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ALIDE GENERAL ASSEMBLY TO ANALYZE THE CONSOLIDATION OF LATIN AMERICAN ECONOMIC GROWTH: THE ROLE OF THE DEVELOPMENT BANKING SYSTEM The Thirty-Eighth ALIDE General Assembly to be held in Lima on May 29 and 30, 2008 will address what must be done to further the region’s development above and beyond the favorable world economic situation and to enter into a virtuous circle of growth through infrastructure finance and technological innovation, etc., as countries in other regions are doing, and the action development financing institutions should take in this regard. The Meeting will also examine the emergence of new markets and alternative integration schemes that offer Latin America and the Caribbean trade and investment opportunities; infrastructure finance, production decentralization and social insertion; and technological development and innovation for sustainable growth and, as a special topic, financial markets and global economic pros-pects: implications for the region and development finance.

ALIDE INDEX PROJECT COMES TO AN END A Final Meeting held on August 16 and 17 at the headquarters of Nacional Financiera S.N.C. (NAFIN) in Mexico City closed the project “Design of an Evaluation Instrument for Development Financing Institutions.” On this occasion, the Project’s senior consultant, Mr. Ramón Trías, and the national consultants and/or representatives of international organizations (CAF, CABEI) presented and/or discussed the methodology and the results of its application in five financial institutions in an equal number of countries in the region and exchanged viewpoints on the best way to apply that methodology, its potential for future application, and the need to develop information technology and gradually build up data and information bases that will make it possible to analyze development bank evolution and performance. Problems and failures in measuring the various indicators were also examined. ALIDE will subsequently publish the performance evaluation methodology that has been prepared and will make it available to the development financing institutions. Advisory and technical assistance will be provided to financial institutions interested in applying this instrument.

Participants in the Final Meeting of the ALIDE Index Project, held at the headquarters of Nacional Financiera, in Mexico


RURAL MICROCREDIT PROGRAM OF BANCO DO NORDESTE DO BRASIL: AGROAMIGO Small-scale agricultural activities are a Brazilian economic and social priority because the 4.1 million family farms represent 84% of the entire country’s rural establishments, accounting for 77% of employed farm labor and producing 37.8% of the gross value of agricultural production.

reducing bureaucratic red tape and broadening service to family farmers who live below the poverty line. The design also provides for going beyond mere access to credit in an effort to massify use by the target public of a variety of financial services (like savings accounts and checking accounts, among other things).

Given their importance, the Brazilian government in 2003 established the following objectives: a) facilitate and broaden access to microcredits among formal and informal microentrepreneurs; b) facilitate and broaden access to financial services by low-income population sectors; c) increase the number of family farmers with access to the formal lending system; d) reduce financial interest rates for lowincome population sectors; and e) increase the number and participation of credit unions in the national financial system. Brazil’s microcredit policies were then broken down into rural and urban actions. In order to serve farm families in the latter case, the PRONAF (Program to Strengthen Family Farming) was implemented, with excellent results in terms of social coverage and low default levels.

The most noteworthy innovations in adapting microcredit methodology to the rural environment are: provision of customer service by a specialized professional, market mapping and demand organization; identification of the client’s financial needs; help with family farmers’ entry into the market; and financing of non-agricultural activities.

Even so, it became evident that a program more attuned to the particular characteristics of the beneficiaries was needed, that would provide them with suitable orientation and offer terms and amounts within the small farmers’ means. The government also concentrated its efforts on massifying access to financial services by low-income population sectors and microentrepreneurs. In this connection, one of its major lines of action since 2003 has been to strengthen and expand the CrediAMIGO Program created in 1997, Brazil’s most important experience with microcredit. Implemented by Banco do Nordeste, it is considered Latin America’s largest microcredit program, with a portfolio of 170 thousand active clients. A microfinance methodology based on the CrediAMIGO program was organized in the rural sector, starting in 2004. AgroAMIGO accordingly took shape as a directed productive microcredit methodology --in other words, one in which credit was granted to meet the financial needs of small formal or informal individuals or legal entities and in which the participation of rural microcredit advisors was highly important as professionals trained to grant assisted loans, with coaching for the producers, and who also offer advisory business assistance. AgroAMIGO’s design brings microcredit into line with federal government social policies, thereby simplifying the loan procedure,

The Brazilian government was already considering adding within the framework of PRONAF the financing of agricultural and non-agricultural activities that would cover the full range of rural activities including services, by directly employing the rural producer and his family’s labor force. It was in this connection and as part of the government’s policy of promoting use of the banking system by the low-income primarily rural population sectors that AgroAMIGO was established from among PRONAF’s line resources. AgroAMIGO finances family farmers, small-scale fishermen, fish farmers and foresters with gross family incomes of up to R$2000 (US$1,050). That financing can amount to up to R$1000 (US$530) for agricultural and non-agricultural production activities at effective concessional interest rates of up to 1% a year and with bonds for good performance amounting to up to 25% of each installment. The loan period may be as long as 24 months with one year of grace. The cooperation of the following entities was instrumental in the design and implementation of AgroAMIGO: a) Brazil’s Ministry of Agricultural Development, which first adjusted current legislation to allow for PRONAF to incorporate microcredit concepts and whose cooperation included the financing of rural microcredit advisor training and motorcycles; b) German Technical Cooperation, which developed the methodology for the advisors’ training program and evaluated it during the pilot program; and c) the Instituto Nordeste Ciudadanía, which selected and hired the advisors and coaches their performance in accordance with the program goals and their working obligations. The figure below illustrates AgroAMIGO’s operational model, showing not only the loan agent and the BNB, but also the participation of Empresa de Asistencia Técnica y Extensión Rural (ENATER). The key aspects of the new methodology can be summarized in the following items:

