covered, and will include EU and non-eu relevant examples and a case study. Training will also be provided on how the CGS is supervised and regulated, and on how the government oversight role should function in the local context. The training will be divided into three parts. Day 1 will provide initial training on the primary aspects of establishing and managing a CGS. Day 2 will offer advanced training through case studies showing live examples of how different types of CGS mechanisms contribute to establishing additionality effects. Day 3 is a detailed discussion of CGS regulation, and also on how the state can provide cost-support and other types of subsidies to ensure the sustainability of the CGS. This seminar is part of a series of capacity building events organised in the context of the project Putting in place the Conditions to Set up a Credit Guarantee Scheme for Agribusiness SMEs in Ukraine (CGS project) financed by the Government of Sweden. The training will be provided in English with simultaneous interpretation into Ukrainian. PARTICIPANTS The 3-day training is addressed to Task Force members and mid-level managers and employees of the relevant government organizations, such as the Ministry of Agrarian Policy and Food, Ministry of Finance, Ministry of Economy, NBU and other relevant agencies. Day 1 training is a general introduction, with training becoming more specific and technical in days 2 and 3. REGISTRATION Participation is free of charge, but participants are committed to take an active role in the entirety of the training. Registration is limited to participants selected and invited by the OECD. If you would like to be considered for the training, please send your CV to the project contacts. ABOUT THE PROJECT The project Putting in place the Conditions to Set up a Credit Guarantee Scheme for Agribusiness SMEs in Ukraine (CGS project), financed by the Government of Sweden, builds on previous OECD analysis which identified agribusiness as a priority sector for investment and business climate reforms and recommends establishing a Credit Guarantee Scheme (CGS) for agribusiness SMEs in Ukraine in order to hedge sector-specific risks. This is advocated as a market mechanism with a high leverage effect, reducing the costs of learning-by-doing that result from informational asymmetries in the sector. The OECD has been working with the Government of Ukraine in designing an appropriate CGS for a segment of credit constrained and underserved agribusiness SMEs. A Task Force was set-up to collect information, discuss analysis and provide guidance on the implementation of the project. The Task Force is chaired by the Vice- Minister of Agrarian Policy and Food of Ukraine, and formed by representatives of the Ministry of Finance, Ministry of Economic Development and Trade, Ministry of Agrarian Policy and Food and the National Bank of Ukraine. Since the launch of the CGS project in 2013, the OECD has been designing an instrument to guarantee a portion of loans to agribusiness SMEs of 100-2000 ha; which will initially be piloted in the regions of Cherkassy, Vinnytsia, Poltava and Kharkiv. The project benefits of the technical support of Internationale Projekt Consult (IPC) who work in close collaboration with the OECD. A series of capacity-building seminars is organised as part of the CGS project. These trainings will be held at the premises of the Ministry of Agrarian Policy and Food of Ukraine (24 Khreshchatyk str., Kyiv) throughout the month of February 2016, and will help to build governmental and commercial bank knowledge on key issues of importance to the operation of a CGS and goodpractice agricultural/ SME finance. OECD Contacts in Paris: Ms. Gabriela Miranda Ms. Yerim Park Project Manager Project Co-ordinator Tel: +33 1 45 24 95 01 Tel: +33 145 24 74 82 gabriela.miranda@oecd.org yerim.park@oecd.org OECD Contact in Kyiv: Mr. Mykhailo Semchuk Local Consultant in Kyiv Tel: +380 91 321 1050 mykhailo.semchuk78@gmail.com 3
Day 1: Monday, 22 February 2016: CGS Overview and Management Goal of the training: The training will provide an overview on how a CGS is established, how it functions, and what is needed to be taken into account to ensure its success and the accomplishment of the mission and vision of the founders. The focus will be on proper EU and international best practices, on good governance and on relating CGS activities to a strategy and mission designed to create additionality. Target group: Day 1 of the training is addressed to Task Force members and mid-level managers and employees of the relevant government organizations, such as the Ministry of Agrarian Policy and Food, Ministry of Finance, Ministry of Economy, NBU and other relevant agencies. Day 1 training is a general overview of the topics, with training becoming more specific and detailed in days 2 and 3. Day 1 Session on CGS Overview and Management 9.30 Background and Challenges to establishment of a CGS scheme 11.00 Coffee Break Includes sessions on the access to finance environment in Ukraine and the related field research on the level of farm finance in the target regions, as well as presentation of CGS case studies. 11.15 Specific features of a CGS 12.30 Lunch Includes descriptions of how a CGS is formed and what is included in its specific features, including financial analysis and target portfolio. 13.30 Eligibility criteria for CGS beneficiaries and partners 15.00. Coffee break Includes training on how a CGS determines who is eligible for a loan guarantee, and various detailed aspects about how CGS additionality factors such as economic additionality, financial additionality and economic sustainability are determined. 15.30 Formation and Governance of the CGS Includes training on the options of CGS formation location and governance for the CGS. 17.00 Review of material, case study, quiz 17.30 End of training Notes: For the training on Day 1, there will be a Power point file of approximately 150 presentation slides, as well as exercises, role playing games and a final quiz on each model. All training to be delivered in English language, with simultaneous interpretation into Ukrainian.
