sdp financial governanace final draft to tony
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VALUE CHAIN ASSESSMENT FOR SATPARA DEVELOPMENT PROJECT (SDP)
Report on:
VALUE CHAIN GOVERNANCE AND FINANCE COMPONENT
Mapping and Analysis of Financial Services Provision by Value Chain Actors
By:
Izhar Hunzai
Consultant, Value Chain Finance
August 15, 2014
TABLE OF CONTENTS
1. INTRODUCTION........................................................................................................................... 41.1 Objectives, Outputs and Scope.......................................................................................41.2 Study Approach and Methodology...............................................................................5
2. FROM BARTER TO BANKING.................................................................................................52.1 Evolution of Financial Services in GB..........................................................................52.2 Birth of the Microfinance Sector...................................................................................62.3 V/WO Banking...................................................................................................................... 6
3. FINANCIAL SERVICES EXTERNAL TO VALUE CHAINS...............................................83.1 Business Environment.......................................................................................................83.2 Financial Institutions.........................................................................................................8
3.2.1 Service Provision.......................................................................................................................93.2.2 Service Quality and Governance......................................................................................10
3.3 Conclusions and Recommendations for Financial Services External to Value Chains................................................................................................................................... 10
3.3.1 Conclusions:..............................................................................................................................103.3.2 Recommendations:................................................................................................................10
4. FINANCIAL SERVICES INTERNAL TO VALUE CHAINS.............................................114.1 Summary of Priority Value Chains............................................................................114.2 VC Actors and their Financial Needs........................................................................12
4.2.1 Dried Apricots..........................................................................................................................124.2.2 Tomatoes...................................................................................................................................144.2.3 Cherries......................................................................................................................................154.2.4 Green Peas.................................................................................................................................17
5. SUPPORT ACTORS IN VCs.....................................................................................................195.1 Overview...............................................................................................................................195.2 Public sector actors..........................................................................................................195.3 Community level Actors.................................................................................................20
6. FINANCIAL GOVERNANACE................................................................................................216.1 Baseline Situation.............................................................................................................216.2 Strategy for Improving Financial Governance.....................................................226.3 Investing in Support Infrastructure..........................................................................226.4 Democratizing Financial Markets..............................................................................226.5 Financial Products and Services.................................................................................22
7. CONCLUSIONS AND RECOMMENDATIONS..................................................................247.1 Conclusion............................................................................................................................247.2 Recommendations............................................................................................................24
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ACRONYMS
ABC Apricot Business Coalition
AKFED Aga Khan Fund for Economic Development
AKDN Aga Khan Development Network
AKF Aga Khan Foundation
AKRSP Aga Khan Rural Support Programme
BDS Business Development Service
CSO Civil Society Organization
DOA Department of Agriculture
FEGs Field Enterprise Group
FMFB First Micro Finance Bank
GB Gilgit-Baltistan
IFAD International Fund for Agricultural Development
IFC International Finance Corporation
LCUs Local Credit Unions
MARC Mountain Agriculture Research Center
MFIs Microfinance Institutions
NATCO Northern Areas Transportation Company
NGO None Governmental Organization
LSO Local Support Organization
SDP Sadpara Development Project
RMA Rapid Market Appraisal
PCSIR Pakistan Center for Scientific Research
VCs Value Chains
VO Village Organization
WO Women Organization
ZTBL Zari Tarqiyati Bank Limited (agricultural development bank)
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1. INTRODUCTIONThis report on “mapping and analysis of financial services provision by value chain actors,” is part of an integrated study to identify and assess promising agricultural value chains (VCs) in the command area of Sadpara Development Project (SDP), under a Technical Assistance (TA) Contract. The scope of work includes four components: a) VC Mapping, b) Rapid Market Appraisal, c) VC Finance and, d) Capacity Building Plan for VC team. Reports on the first two components have been compiled and submitted to the client.
The investigations under component “C” of this consultancy follow the results of the first two components, which studied several agricultural value chains and prioritized four most promising ones in the project area. This part of the study looks at the current financial services both internal and external to selected agricultural value chains, as well grants and other support services available from public sector agencies and NGOs. Finally, the report identifies service gaps and opportunities to improve and upgrade financial and other service provision in the SDP command area. The report contributes to the third and final round of deliverables specified in the Terms of Reference (TOR), as following:
Deliverable 3: Final Value Chain Assessment Reports (Reports on each component)
1.1 Objectives, Outputs and Scope
The objective of the financial governance part of the assignment is to undertake an analysis of the financial environment and interaction between providers and users of financial services in agriculture in general, and specifically in the four value chains selected in the study.
The main outputs of the study are:
a. An overview of the available financial services and institutions in SDP command areab. An analysis of service gaps and identification of opportunities for upgrading selected
value chains and various segmentsc. A set of recommendations and strategies for improving provision of financial services
to support agricultural value chains in SDP command area.