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AGROAMIGO: Operational Model

Customer survey Rural Microcredit advisor Family farmers Consolidates the customer survey and proposal / Credit project

EMATER: Project preparation and Technical Assistence

Project preparation

Consolidates customer survey and proposal/ Credit project

Agency frees resources for farmers

BNB Agency

Operational Parter INSTITUTO NORDESTE CIUDADANIA (OSCIP)

1) Definition of the working area consists of defining the geographic area in which the rural microcredit adviser will operate in the light of socieconomic criteria and the existence of support infrastructure. Possible local associations that could emerge from the program’s implementation are also considered in identifying the area of operation. 2) Market mapping consists of visits to selected municipalities and/or localities for preliminary contacts with potential clients and community leaders. The target public should be identified during this stage. 3) Promotion and dissemination of information about the Program, through which detailed guidance will be offered and given about the requirements and conditions of the Program and of other existing lines of interest. An effort will be made during this stage to keep in contact with the previously identified community leaders. 4) Project preparation and formalizing of proposals includes the reception and validating of documentation and an analysis of the project (and client) in keeping with the 5 terms (state of the business, capacity for payment, capital, collateral, and nature). 5) Approval of the loan proposal and signing of the contract involves a joint effort between the adviser and the business support manager. 6) Disbursement of the loan includes not only letting the client know that it has been approved, but also participating in the loan’s release and strengthening its terms (the payment dates, among other things). 7) Loan administration involves making periodic visits to check the investment that has been financed and to orient the client and providing coaching prior to its repayment. Participation in local events will also be sought to enhance the Program’s image. 8) Loan renewal and access to new financial products, for which the customer’s credit record is reviewed and if it is in order the loan is renewed gradually in accordance with the client’s payment capacity. Furthermore, potential customers are offered microfinancial products like checking, simplified or savings accounts. 9) Loan portfolio management monitors goal compliance by the adviser and the agency and evaluates the number of contracts signed, the default rate and loan renewals.

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The Program was officially launched in November 2006, but actually started operating in the second half of 2004, following the good results obtained in their rural microcredit pilot projects by the Oeiras and Floriano agencies in the State of Piauí.

AgroAMIGO’s Performance Year

By the end of 2006, AgroAMIGO had carried out 138 thousand operations and applied US$69.7 million, over eight times more than the total loan amount for 2005. Today the Program serves 722 municipalities in the Northeast, Northern Minas Gerais and Espírito Santo and 375 rural microcredit advisers guide farmers in their undertakings. The Program shows a low default rate and a profitable portfolio. Most of its loans are in the neighborhood of US$530 at a fixed term of about two years, which is adjusted to the recipient’s profile.

Sector financed Extraction activity* and Forestry

Amount in millions of US$

2005 7.4 2006 68.9 Source: Banco do Nordeste

Number of Operations in thousands 17.5 138

Default 0.02 0.76

very recent implementation, the next steps are already being planned, with a view to improving its design. Envisaged are the AgroAMIGO (Oct 2006) Term 3%

Up to 1 year

Amount

20% Up to R$500 (US$229) From R$501 to R$800 28% (US$367)

1%

Agriculture 6% From 1 to 1.5 years 6% AgroAMIGO is contributing to Non-agricultural the diversification of the activities it activities 16% From 1.5 to 2 years 52% From R$801 to R$1000 79% finances, which range from traditional Above R$1,000 ones like cattle breeding and sheep and Animal husbandry 75% 14% (US$459) goat breeding to rural services. Its Total 100% 100% 100% service to non-agricultural activities is *Involves the collection of crops and plant or animal products. also noteworthy, particularly those implementation of a variable pay scale for rural microcredit directed by young people and women, as well as to craftsmen and advisers, use of Palm Pilots for more efficient information collection, rural traders. The Program takes the human element into account, the creation of specific rural microcredit units, and the incorporation financing a variety of activities that supplement the farmer’s family of Credit Score methodology as a customer classification system for income, create rural jobs and, for the main part, do not depend better loan targeting and operating risk reduction. directly on climatic conditions in the region. Despite the Program’s .

KFW, SUPPORT FOR MSMEs AND ENVIRONMENTAL PROTECTION IN LATIN AMERICA AND THE CARIBBEAN Entwicklungsbank (Germany’s KfW development bank) and ALIDE organized the Seminar KfW Financing Lines and Programs: official German financial cooperation with Latin America, in the city of Lima, Peru on November 15-16, 2007 to strengthen KfW’s financial cooperation with Latin American development banks for the funding of investments in priority areas, particularly SMEs and environmental protection

KfW BANKENGRUPPE This German development bank was founded in 1948 as a public company and has assets amounting to 360 thousand million euros and a staff of 3,946 employees. Its main objectives are to boost the economy, society and ecology; finance investments in Germany; export and project finance; take charge of development cooperation; carry out tasks and services entrusted to it by the government, advise the Federal Government, and conduct refinance operations. KfW Bankengruppe is made up of five institutions as follows: a) KfW Mittelstandsbank: (SME Bank) promotes SMEs, enterprise founders and start-ups in Germany; b) KfW Förderbank is a development bank for housing, environmental protection, the climate, education, infrastructure and social issues; c) KfW Entwicklungsbank is a development bank that promotes developing and transition countries through the public sector; d) DEG – the German Investment and Development Company promotes

KfW Entwicklungsbank Allocations in 2006, by regions 15%

17%

10%

18%

40%

Europe/Caucasus Latin America

North Africa/Near East Sub-Saharan Africa

Asia/Oceania

developing and transition countries through the private sector; and e) KfW IPEX-Bank engages in export and project finance involving German and European supplies.

