THE EIB EASTERN AFRICA - SME AND MICROFINANCE BANKING FORUM 2018

Agriculture & Finance Consultants

THE EIB EASTERN AFRICA

SME AND MICROFINANCE BANKING FORUM 2018

THE EIB EASTERN AFRICA SME AND MICROFINANCE BANKING FORUM 2018

Technical Assistance Programme to EIB Financial Sector Operations in East and Central Africa

The European Investment Bank (EIB) and AFC Agriculture & Finance Consultants jointly organized the “EIB Eastern Africa SME and Microfinance Banking Forum 2018” on 30 to 31 October 2018 in Nairobi, Kenya.

The first EIB Eastern Africa SME and Microfinance Banking Forum was organized in the framework of the East Africa Technical Assistance (TA) Programme funded by the European Investment Bank and successfully implemented since 2014 by the consortium of AFC Agriculture and Finance Consultants, the Academy of German Cooperatives (ADG), and INTEGRATION. The current project countries include Kenya, Uganda, Tanzania, and Rwanda, with a total of 30 participating financial institutions (FIs). The main objective of this TA Programme is to support the establishment and growth of micro, small and medium enterprises (MSMEs) across all economic sectors by providing global loan facilities called Private Enterprise Finance Facilities (PEFF) and Microfinance Facilities (MFF), as well as providing TA measures to participating FIs.

Senior executives of commercial banks, microfinance institutions, and banking associations, as well as other relevant stakeholders from Kenya, Rwanda, Uganda, Tanzania, Ethiopia, and Somalia were invited to the event.

Achievements to date:

424 Training sessions on various topics related to the MSME banking and finance sector for

201

The said forum is the first in a series of planned annual events to be held in East Africa.

implemented capacitybuilding interventions

238 workshops 17,761 for

9,126

MSMEs

partner financial institutions staff

Achievements: November 2014 – September 2018 Financial Institutions

Trainings

Trained

Capacity Building Activities

MSME Events

MSMEs Trained

Kenya

13

231

4,990

75

67

1,555

Uganda

6

71

1,748

31

63

4,704

Tanzania

6

92

2,003

60

98

11,242

Rwanda

5

30

385

35

10

206

30

424

9,126

201

238

17,761

Country

TOTAL

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THE EIB EASTERN AFRICA SME AND MICROFINANCE BANKING FORUM 2018

Day 1: 30 October 2018

Opening Ceremony and Welcoming Remarks

Bank Failures: The Role of the Financial Sector and Regulators

General Principles of Credit Risk Management (the EIB Approach)

The exclusive event which gathered approximately 100 participants was officially opened by the Head of the EIB Regional Office for East Africa, Mrs. Catherine Collin and European Union’s (EU) Ambassador to Kenya, Mr. Stefano Dejak, who emphasized the important role of the EU as a reliable economic partner in Eastern Africa. They finally encouraged the participants to take advantage of the special twoday forum to interact with each other and the EIB members.

Mrs. Sheila M’Mbijjewe, Deputy Governor of the Central Bank of Kenya, delivered an opening speech on bank failures and the role of regulators in the financial sector. She further presented an overview of the Kenyan banking sector and highlighted how MSMEs contribute significantly to Gross Domestic Product (GDP) growth and creating employment not only in Kenya, but throughout the world.

Mr. Paolo Lombardo, EIB’s Deputy Director General of the Risk Management Directorate, spoke about EIB’s approach to credit risk management and explained EIB’s risk management as a three-phased journey, in which risks need to be identified, measured, and stress-tested.

Afterwards, Ambassador Dejak joined both speakers in a feedback and discussion session.

The Banking Sector in East Africa – Responding to Market Shocks

Mr. Ricardo Santos, EIB Economist, and Mr. Jared Osoro, Director of Research and Policy at the Kenya Bankers Association jointly presented the recent findings on their study on market shocks in East Africa. They provided insights into the key findings of the recently published “Banking in Africa: Delivering on Financial Inclusion, Supporting Financial Stability “ Study released by the EIB in November 2018 which found out that even with the increasing exposure to credit risk and the persistence of risks, the banking industry in East Africa remains stable, and that the region has experienced instability in the form of bank failures in the recent past.

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THE EIB EASTERN AFRICA SME AND MICROFINANCE BANKING FORUM 2018

Day 1: 30 October 2018 (continued)

Preserving a Healthy Banking System: Internal and External Considerations

EIB Presentations and Debate

The presentation and panel discussion sessions were moderated

by Mr. Guillermo Bosse, Team Leader of the EIB TA Programme for East Africa. Mrs. Eleni Kyrou, Lead Gender Specialist at the EIB Environment Climate and Social Office started with a presentation on women in business and why it makes good banking sense. She was followed by Mr. Robert Schofield, Head of the Financial Sector Division of EIB’s Global Partners Department, who highlighted their current initiatives for SMEs in East Africa. Given the fact that longterm lending in East Africa is largely underprovided, EIB fills this gap by offering competitive local currency borrowing. Mr. Olivier Edelman, Head of EIB’s Microfinance Unit in the Equity New Products and Special Transactions Department, presented next on their current microfinance credit lines, with the aim of promoting financial inclusion for the poor, generating employment; empowering women and thereby also addressing the root causes of migration.

