turkey msme finance facility 7volumevolume · msme finance facility? the ebrd turkey msme lending...

What is Turkey

MSME Finance

Facility?

The EBRD Turkey MSME

Lending Programme combines

long term loans by the

European Bank for

Reconstruction and

Development (EBRD) with

advisory and training

components (Technical

Assistance, TA) to a number of

selected Turkish partner banks.

The TA component of the

programme was launched in

November 2010.

The overall objective of the

Programme is to help Partner

Banks (PBs) participating in the

EBRD MSME Finance Facility

in Turkey introduce and/or

further accelerate Micro- Small

and Medium Sized Enterprise

(MSME) lending techniques to

the least economically

developed regions of the

country, thereby increasing

funding to MSME borrowers,

specifically to agricultural

borrowers.

Besides the measures

supporting MSME lending, the

programme consists of specific

technical assistance measures

to increase credit to the

agriculture sector and enable

PBs to lend at stable levels in

the agriculture market.

For the time being, KKB,

Isbank, Vakifbank, TEB and

Yapi Kredi Bank are the five

partner institutions of the

Technical Assistance

programme.

Isbank Isbank Isbank Isbank agricultural bagricultural bagricultural bagricultural banking anking anking anking vision vision vision vision mmmmeeting eeting eeting eeting

Isbank has organized a vision meeting on April 18, 2014 for introducing the Bank’s new agricultural lending policies, product portfolio and branch structure. In addition, a common agricultural vision has been developed through the meeting. Isbank is planning to launch specialized agricultural banking services at 14 branches all over Turkey. Following the pilot implementation, the concept is expected to be extended to all regions with agricultural potential.

“Almost half of our 1,300 branches are located in regions where agriculture is the main economic activity. Our agricultural loan portfolio has increased by 45% and reached a level of TL 1.8 billion as of end 2013. We will be offering financial support to our farmers and agricultural enterprises in a systematic manner by defining an agricultural banking vision and creating a professional approach to identify the needs of the producers correctly and mitigate the risks concerned. As a result of our strategy and

The contents of this publication are the sole responsibility of Frankfurt School of Finance & Management and can in no

way be taken to reflect the views of the European Union, EBRD or U.S. Agency for International Development.

TURKEY

MSME Finance Facility NEWSLETTER

VOLUMEVOLUMEVOLUMEVOLUME

7 MAYMAYMAYMAY 2014201420142014

The technical assistance

component of the project in

Phase II (May 2012 – October

2013) and Phase III (November

2013 – October 2015) is funded

by the European Union.

This project is funded by the

EBRD.


component of the project in

Phase I (November 2010 – April

2012) was funded by the USAID.


component of the project is

provided by Frankfurt School of

Finance & Management.

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focus, we have established agricultural banking services at 14 branches to be able to provide specialized banking services to the agricultural producers.” said Isbank Deputy Chief Executive, Mr. Suat Ince. Mr. Ince and other Isbank representatives referred to the great cooperation between Isbank, EBRD and Frankfurt School which helped turning this progress into a success story.

Use of TARDES and agricultural score-card for evaluation of agricultural loan applications, introduction of “Imece Card”, provision of specialized services to the farmers, cooperation agreements with agricultural cooperatives, large branch network and reputation among farmers will be the main factors for Isbank increasing market share and penetration into the sector.

Frankfurt School consultant Mr. Gürkan Erel delivered a speech on evolution of agriculture sector in Turkey and the world, highlighting the strategic significance of the sector and importance of improving agricultural finance capacities of financial institutions. Mr. Nihat Kaya from Kaya Gıda (VCF partner of Isbank), Mr. Ali Ekber Yıldırım from Dünya Daily Newspaper and Mr. Selcuk Pınar, representative of PANKOBIRLIK shared their experiences with the audience as well.

Value Chain Finance Programme

Value chain finance (VCF) for

agriculture is an approach of

growing interest to financial

institutions and to stakeholders

involved in value chains. Value

chain finance can contribute to

meeting the growing need for

agricultural finance and

investment in a structured

manner, responding to the

needs of farmers, suppliers and

producers of processed or

value added products.

If you believe that there is a

potential in your region for the

implementation of Value Chain

Finance scheme, please

contact us.