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Tasks to promote developing countries are distributed within the supplies investment capital in market conditions through mezzanine Group as follows: loans, equity and guarantees, and guarantees for manufacturing, a) KfW Entwicklungsbank (KfW development bank) arranges for service, agribusiness, financial and infrastructure projects. cooperation with state It also has Facilities for and private institutions KfW Entwicklungsbank and DEG Public-Private Participation of developing and New Allocations in Millions of Euros (PPP) studies that finance transition countries that KfW Entwicklungsbank 2004 2005 2006 infrastructure and financial have a government project feasibility studies. guarantee; provides Financial Cooperation Financing 984 1076 1182 Companies domiciled in the loans and non Financial Cooperation Development Loans 782 492 704 European Union or in a reimbursable financial Financial Cooperation Promotional Loans 160 247 512 partner country of the grants; and acquires Mandates 18 84 85 German Federal Ministry for equity participations in Total New Allocations 1944 1899 2483 Economic Cooperation and microbanks using DEG Development (BMZ) are federal budget funds eligible to apply. The public and its own resources; Loans 466 515 747 funding involves a and b) DEG: takes Equity participations 53 163 123 contribution of up to 50% of responsibility for establiGuarantees 44 22 47 the cost of the study, with a shing and broadening Total New Allocations 563 699 917 maximum sum of 200 economic structures in Total New KfW and DEG Allocations 2507 2599 3400 thousand euros. The the private sector of partner countries with German Development Cooperation are: developing and transition countries; and provides long-term loans, Bolivia, Brazil, Chile, Costa Rica, Dominican Republic, Ecuador, El subordinate loans, equity shares and guarantees, generally from its Salvador, Guatemala, Honduras, Colombia, Mexico, Nicaragua, own funds and budgeted funds.The German Investment and Paraguay, and Peru. Development Company (DEG) also provides long-term financing for growth and development through the promotion of private enterprises in developing countries and emerging markets. It

FINANCIAL COOPERATION FOR LATIN AMERICAN MSME PROMOTION Financial cooperation is provided to promote the following areas of developing and transition countries: democracy promotion, decentralization and local development; drinking water supply and sanitation, education, the financial sector, environmental and natural resource protection, renewable energy and energy efficiency. The final aim is to contribute to the anti-poverty struggle, peace development and crisis prevention. • Financial Sector Development Strategy and its Relevance for MSME Promotion

the loan decisions in keeping with banking practices (those who assume the risk also make the decisions) and e) the interest rate should cover at least the cost (incentive for banks to grow and/or broaden their loan portfolios to take in micro, small and medium enterprises, at no cost to the government). Drawing on budgeted funds, the following instruments are offered: a) non-reimbursable financial contributions for less developed countries (with a per capita GDP of less than US$900); for all Classic Composite Loan

The strategy is based on the following strategic objectives: a) improve the access of private sector micro, small and medium enterprises to financial services; and b) strengthen the MSME sector financing activities of banking and non-banking institutions,

Design Risk assumption Term Grace period

under the following principles: a) provide financial Eligibility institutions with long-term credit lines and offer (countries) them complementary measures (advisory services, for example) to support their efforts to establish a Eligibility (sectors) strong and healthy credit business for the MSME sector (sustainable impact on the sector); b) subsidies are not granted for viable MSME investments; c) MSME entrepreneurs belonging to the poorest economically active population and who previously had no access to formal financing sources are targeted, thereby promoting the growth of the poor and job creation; d) the banks themselves make

2 tranches Federation (90%) KfW (10%) CF tranche KfW tranche 40 years 10 years CF tranche KfW tranche 10 years 5 years Lowor intermediate-risk countries Infrastructure

Integrated Composite Loan 1 single tranche Federation (90%) KfW (10%) up to 25 years

Loans with Cheapened Interest Rates 1 single tranche KfW (100%)

5 years

5 years

Low- or intermediate-risk countries Infrastructure, financial sector

Low-risk countries

up to 12 years

Infrastructure, financial sector, budget support

countries committed to the struggle against poverty through self-aid, for environmental protection, social infrastructure, and gender equality measures by means of loan guarantee funds and subsidized interest; b) 40-year loan (IDA/AID) at an interest rate of 0.75% with a 10-year grace period, for countries with per capita

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GDPs of less than US$ 1,415; and c) 30-year loan (standard ODA/AOD) with an interest rate of 2% and a grace period of 10 years for which all other developing countries may apply. - Promotion in developing countries: KfW Entwicklungsbank grants promotional loans for public banks, public and private infrastructure (enterprises in which the state has an equity share of more than 51% and public-private participation (PPP) structures); and the microfinance sector (including participations in capital and mezzanine funds). The DEG, for its part, gives support through mezzanine funds and capital participations to private banks, private infrastructure projects (enterprises in which the private sector’s equity participation is above 51%) and private corporations. It also grants loans to private banks, private corporations and private infrastructure projects.

- "Capital mobilization for the poor" - KfW initiative to promote the growth of the poor: the aim is to raise additional funds for the development of the financial system, which is decisive for reaching the Millennium Development Goals (MDGs). A total of 1.3 thousand million euros is to be mobilized (between 2007 and 2011) and includes promotional loans and capital participations of financial cooperation. This initiative for MSME promotion is expected to improve living conditions in six of the eight MDGs, to wit: halving the number of people living on less than US$1 a day by 2015, in universal primary education, gender equality, health, the environment, and the world association for development.

