INTERGRATED RISK MGT ABDUL KYANIKA NSIBAMBI CENTENARY BANK UGANDA 2 nd April 2009.

INTERGRATED RISK MGT

ABDUL KYANIKA NSIBAMBICENTENARY BANK UGANDA

2nd April 2009

Location

Mission Statement

“To provide appropriate financial services, especially microfinance, to all people of Uganda, particularly in rural areas, in a sustainable manner and in accordance with the law”

Centenary Bank – HistoryFirst Years ( 1982 – 1993)

1983 – Formed as a Credit Trust with the name “ Centenary Rural Development Trust”, by the Uganda National Lay Apostolate,

1985 – Began providing financial services 1993 – Registered as a Commercial Bank

with only 8 branches,

Centenary Bank Ownership

Uganda Catholic Secretariat

31%

Stichting HIVOS – Triodos Fonds

18%

Catholic Diocese38%

SiDi12%

Individuals1%

CENTENARY BANK TO DATE

One of the fastest growing Commercial Banks in Uganda – over 700,000 depositors and over 90,000 borrowers

Pioneered Microfinance in the Banking sector, serving mainly Micro and SME’s

Actively involved in Agricultural lending, the backbone of Uganda’s economy

Large branch network with 32 branches networked countrywide, 52 ATMs and employing over 1,300 staff

Centenary Bank – Branch Network

Centenary Bank – Loan PortfolioAs at 31st December 2008

Loan Clients 92,611 Volume is $ 144,000,000 funded

by a deposit base of $ 172,272,000 74% of the LP are micro loans, with

minimum loan amount of $ 50 NP Loans = 1.5%, The Agricultural LP is 13% – 14% of

the Total LP,

PERFOMANCE FOR THE LAST SEVEN YEARS

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2002 2003 2004 2005 2006 2007 2008

Gross Loans Total Income Deposits Total Assets

Agricultural LP Growth.

Proposed H/q OF THE BANK

Why Agricultural Lending? The mission statement of the bank is to

extend financial services to rural economically active poor,

80% of Ugandan population stay in rural areas and main activity is Agriculture.

Uganda has conducive climate for agricultural production and fertile soils,

The national economy is entirely dependent on agriculture,

There is increased demand of agricultural commodities in the region,

Agricultural Lending – History

Started in 1998 as a pilot test targeting small farm holder farmers

Focus was mainly on commercially oriented farmers located in rich agricultural regions,

Agricultural Enterprises Financed

Crop/animal production, processing & marketing,

Crops financed: maize, vegetables, rice, coffee, bananas, oilseed crops

Animal production including cattle fattening, and dairy production, poultry, and piggery,

Risks in Agricultural Lending

Purely dependent on nature, Crop and animal diseases and pests, Market & price risks, Poor loan management by credit officers

and institutions in the following areas;loan evaluation,Structuring,Documentation,Monitoring,Recovery.

Risks in Agricultural Lending Cont’d…..

Perishability of the agriculture produce,

Loan Collateral Limitations, Poor Credit Culture in some parts of

the country, Lack of entrepreneur skills by

farmers, Bad policies and Instability.

Risk Mitigation Measures by the Bank, Focus on commercially oriented farmers, Holistic approach in credit appraisal by

considering all sources of income of the household,

Combination of securities/collateral approach,

Using well trained credit officers with a background of agricultural academic qualifications,

Risk Mitigation Cont’d……..

Quick and timely loan processing Proper structuring of loan payments

depending on the farmers cash flows,

Diversification of the agricultural portfolio,

Using an efficient back office credit mgt system to monitor the portfolio growth and quality,

Risk Mitigation Cont’d……..

Networking with other partners in the agribusiness industry which include farmers’ association, government, processors, NGOs, FIs.

Increasing outreach by coming up with new products, opening more branches and lending offices,

Challenges of Agricultural Lending

Lack of credit history,  Lack of farm records, Heterogeneity of farming, Seasonality of agricultural

production & Loan Term Structure. Clients are widely dispersed with

inadequate rural transportation facilities,

Challenges ctn’d Poor physical and institutional

infrastructure, Lack of production statistics from

the farmers,

End

LOVE SERVE AND UNITE

Thanks for Listening