Client Assessment

Programme (CAP

Tool)

CAP Tool is a system

establishing the necessary link

between farmers / agricultural

entreprises and financial

institutions. It is designed as a

comprehensive risk

assessment model, but is

tailor-made from one partner

bank to another, depending on

the risk appetite and lending

strategies of each partner

bank.

CAP tool is a unique agro-

credit assessment tool

designed to support PBs’ staff

with little or no agricultural

knowledge in the decision

making process.

Within Phase III of the EBRD

MSME Lending Programme,

CAP tool is transferred to KKB

and opened to the use of whole

banking sector under the brand

name of TARDES.

New Value Chain Finance (VCF) sNew Value Chain Finance (VCF) sNew Value Chain Finance (VCF) sNew Value Chain Finance (VCF) schemes have been established!chemes have been established!chemes have been established!chemes have been established!

At the beginning of Phase III, Frankfurt School started initiatives with the partner banks for establishment of new VCF schemes across the country. As of April 2014, two VCF schemes, Yesil Kure and Onar Tarim have been successfully established in cooperation with TEB and the protocols have been signed between the bank and the firms. Besides coordinating the whole process and explaining the benefits of the VCF scheme to all stakeholders involved, the consultant team supported the parties in contract / protocol development phase as well i.e. defining contractual terms and conditions, drafting contracts etc. TEB will be receiving guarantees of buyers as a security and minimize its risks together with the purchase guarantee and pre-determined sales price set through contract. In addition to financing the VCF partners (producers or main company), TEB will have a chance to coordinate cash flow cycles between the contractual parties.


way be taken to reflect the views of the European Union, EBRD or U.S. Agency for International Development. 2

The consultant team is together with TEB Bafra branch

manager and Mr. Ahmet Aydin, owner of Yesil Kure.

The consultant team is together with TEB Edirne branch

manager and maize producers in Karaagac, Edirne.

TransferTransferTransferTransfer of CAP tool & TARDESof CAP tool & TARDESof CAP tool & TARDESof CAP tool & TARDES

As of end 2013, transfer of CAP tool to KKB TARDES system has been completed and TARDES has been launched in January 2014. Following the intensive promotion and marketing activities, TARDES is currently being used by Isbank, Akbank, Bank Asya and Fibabanka. TARDES agronomic database is continuously fed with the most recent agronomic data collected from all over Turkey through face-to-face interviews with farmers by the consultant team. Current version of TARDES includes 1,515 product-cost sheets (the so-called tech-cards) accounting for 115 agricultural products.

KKB and the consultant team invested in development of tailor-made versions of TARDES in line with the needs, demands and risk appetite of partner bankers. In order to define the specificities of the new version of TARDES and design the system in line with the feedback of TARDES’ existing and potential future users, a meeting has been organized by KKB and the consultant team with the representatives of Turkish commercial banks. The goal is to introduce a semi-dynamic system where the financial institutions can define their preferences into the system and select the best credit decision module reflecting their preferences among the alternatives offered.

CKS integration with TARDESCKS integration with TARDESCKS integration with TARDESCKS integration with TARDES

After a series of meetings with KKB and Ministry of Food, Agriculture and Livestock, integration of TARDES with the Ministry’s Farmer Registry System (so-called CKS) has been successfully finalized. TARDES, through integration with CKS and KKB records, aims to offer a complete solution to the users. CKS integration will eliminate the erroneous and burdensome data entries by bank staff and respective CKS information of the agricultural producer will be automatically shown in TARDES. Non-TARDES user banks will be able to benefit solely from CKS integration to feed their own system. For details, please contact your partner at KKB.

Training Programmes

Intensive training programmes,

seminars and workshops are

among the major components

of the Technical Assistance

measures within the framework

of EBRD MSME Finance

Facility. The following training

programmes are provided:

o “First Step in MSME Lending”

o “The Certified Expert in MSME Lending”

o “Marketing & Sales Training for Agriculture Customer Relationship Managers”

o “Agricultural Lending”

o “Small Enterprise Lending”

o “Medium Enterprise Lending”

o “Financing Agri-investments”

o “Training of Trainers”

o “On the job training”

As of end-April 2014, 2,251

loan officers and relationship

managers from Akbank,

Denizbank, Garanti Bank,

Isbank, TSKB, Vakifbank and

Yapi Kredi Bank have been

trained in various training

programmes.