ENVIRONMENTAL PROMOTION: AREAS OF ACTION, PROGRAMS AND INSTRUMENTS KfW Förderbank (KfW promotional bank) is responsible, within the Group, for dealing with environmental issues. The Group targets enterprises, individuals and municipalities in Germany through the following promotional programs: a) home building and remodeling, energy conservation, enabling people to live in homes they own; remodeling of residential buildings and renewable energy use; b) environmental protection, investment promotion in commercial enterprises to protect water, air and soil, and efficient energy use; c) support for academic studies and post-graduate professional education; and d) municipal infrastructure project finance. Political ideas about KfW’s role and activities tend to cover a wide range of topics (from climate protection to the reconstruction of uninhabited residential buildings). The government administration frequently helps out by prescribing highly detailed technical specifications for investments financed by KfW. Although these KfW Forderbank Promotion (Commitments in millions of Euros) 21%

13%

10% 4%

43% 9%

Investment in Environment Proteccion Municipal Infraestructure Global Creditlines

Housing Education Securitizacion

specifications are updated frequently, banks need simple loan application rules and stable program conditions in order to keep administrative costs down, while customers need to easily understand program conditions. Enterprise Programs for Environmental Protection Investments - Environmental protection investment loans in Germany and abroad: These loans granted through financial intermediaries are long-term and have low interest rates and finance up to 75% of the eligible costs, usually up to a sum of 10 million euros per project. They can be redeemed totally or partially before maturity with no

penalty. The loans finance investments that substantially improve the environmental situation, such as, for example: air pollution reduction or prevention, improvement in wastewater treatment and drinking water supply, solid waste prevention and treatment, and efficient energy use, use of renewable energy sources, innovative and environmentally friendly manufactured goods, and investments in environmental services enterprises. - Environmental Protection and Energy Saving Program: Loans are granted under this program for environmental protection, energy conservation and renewable energy. The long- term financing, provided through financial intermediaries, is attractive, with riskadjusted interest rates. Up to 75% of the investment of SMEs can be financed at concessionary terms (up to 50% in all other cases), which can amount to a maximum of one million euros in East Germany and Berlin and 500 thousand euros in West Germany. Under this program, financing can be provided for waste and water treatment, air pollution control, energy conservation and rational energy use and renewable energy use, pollution treatment and ecoaudit costs. - Renewable Energy Promotion Program: Investment loans for systems using renewable energy and that produce energy from biomass or large solar or geothermal heat collectors. These lowinterest loans granted through financial intermediaries have terms of up to 20 years, with free redemption and grace periods. The interest rate is fixed for 10 years and finances up to 100% of the eligible investment costs, usually amounting to up to 5 million euros. They can finance the installation and expansion of automatic feeding systems for solid biomass combustion for thermal use; the installation and expansion of geothermal heat collectors for thermal use; and the installation and expansion of large solar collectors for thermal use. - BMU Demonstration Project Finance Program: considers loans with a grant or subsidy element in the Ministry for the Environment, Nature Conservation and Nuclear Safety’s interest rates and in special cases an investment grant (of up to 30% of the eligible costs). Loans are made for up to 30 years with 5 years of grace at a fixed interest rate during the first 10 years, and finance up to 70% of the eligible costs without limit. The funding targets mainly

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industrial demonstration projects that show how modern procedures and combinations of procedures can be implemented to reduce environmental pollution. - Housing, Environment and Growth Promotion Initiative (HEG): Its aim is to strongly boost economic growth with climate protection effects. The HEG is part of a 25 billion euro package of measures to boost growth and employment allocated by the Federal Government at the end of 2005. It is the intention of the German government to commit 17 million euros for this purpose every year.

- Public Infrastructure (special window): Renewable Energy Systems in Buildings: Two promotional approaches are used: a) energy: building improvement to reach energy savings standards; and b) package of energy conservation measures. Energy saving loans of up to 300 euros per m² are made at 30-year terms, including 5 years of grace. The Municipal Loan Program participates in the financing by covering up to 100% of the eligible investment costs, particularly in developing areas, and up to 70% in all other areas. The Social Investment Program, for its part, finances up to 100% of the eligible investment cost, for a maximum of 10 million euros.

KfW’s PRINCIPAL CLIMATE PROTECTION ACTIVITIES Its main financing measures include national credit programs, official financial cooperation and export and project finance. The KfW also has its Carbon Fund to make use of the flexible mechanisms of the Kyoto Protocol and the “KfW CO2 neutral” Initiative for offsetting its own CO2 emissions.

guarantee; and c) Jungle protection or climate protection: For emissions from land use and from deforestation, etc.