Mr. Courtney Christie-Veitch, Financial Sector Supervision Advisor at the International Monetary Fund East Africa Regional Technical Assistance Centre (East AFRITAC), highlighted the weaknesses in the internal risk management frameworks of banks during the 2007 and 2008 financial crisis, particularly in the areas of corporate governance and board oversight, and the lessons learned for banks and MFIs in East Africa.

Lastly, Mr. Carmelo Cocuzza, Head of the Corporate Unit of EIB’s Global Partners Department presented with Mr. Bosse and their topic focused on the various financial sector technical assistance programmes and how it supports the East African banking sector. Mr. Bosse then introduced the EIB Technical Assistance Programme for East Africa and highlighted its training and support services for local partner banks and MSMEs, and it has been successfully running in Kenya, Tanzania, Uganda, and Rwanda since 2014.

The panel discussion with the EIB gave participants the opportunity to share views on suitability of EIB lines of credit and on the capacity building received from the TA programme

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Sierra Leone

Chad

2017

GuineaBissau

Gabon

Zambia

Madagascar

Burindi

Nigeria

Niger

Cameroon

Uganda

Angola

Ghana

Equatorial Guinea

Benin

Rwanda

Median (SSA)

Swaziland

Cote d’Ivoire

Mali

Mozambique

Burkina Faso

Seychelles

Kenya

Botswana

Djibouti

Togo

Senegal

2015

Cabe Verde

70 60 50 40 30 20 10 0

Namibia

Percentage of GDP

Credit to the Private Sector (selected sub-Saharan African countries)

THE EIB EASTERN AFRICA SME AND MICROFINANCE BANKING FORUM 2018

Day 2: 31 October 2018

Welcoming and Opening Remarks

Panel: Practical Approaches to Agricultural Finance

Mrs. Myriam Djari, Deputy Head of the EIB Regional Office for East Africa, and Mr. Bosse, warmly welcomed everyone on the second day of the forum.

This session was opened and moderated by Mr. Andrew Obara, Long-term Expert at the AFC Uganda office. Mr Obara introduced the day’s topic and emphasized the importance of the agricultural sector for the GDP of East African countries.

The following panellists were then invited for their presentations:

Amongst the presenters from EIB partners institutions top managers from Pride Microfinance Uganda and Housing Finance Bank Uganda discussed the delivery of effective financial services products as examples for optimising banking operations.

Weather

Production

AFC Managing Director, Mr. Johannes Buschmeier, emphasized the importance of analysing the agriculture value chain and conducting market surveys as well as investing in trainings of bankers and farmers to make agricultural finance work.

Mrs. Esther Muiruri, Director of Agribusiness at Equity Bank Group, presented Equity Bank’s approach to agricultural finance and described the bank’s various innovative financing models, ranging from agency banking to digital solutions.

Mr. David Odongo, AFC Expert and staff of the East African Development Bank, highlighted the challenges to and solutions for the large scale agricultural financing in East Africa.

Policy

Discussions were lively as usual, as the participants were very eager to learn more about the best practices from regional and international experience.

Commodity East Africa generally faces a low-risk appetite for agricultural finance due to risks associated to:

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THE EIB EASTERN AFRICA SME AND MICROFINANCE BANKING FORUM 2018

Day 2: 31 October 2018 (continued)

Cyber Security

The final presentation of the day was conducted by Mr. Baiju Shah, Director of eBiashara Africa Ltd., wherein he highlighted the latest and upcoming trends in banking cyber security and emphasized the importance of mitigating the associated risks.

Wrap-up and Closing

Mr. Carmelo Cocuzza officially concluded the first EIB Eastern Africa SME and Microfinance Banking Forum 2018 and acknowledged AFC and the EIB Regional Office for successfully organizing and implementing the event.

He further highlighted the initial feedback received from participants on the appreciation for the event not only as a learning platform and providing the opportunity to exchange updates with the EIB, but also for facilitating peer networking and sharing of ideas

For more information about the conference and EIB’s Technical Assistance Programme, please contact: European Investment Bank Headquarters

98-100, boulevard Konrad Adenauer L-2950 Luxembourg Tel: (+352) 43 79 1 Fax : (+352) 437704

European Investment Bank Regional Representation for East Africa Keystone Park, Block A, 3rd floor Riverside drive 95, PO Box 40193 KE-00100 Nairobi, Kenya Tel: +254-20 2735260

Website: www.eib.org

Email: nairobi@eib.org

Information about EIB projects for SMEs: http://www.eib.org/en/projects/priorities/sme/index.htm DISCLAIMER: This technical assistance operation is funded by the European Union under the Cotonou Agreement. The authors take full responsibility for the contents of this publication. The opinions expressed do not necessarily reflect the view of the European Union or the European Investment Bank.

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