Agriculture sector report and product reports Agriculture sector report and product reports Agriculture sector report and product reports Agriculture sector report and product reports

In order to increase agricultural know-how for specific products and support agricultural lending activities of MSME Finance Facility partner banks and TARDES users, the consultant team developed a product repproduct repproduct repproduct reportortortort format. The product reports provide basic information on the respective product including:

• Production figures in Turkey and the world;

• Specific cultivation techniques and specificities of the product;

• Production cycle;

• Yield and producer sales price range;

• Price elasticity;

• Storage conditions;

• Import – export conditions and main buyers;

• Government subsidies, if any;

• Minimum economic size to cover living expenses.

As of end April, 37 product reports have been prepared and shared with partner banks. These reports are uploaded to TARDES and offered to the use of TARDES user banks as well.

In addition, the consultant team prepared a sector reportsector reportsector reportsector report summarizing the latest developments in agriculture sector. The first edition of the sector report covering January – March 2014 period includes the following assessment and field observations of the consultant team:

• Economic assessment of agriculture sector and agricultural loan portfolio development;

• Effects of Syrian internal conflict on Turkish agriculture sector;

• Effects of drought on agriculture;

• Effects of frost on agriculture;

• Region based field observations & expectations;

• Product based field observations & expectations.

The sector report aims to provide an insight to the partner banks on effects of recent developments in the sector, reveal opportunities and threats and provide recommendations. First edition of the agriculture sector report has been disseminated to partner banks and will be uploaded to TARDES soon.

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3

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MSME Finance Facility Programme Regions

Adıyaman, Ağrı, Amasya,

Ardahan, Artvin, Batman,

Bayburt, Bingöl, Bitlis, Çankırı,

Çorum, Diyarbakır, Elazığ,

Erzincan,Erzurum, Gaziantep,

Giresun, Gümüşhane, Hakkari,

Hatay, Iğdır, Kahramanmaraş,

Kars, Kastamonu, Kayseri,

Kilis, Malatya, Mardin, Muş,

Ordu, Osmaniye, Rize,

Samsun, Siirt, Sinop, Sivas,

Şanlıurfa, Şırnak, Tokat,

Trabzon, Tunceli, Van, Yozgat.

MSME Finance Facility Newsletters

Previous editions of MSME

Finance Facility newsletters

are uploaded to programme

website. You can download

these editions from

www.msmeturkey.com.



Integration of CAP tIntegration of CAP tIntegration of CAP tIntegration of CAP tool ool ool ool and and and and pilot implementation pilot implementation pilot implementation pilot implementation at Vakifbankat Vakifbankat Vakifbankat Vakifbank

During the previous phase of EBRD MSME Lending Programme, the consultant team developed a tailor-made version of agricultural client assessment programme (CAP) in line with Vakifbank’s preferences. Integration of web-based CAP tool into Vakifbank’s own system has been completed in early 2014. The bank started to use the system in 26 pilot branches as of February 2014. Pilot implementation period was quite successful and Vakifbank recently launched the CAP tool for the use of all branches as a single mechanism for agricultural loan assessment.

261 Vakifbank regional and branch staff have been trained previously on agricultural lending and use of CAP tool. In May, the consultant team started to deliver on-the-job training programmes for the Bank in regions with the greatest agricultural lending potential. These training programmes aim to transfer of know-how on agricultural lending and CAP tool and include activities such as joint client visits, marketing and agricultural loan evaluation.

For sustainability of training programmes and creation of an internal capacity within Vakifbank for continuation of training programmes, the consultant team is going to design an intensive agricultural training of trainers (ToT) programme in the upcoming period.

Consultant team attended Growtech Agriculture Fair Consultant team attended Growtech Agriculture Fair Consultant team attended Growtech Agriculture Fair Consultant team attended Growtech Agriculture Fair

Frankfurt School attended 14th Growtech Eurasia Agriculture Fair in Antalya on December 3 – 6, 2013 together with Isbank and Yapi Kredi Bank. The consultant team provided on-the-job training to both bank staff attending the fair particularly on marketing of agri-lending products, sales and communication with farmers.