The KfW Carbon Fund

This Fund allows for the purchase of emission reduction certificates for CDM and JI projects from the European Emission Trade System (ETS) and targets mainly: a) German and European enterprises that wish to make use of project certificates within the framework of their corporate and investment planning strategies as an alternative to implementing projects of their own, and of risk reduction thanks to certificates from a project portfolio; Thomas Duve, Deputy Director of the KfW’s Strategic Project b) banks and other Loan Department; Peter Weinert, Director of the KfW Regional Agency for financial services Peru, Ecuador and Colombia; Ilka Duwe, DEG (German Investment and suppliers, on behalf Development Company) Regional Director for the Andean Countries; and in representation Rommel Acevedo, ALIDE Secretary General; and Eduardo Vásquez, of their industrial ALIDE Head of Institutional Relations customers, permitting them to widen their product offering and to gain experience in this new market segment; Priority areas of KfW Financial Cooperation in Latin America: a) c) the export Climate protection through the promotion of renewable energy and economy in pertinent sectors, above all the area of renewable energy efficiency: The current volume of operations in different energy and energy efficiency, making it possible to promote stages of execution stands at 400 million euros. Resources have marketing and supplement the existing finance offering. The Fund been funneled into Bolivia, Ecuador, Brazil, Chile and Costa Rica, program was launched in June 2004 with an invitation to propose and the Central American Bank for Economic Integration; b) projects for the Clean Development Mechanism, more than 350 Special Facility - Renewable Energy and Energy Efficiency. At the project proposals being evaluated. The following activities have instruction of the German government, KfW is making 500 million been financed: sanitary landfill gas recovery in Brazil; eolic park, euros available between 2005 and 2009 for low-interest loans. The biomass, and water power in India: eolic park in Egypt and water loan term is up to 10 years with 3 years of grace and bears a state power in China. The first phase, that of the purchase contracts, is expected to be completed by year-end 2007. . Financings in this area by the different KfW Group members in 2006 amounted to the following: KfW IPEX-Bank: total allocations of 15 thousand million euros, with 2.1 thousand million going to environmental protection. KfW Development Bank: total allocations of 2.5 thousand million euros, of which one thousand million were used for environmental protection. KfW SME Bank and KfW Promotional Bank: Investment financing totaling 41.3 thousand million euros, with 12.5 thousand million allocated for environmental protection. All told, roughly 27% of the allocations are used for environmental protection, broken down as follows: 17% for infrastructure, 9% for enterprises, 49% for housing and 26% for renewable energy.

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II WORLD CONGRESS ON AGRICULTURAL AND RURAL FINANCE Global rural finance experts and key stakeholders converged at the Royal Thai Navy Convention Hall in Bangkok, Thailand for the 2nd World Congress on Agricultural and Rural Finance from October 31 – November 3 to exchange ideas and success stories as well as discuss relevant issues on the theme, “the Contribution of Agricultural and Rural Economies to Sustainable and Equitable Development.” The Congress was hosted by the Asia-Pacific Rural and Agricultural Credit Association and the Bank for Agriculture and Agricultural Cooperatives (BAAC) of Thailand, and organized in collaboration with the Confédération Internationale du Crédit Agricole (CICA), the African Rural and Agricultural Credit Association (AFRACA), The Latin American Association of Development Financing Institutions (ALIDE) and the Near East-North Africa Regional Agricultural Credit Association (NENARACA).

The government has to create a strong legal framework that involves appropriate use of resource such as finance, land and water. Moreover, they should provide a guarantee to support credit, marketing, and promoting the agricultural sector. Mr. Moh’d Hussein Adam, Planning Sector Manager, Agriculture Bank of Sudan, commented that Sudan is endowed with large agricultural resources which enable Sudan to achieve local satisfaction from the most important and food crops in both animal and plants production except for wheat which consumption is increasing very rapidly and reached 2 millions tons in 2006, while local production is not more than 750 thousand tons in 2007. Mr. Zheng Hui, President, Agricultural Development Bank of China said that China is the largest green output in the world with 20% of the world population. Therefore, is very concerned with food supply because it is the main important sector. The government created a policy to increase

William Hayden, General Manager of the National Bank of Costa Rica and Director of ALIDE (third by the left) presiding over the fourth plenary session.

In the first session “Sufficiency: Addressing Population and Food Sourcing Issues”, Mr. Ralph Houtman, Ragional Marketing and Rural Finance Officer, UN-FAO RAP, Bangkok, said that the world is now facing a problem with food production because of many reasons, for instance global warming, high demand and high cost of fuel. Numbers of sectors related long term sustainability have been created to make sure that there is enough food for the population. We have to search for a solution because we cannot take global food security for granted anymore. Mr. Alfredo Marrero, President, Sociedad de Garantías Recíprocas para el Sector Agropecuario, Forestal, Pesquero y Afines, S.A., Venezuela, said that the need of farmers in Venezuela is the guarantee of food security for the population from the government.

the products, by having the farmers sign a contract, which set out a goal for them to accomplish. As a result, China has become the largest cereal producer of the world. Another policy is to abolish the agricultural tax and adopting the available land which cause the farmers to gain more income. However, still faces a number of challenges in food security policy, because of the increase in green consumption and the price of agricultural products. In the session two “A Fair Share of Benefits and Responsibilities at Grass Roots Level”, Mr. Bashir Albasir, Director General, The Agricultural Bank, spoke that to improve agriculture system; the main point that the government needs to focus on is “richness”. What the government needs to do is that they must establish more channels of bank campaigns so the poor farmers in the rural areas can find and reach these supporting sectors. Widen the number of Agricultural Banks is one of the key

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solutions; however, by widening the number of banks alone cannot support the poor farmers adequately. What bank needs to do is that they must provide “soft loan”, which are the loans with cheap interest rates as well as provide farmers with training so they will gain benefit from borrowing large funds. Mr. Richard Meyer,

extra income; y 5th decade: decided to rely on themselves under the policy emphasizing on the framework of the lending funds. Mr. Sudhansu Sekhar Acharya, Executive Director, NABARD, spoke that the main purpose in creating more bank network both from the support of local or international is to help the poor farmers in the

Rommel Acevedo, Secretary General of ALIDE (second by the right) acted of moderator in the second plenary session

Consultant, CICA, commented that Micro Finance Service (MFI) is a very innovative institution that is promised to give the money to the poor peoples; its main methodology is to support and contribute in agriculture industry. However, there are three main issues today about MFI concerning problems, those are: a) Outreach: MFI has its main target in supporting the poor farmers however; MFI is struggling in ability and capacity to reach such group of farmers; b) Sustainability, by lending a large amount of funds to the poor farmers, they are enquired to be well trained first and must learn how to save and pay back the bank loan at the same time; y c) Impact: the conflict between MFI and the borrowers because MFI itself is growing rapidly but at the same time there are higher in number of poor clients. MFI seems to be avoiding serving the poor group of clients – if this is true “How can they expand those to rural area” There are three main factors that can support in widening funds through out the poor in the rural areas: a) new product; b) Innovation; y c) Linkage – must create and develop more number of business partners to reduce the cost of capital.

rural areas. The organization was well prepared and willing to give out loans to the poor farmers in India however, there are a few problems that the organization is facing: the process is too complicated, y the social problems in India. Mr. Gilbert Some, Banque Agricole et Commerciale du Burkina (BACB), said that the purpose is give training to those farmers in the rural areas as well as to supports them in financial service targeting on the women in the rural area. The aimed direction of BACB is to enhance its service and ability to support the poor farmers in the rural areas.