Day 2: Tuesday, 23 February 2016: CGS Regulation Goal of the training: Training on how the CGS is supervised and regulated. Focus is on the government oversight role and how it relates to regulation, this training is not for regulators per se. Target group: Day 2 of the training is addressed to Task Force members as well as managers and employees of the relevant regulator organizations, such as the Ministry of Agrarian Policy and Food, Ministry of Finance, Ministry of Economy, NBU and other agencies. Day 3 of the CGS training is becoming more specific and technically oriented, as such the appropriate technical level of trainees should attend from the Task Force, especially from the NBU and the Ministry of Finance. Day 2 CGS Regulation 13.30 CGS Regulatory issues 15.00. Coffee break A training on how the CGS is supervised and regulated. Focus is on the government oversight role and the NBU, and also on other issues related to regulation. 15.30 CGS Prudential standards and guarantee activities Training on the prudential standards established by the NBU and on how they can affect the guarantee activities supported by the partner commercial banks. 17.00 Review of material, case study, quiz 17.30 End of training Notes: For the training on Day 2, there will be a Power point file of approximately 40 presentation slides for each half-day, as well as exercises, role playing games and a final quiz on each model. All training to be delivered in English language, with simultaneous interpretation into Ukrainian. 5
Day 3: Wednesday, 24 February 2016: CGS Risk Management Goal of the training: Training on CGS risk types, policies and procedures to be considered by the CGS, including general recommendations for risk governance in order to increase the members of the Task Force and relevant ministries participants knowledge and understanding of CGS mechanisms. Target group: Day 3 of the training is addressed to mid-level managers and employees of the relevant government organizations, such as the Ministry of Agrarian Policy and Food, Ministry of Finance, Ministry of Economy, NBU and other agencies. On Days 2 and 3 of the CGS seminars, the training is becoming more technically-oriented, and the appropriate technical level of trainees should attend from Task Force member institutions. Day 3 Advanced Session on CGS Risk Management 9.30 CGS Risk management and principles of risk governance 11.00 Coffee Break Training on risk types, policies and procedures to be considered by the CGS, including general recommendations for risk governance 11.30 CGS Risk mitigation and risk management tools 12.30 Lunch A training on how risk is mitigated, and including review of risk management tools such as financial sensitivity analysis, asset liability management (ALM), partner bank assessment and monitoring. 13.30 CGS Risk mitigation and risk management tools (cont d) A training on how risk is mitigated, and including review of risk management tools such as financial sensitivity analysis, asset liability management (ALM), partner bank assessment and monitoring. 14.30 Review of material, case study, quiz 15.00 Coffee break 15.30 IAS, IFRS and ICC standards for CGS A training on how the CGS IAS, IFRS and ICC standards. Focus is on the correct accounting can assist in the sustainability of the CGS. 16.15 Anti-money laundering techniques for CGS schemes An overview of needed anti-money laundering techniques as pertains to the activities of a CGS, and what a CGS can do to reduce the potential of fraud and abuse in the course of its operations. 17.00 Review of material, case study, quiz 17.30 End of training Notes: For the training on Day 3, there will be a Power point file of approximately 50-60 presentation slides for each half-day, as well as exercises, role playing games and a final quiz on each model. 6
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