Consultant team with producers at Isbank booth in Antalya

Frankfurt School agriculture experts also had an opportunity to interview farmers, hear their demands, needs and opinions regarding their access to agricultural bank finance, observe the latest technologies and trends in agriculture sector, and collect agricultural data from the producers.

www.msmeturkey.com

www.msmeturkey.com

Technical Assistance Services:

Frankfurt School of Finance & Management

Mustafa Kemal Mah. 2157. Sokak

Benerler Is Merkezi No: 5/4 Cankaya

Ankara / Turkey

Tel: (90) 312 467 44 77

Fax: (90) 312 467 44 76

E-mail: [email protected]

Web: www.msmeturkey.com

The technical assistance component of the project in Phase II (May 2012 The technical assistance component of the project in Phase II (May 2012 The technical assistance component of the project in Phase II (May 2012 The technical assistance component of the project in Phase II (May 2012 –––– October 2013) and Phase III (November October 2013) and Phase III (November October 2013) and Phase III (November October 2013) and Phase III (November

2013 2013 2013 2013 –––– October 2015) is funded by the European Union.October 2015) is funded by the European Union.October 2015) is funded by the European Union.October 2015) is funded by the European Union.

The European Union is made up of 28 Member States who have decided to gradually link together their know-how,

resources and destinies. Together, during a period enlargement of 50 years, they have built a zone of stability,

democracy and sustainable development whilst maintaining cultural diversity, tolerance and individual freedoms. The

European Union is committed to sharing its achievements and its values with countries and peoples beyond its borders.

The European Commission is the EU’s executive body.

This project is funded by the European Bank of Reconstruction and Development (EBRD).This project is funded by the European Bank of Reconstruction and Development (EBRD).This project is funded by the European Bank of Reconstruction and Development (EBRD).This project is funded by the European Bank of Reconstruction and Development (EBRD).

The EBRD is a multinational institution set up with the specific aim of assisting countries to develop into market-

oriented economies. The shareholders include 61 countries from both the region and the rest of the world, plus the

European Commission and the European Investment Bank.

The EBRD invests and operates in 29 countries from central Europe to central Asia. Investing primarily in private sector

clients whose needs cannot be fully met by the market, the Bank promotes entrepreneurship and fosters transition

towards open and democratic market economies. Please visit www.ebrd.com for more details.

The technical assistance component of the project in Phase I (November 2010 The technical assistance component of the project in Phase I (November 2010 The technical assistance component of the project in Phase I (November 2010 The technical assistance component of the project in Phase I (November 2010 –––– April 2012) was funded by the April 2012) was funded by the April 2012) was funded by the April 2012) was funded by the U.S. U.S. U.S. U.S.

Agency for International Development (USAID).Agency for International Development (USAID).Agency for International Development (USAID).Agency for International Development (USAID).

USAID is an independent federal government agency that receives overall foreign policy guidance from the Secretary of

State. USAID works in agriculture, democracy & governance, economic growth, the environment, education, health,

global partnerships, and humanitarian assistance in more than 100 countries to provide a better future for all and

supports long-term and equitable economic growth and advances U.S. foreign policy objectives.

USAID provides assistance in five regions of the world: Sub-Saharan Africa, Asia, Latin America and the Carribean,

Europe and Eurasia and the Middle East. Please visit www.usaid.gov/locations/ europe_eurasia/countries/tr/ for more

details.

The The The The technical assistance services within the project are provided by Frankfurt School of Finance and Managtechnical assistance services within the project are provided by Frankfurt School of Finance and Managtechnical assistance services within the project are provided by Frankfurt School of Finance and Managtechnical assistance services within the project are provided by Frankfurt School of Finance and Management. ement. ement. ement.

Frankfurt School of Finance & Management (former Bankakademie) is the leading private business school and advisory

institute in Germany with more than 50 years of experience in consulting, qualification and training services in all areas

of banking and finance.

International Advisory Services, operating since 1992, is committed to improving financial markets and increasing

financial access to finance for low-income populations in developing and transition countries and emerging markets.

Please visit www.frankfurt-school.de for more details.

“This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of Frankfurt School of Finance & Management and can in no way be taken to reflect the views of the European Union."

MSME Finance Facility Newsletter Volume 7 May 2014

turkey msme finance facility 7volumevolume · msme finance facility? the ebrd turkey msme lending...

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