In the session three “Present-day Climate and environmental reality”, Mr. Yuxue Xue, Deputy Resident Representative, UNDP, said that climate change is one of the most important issues. It is considered as global pheno-menon and should be the responsibility of both national and international sectors. It is also a serious challenge of every country, especially poor countries. For developing countries, climate change means the loss of their home, land and lives and their governments have to spend a large amount of money to solve this problem. Mr. Tawfig Al Ja’Afreh, The other side, Mr. Director General, Agricultural Credit Thiraphong Tangthirasunan, Corporation of Jordan, said that the President, BAAC and President environment in Jordan is attended Mr. Rodrigo Sanchez Mujica, Chief Executive Officer Fideicomisos of APRACA said that the work of by challenges and general Instituidos en Relacion con la Agricultura -FIRA- Bank of Mexico, the bank is divided into 5 problems, for instance, different decades: 1st decade: Soft loans offered to desertification, rainfall crisis, ground farmers but banks were suffered from lending to the farmers; 2nd sloping, and soil erosion. Fragmentation of ownership of agricultural decade: reached the poor farmers by one on one basis system; 3rd land is also a great problem due to the fact that 91% of the country decade: outreach expansions in term of branch networks; 4th is dry desert. Mr. Rodrigo Sanchez Mujica, Director General decade: farmers formed and unit themselves as a group to find Fideicomisos Instituidos en Relacion con la Agricultura -FIRA- Bank

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of Mexico, spoke that the irregularity of climate is also important as climate change. One of the main weaknesses of the Mexican territory is that it is located within a region of high cyclonic activity. The government has a global strategy to reduce adverse effects of climate change, such as, increasing surface of commercial plantations and generating electricity with renewable energy sources. FIRA from 52 years ago provides funding and credit guarantees to the banking system to finance agribusiness. Its programs are designed to promote integrated development to Mexican rural producers. Mr. Alain Retiere, Director General, UNOSAT, commented that the satellite is quite important for sustainable development in vulnerable rural community. It helps in learning and understanding the economic and environmental constraints in their geographic context without disturbing too much the rural community. It also provides real time communication through internet, and allows mobile connection between field and project management in the headquarters. In the session four “Bringing Technology Closer to Grass Roots Communities”, Ms. Renate Kloeppinger-Todd, Rural Finance Advisor, World Bank, mentioned about the “Key factors of Success” which is to connect technology with each bank. “Technology” is just a tool that can be used to support in customer satisfaction and relationship. Cost of interest rate is also another factor that will finally allow them to make profit. Technology works but you have to buy the right ones that is, not too expensive, not too cheap, and must be affordable in terms of maintenance cost as well. Mr. Duke Osam-Duodu, Deputy Managing Director, ARB Apex Bank, Ghana, said that rural area also has less opportunity in term of “Globalization” because of the difficulties in accessibility to information and ability to use technology, for example ATM, Credit Cards etc,. He further talked about on “How to bridge the digital divide?” He came up with two solutions: 1) specific training: farmers need to be trained to be able to use innovation technology; y 2) awareness: farmers need to be informed about the new innovation and technology for the use of daily basis. Mr. Zachariah K. Chianda, General Manager, Cooperative Bank of Kenya, spoke about the success of the Bank that was developed from the grass root; the main key that allows such banks to be in that position is that the accessibility of affordable financial service to meet the needs of each household concerning their inadequate income, insufficient cash flows and inability to save for investments. In Kenya, it has been proven that low cost in financial service is affordable to low income group of populations therefore the challenge is to find new and innovative ways of broadening access

to financial services. This can be achieved by the following:Increase in number of outlets, diversifying products and services offered to various market segments, lower cost of banking service , innovations in products and delivery channels (Online banking y ATM), y law and regulation framework to ensure stable and efficient financial system. In the last session “Public-Private Partnership at grass roots level and Closing Sessions”, Mr. Mechai Viravaidya, Chairman of Population and Community Development Association, commented that private sector plays an important role in agricultural development because it can be developed easily. It also creates jobs due to small size and invested capital. Moreover, it has diversified profession and meets the versatile consuming demand which is not satisfied by the state owned industries. Public-private sector partnership focuses on business sectors which are infrastructure and poverty alleviation. Ms. Sulaiman Arif Arianto, Managing Director, Bank Rakyat Indonesia, spoke that its philosophy is to provide financial access, charity, revolving fund, subsidized loan, commercial micro loan, and commercial loan. However, the obstacles of rural financial institution are, for example, an inability to recognize the market characteristic, and a limitation of long term source of fund. An ideal requirement for MSME development is synergy, including financial institution, big enterprises, government, and related institutions. Mr. Masmoud AlAsaad, Agricultural Cooperative Bank, Syria, said that the credit has been another major problem of this country. There are only 15% of the populations who can access money from formal credit market. The rest of them usually access non-official form of credit which charges very high interest rate (75%). So, the government, in association with many organizations such as UNDP and Japanese government established a financial project to help the people manage their fund by using their custom in the region. Mr. William Hayden, President, Banco Nacional de Costa Rica (BNCR) and Director of ALIDE, said that the Bank was established 93 years ago due to coffee crisis to help small coffee companies. It deals with both large and small companies, countries and international organizations. It also works in all sector of banking industry and offers all the financial services that allowed by law. Furthermore, raises its own fund; therefore, none of its budget comes from the state budget. It also believes that credit is only a tool which cannot be used to solve every problem, so, it tries to promote social inclusion and examines the poverty.

TWELFTH IBERO-AMERICAN FORUM ON SYSTEMS OF GUARANTEE HELD IN CHILE The Twelfth Ibero-American Forum on Systems of Guarantee and Financing for Micro, Small and Medium Enterprises was held in Santiago, Chile on November 12 through 14. Dr. Enrique Iglesias, Secretary General of the Ibero-American General Secretariat and Dr. Alejandro Ferreiro, Chilean Minister of Economy were present at the opening ceremony, the event being attended by over 250 participants from 18 Ibero-American countries. The key topics addressed at the meeting organized by ALIDE, Spain’s IBERAVAL S.G.R, SELA/IBERPYME and the Chilean State Guarantee Fund for Small Enterprise were: (a) guarantee and finance systems for

micro and SMEs in Chile from the perspective of the efforts of CORFO, FOGAPE, the Economy Ministry, the Office of the Superintendent of Banks and Financial Institutions, and the private and entrepreneurial banking systems; (b) Ibero-American guarantee system products and services, with case studies of guarantee programs and institutions in Argentina, Colombia, Spain, Mexico and Peru; (c) guarantee systems from the outlook of multilateral organizations (World Bank, IDB, CAF and CABEI) and the development banking system; (d) international overview of guarantee systems from the vantage point of the Asian and

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evolution and prospects of the guarantee systems in Latin America in a context of economic growth. During the Twelfth Ibero-American Forum on Systems of Guarantee and Financing for Micro, Small and Medium Enterprises the attending institutions created the Latin American Guarantee Association (ALIGA), which groups together the region’s guarantee institutions to carry out activities of common interest more organically and continuously. To this end, a Provisional Board was entrusted with taking the necessary steps for the organization’s establishment and operation, in keeping with its stated objectives.

Organizing authorities of the Twelfth Forum at the Closing Ceremony

European continental guarantee federations; and (e) analysis of the UNICAS in Northern Peru with over 9,000 people, involving them in

It was also agreed to hold the Thirteenth Forum in Brazil in 2008 and that the Serviço Brasileiro de Apoio às Micro e Pequenas Empresas (SEBRAE), as the local counterpart, will be in charge of its organization. The Forum presentations and documents can be found at the website: http://www.redegarantias.com/

BANCO NACIONAL REACHES AGREEMENT WITH ASIAN BANK Presidents of Costa Rica and China witness the event In late October, as a result of the first official visit to the Asian giant, and senior executives from the institution’s entrepreneurial and the General Manager of Banco Nacional, William Hayden, signed a foreign trade area held key meetings with other Chinese banking Framework Cooperation Agreement with the China Development institutions. Bank in the People’s Palace in Beijing. Important meetings have also been held with the top officials of The agreement, signed by the General Manager and the Vice- Bank of China and Export-Import Bank of China, financial President of the China Development Bank, Liu Ke Gu, was witnessed institutions for which other cooperation agreements are in the by the President of the People’s Republic of China, Hu Jintao, and the works. The negotiations will be stepped up over the next few days in the expectation of achieving important results that will facilitate President of Costa Rica, Oscar Arias Sánchez. trade and the establishment of Under this agreement, the two a favorable investment climate banks will establish cooperation between Costa Rica and China. links in several areas of common interest and will work jointly on The links between Banco matters of cooperation, financing Nacional and China are not and the exchange of experiences. recent, for the Bank has The China Development Bank has always maintained commercial experience in infrastructure relations with the Chinese financing, which could be colony in Costa Rica. For that interesting at the local level and, in reason, it has assumed the turn, has shown special interest in commitment to promote the Banco Nacional’s micro, small and training of Costa Rican medium enterprise services. exporters so that they will be able through William Hayden called the results of the BN Pymex, with advisory this visit highly positive and William Hayden, General Manager of Banco Nacional, met with Li assistance and training, to emphasized the bridges that have Ruogu, Governor and top executive of Export-Import Bank of China. enter the Chinese market. It been built with China’s most seeks, at the same time, to important banks for different kinds of business. He added that Banco Nacional is part of a historic process serve that community by giving its executives training in Mandarin of establishing closer links between China and Costa Rica. During and Cantonese so that they can provide these customers with an exhibition of Costa Rican products in Beijing, he drew attention to specialized service. This tour through China is expected to have a the importance of the presence of products and services of 24 BN multiplier effect on the people and enterprises scheduled to arrive in Pymex (micro and small exporters). Parallel to the official visit by the country, as well as on the Costa Ricans who see an opportunity Costa Rica’s president, the General Manager of Banco Nacional for investment in that country.

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BROU IS URUGUAY’S BEST BANK OF THE YEAR 2007 Banco de la República Oriental del Uruguay (BROU) was honored by the magazine LatinFinance as The Best Bank in Uruguay in 2007. That prize recognizes its magnificent and continuing work and high quality performance over the past twelve months. Among all of the region’s banks that were considered, the excellence and leadership of Banco de la República Oriental del Uruguay were exceptional, making it an example to be followed by other banks in the region. In the words of the President of BROU, Mr. Fernando

Calloia, “this recognition is extremely important for this historic development bank that competes in the Uruguayan market with topnotch international banks, for it bears out the hypothesis that a public development bank can attain high standards of economic and financial efficiency that are even better than those of the private banking system.” At September 2007, the Bank’s assets were in the neighborhood of US$ 6,464 million and it showed a 29.5% return on equity.

BANCO NACIONAL DE COSTA RICA IS GIVEN TRIPLE INTERNATIONAL RECOGNITION Banco Nacional de Costa Rica was singled out this November in Miami for international recognition by the prestigious magazines, Latin Finance and Euromoney, and the Dresdner Bank. The LatinFinance Bank of the Year prize, which it obtained for the second straight year, stresses the “excellence and leadership of Banco Nacional” in Costa Rica. According to the grounds for the prize’s award, which recognized “its consistently superior work and high performance throughout 2007,” the bank “is an example for all of the country’s other banks and has done an extraordinary job, of which all of the staff should be proud.” The prize recognizes its excellence in retail, commercial and investment banking. The jury bases its decision on the use of quantitative methodology and on financial and qualitative results, in the sense of having a strategic vision of the future of the banking market and industry; the institution must also hold strong positions in inter alia,

product and service diversification, market placement and transparency. BNCR also obtained the certificate for Best Bank in Costa Rica from the English Euromoney magazine, as part of its 2007 Awards for Excellence. The publication decided that over the year Banco Nacional showed the best evolution of the country’s entire financial system. As a third recognition, authorities of the German Dresdner Bank awarded Banco Nacional the prize for being the Best Correspondent Bank in Costa Rica. This is the first time the award is being made and it emphasizes the Bank’s “professionalism and excellent continuous work” over the year. These prizes are to be added to the Bank’s recognition by the magazine Summa and the Central American newspaper Moneda (at June 2007) as the number one bank in Central America in assets. It also occupied the top position in assets in the country’s banks, according to the magazine Actualidad Económica (at May 2007)

MEXICO’S NACIONAL FINANCIERA PORTAL WINS GLOBAL UN CONTEST This development bank’s website is the main distribution channel for Nacional Financiera’s products and services. Nacional Financiera (NAFIN)’s portal was chosen as the world’s best website in the "e-business" category by the World Summit Award, an initiative of the United Nations World Summit on the Information Society. The www.nafinsa.com web page represented Mexico in the contest held in Croatia this past September, in which it competed against 650 projects submitted by 160 countries. In the end, it won first place in that category, which will be awarded to it this coming November 5 in Venice, Italy. This development bank’s website is the main promotional

and distribution channel for Nafin’s products and services, inasmuch as through it almost five million loan operations totaling close to 400 thousand million (U.S.: 400 billion) pesos have been carried out. In a press release, the development bank reports that over 3.5 million visits to the portal are expected over the year concerning its quality content, applications and availability. This user flow makes it the second most visited development bank website in the world, following only that of the United States Small

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Business Administration (SBA). The institution’s electronic page manages a directory of hundreds of thousands of small and medium Mexican enterprises and records 770 thousand business inquiries and notices among its registered entrepreneurs. It also

has the best business library for small and medium enterprises (SMEs), covering about 170 topics, such as how to start a business, leadership, sales, finances, accounting and family enterprises, among others. The World Summit Award establishes the need for the information society to speak out not only about technology, networks and access problems, but also about specific benefits and innovative applications, inasmuch as technological breakthroughs are reflected in valuable contents, with emphasis on cultural and economic identity and diversity. According to the report, this initiative is a UN World Summit mechanism set up to permit an understanding of the already existing wealth and to create the necessary transparency in information markets. In April of that same year, Nafin obtained the National Quality Prize in Mexico, which it received directly from President Felipe Calderón Hinojosa. (Source: Notimex, El Universal. Ciudad de México).

Business Opportunity Project Belle Rive Residences, Hotel & Club Location: Jacmel, Haiti Owner/Developer: SIMACT Belle Rive, Inc Project Components: The Residences at Belle Rive, 94 Townhouse and tower Aparments. The Belle Rive Hotel: 120 Room – 4 Star Boutique Hotel with Spa and Health Club The Belle Rive Club: Club serving both the Residences, Guests and The Hotel, with shops, restaurant, theater and conference hall. The Belle Rive Marina: Marina with slips for 20 Vessels Baguette Beach: private Beach and Sporting Club 20 minutes away by private boat The Belle Rive Beach: Private Beach for Residents, Guests and Members only Site: 24 Acre Ocean View with Private Beach Project Duration: 56 months in 7 phases or 30 months continuos builtout

Project Financing: Required Equity Investment, US$6 Million for 2.5 years. Request Financing: $14 Million for 1.5 years out of which $4.2 Million revolving for 2.5 years. Simple interest at 7% per annum. Total Return on Investment: 48.69% over months Annual Return on Investment: 10.44% Total Return on Equity: 370% over 56 months Annual Return on Equity: 79.39% Use Funds Methodology: Poject funds (equity and financing) will be fully invested through Phase IV. In phase V, full equity and revolving finance will be invested. At the end of Phase V both equity and revolving finance will be paid off and a first distribution of profit will occur. The remaining profit will be recapitalized to fund Phases VI and VII, with at final distribution occurring at the completion of Phases VII.

Further information, please contact: Jean Marie Wolff at (516) 997-4400 or jwolff5604@aol.com or Ahpaly Coradin, Esq. at (305) 895-3739 or ahpaly@coradinlaw.com

General Secretariat, Paseo de la República 3211, Lima 27 – Perú Switchboard:(511) 442-2400; Fax (511) 442-8105 / E-mail: e-banca@alide.org.pe Web Site: http://www.alide.org.pe/

ALIDE 2007 © P


Alide e news dec2007