The scope of this component covers the following key activities.
1. Mapping and analyzing financial services provision by value chain actors and financial institutions
2. Examining accessibility of financial services and products3. Examining governance within the value chain(s) to determine if certain actors have
disproportionate power relationships compared with other actors. Are these relationships mutually beneficial or exploitative?
4. Analyzing value chain actors’ financial acumen and bankability5. Examining finance policy environment, legal, regulatory, or tax issues that constrain
the flow of finance within value chains.6. Collecting information on credit currently provided and used by input suppliers,
smallholder farmers, farmer associations, processors (including commercial farms/estates), aggregators, wholesalers, retailers, and other actors in the value chain
7. Collecting information on volume of credit extended by each supplier, nature and form of credit by supplier to the sectors (i.e., kind, cash, etc.), credit terms (i.e., term of the loan, payment mechanisms, allowable grace periods, interest rates, processing fees, and collateral requirements?
8. Conducting stakeholder meetings to clarify and refine information about opportunities and gaps, potential approaches, tools, financial products, and services needed to increase value chain functioning
9. Summarizing conclusions and give recommendations that should include:
a) Strategies, activities and specific steps to be followed to expand credit to selected value chains,
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b) Recommending types of financial products and services appropriate for each of the target value chain participants, the ideal providers of such financial products and services,
1.2Study Approach and Methodology
The first task of the assignment was to study and prioritize promising value chains, (deliverable 1: crop prioritization), for which the consultants visited Skardu between July 3 and 8, 2014, and conducted detailed consultations with project staff and stakeholders. A two-day workshop was organized to identify and prioritize relevant VCs for the project. On day one, in-depth consultations were held with SDP management and staff to develop criteria for selecting and prioritizing relevant VCs. On day two, a wider group of stakeholders was invited to further refine and validate the selected list of priority VCs. During the same visit, questionnaires were developed and over the next 4 weeks, data was collected and compiled.
The second task was to conduct a rapid market appraisal (RMA), which entailed detailed analysis and benchmarking of production, processing, transportation and market opportunity aspects of the value chains. The process and results of the first two components are contained in the two reports: deliverables 1&2.
This third component of the holistic assignment takes up the results of the first two components, i.e., four value chains and RMA, and describes and analyzes the financial services provision, both internal and external to the value chains, and identifies gaps and opportunities for improving access to and provision of financial services, with the purpose to upgrading the selected value chains.
2. FROM BARTER TO BANKING2.1 Evolution of Financial Services in GB
It is often said that three developments have been highly significant in the recent history of Gilgit-Baltistan. They include, inter alia, a) the abolition of feudal states, b) construction of the KKH, and c) establishment of AKRSP.
Before the KKH, the area was landlocked, which naturally created a closed economy in which people strived towards self-sufficiency in food and fiber production, with very few surpluses being produced and exchanged. Value was ‘stored’ mostly in animals, butter and trees, which were bartered for other necessities of life. Cash was limited to incomes earned from military and other non-farm services, as well as wages earned on government contracts. The KKH essentially ended the isolation of the area and exposed it to larger production and marketing systems, thus ushering in a new era of development and specialization. However, the impact of KKH would have been limited had there not been another development that extended its benefits, beyond immediately accessible areas, to remote corners of GB.
In 1983, AKRSP was established as an experiment in “endogenous and self-sustaining development” at the grassroots level.1 Three activities provided a foundation for the new experiment: a) social organization for cooperative management; b) capital generation through regular savings; and, c) technical skills for increasing productivity.
Going against contemporary best practice in microcredit and development at the time, AKRSP first focused heavily on savings promotion, introducing credit programs only when a strong need for loans emerged after market penetration and the adoption of new technologies.2 Through Village Organizations (VOs) and Women’s Organizations (WOs), rural farmers were encouraged to first organize, and then save incrementally to build up capital. Farmers
1 Village Organization Banking (VOB), AKRSP, 19902 Ibid
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used their savings to purchase agricultural inputs and for household emergencies. This was achieved by saving as little as USD 1 cent every two weeks. Initially, the primary sources of savings was wages under micro infrastructure projects, such as irrigation channels and link roads, funded by AKRSP, and subsequently included small portions of remittances and income earned from the sale of agricultural products. V/WOs acted like informal banking groups. After members deposited their savings in the group, the elected manager recorded the amount in a group registrar as well as in their individual passbooks. Collective savings were deposited in a formal bank account, or invested in government bonds, often earning interest on fixed term deposits. Most groups also initiated internal lending, enabling villagers to borrow from the group savings at interest rates set by the V/WO itself.
AKRSP Field Accountants trained village and valley level accountants and regularly checked financial records and conducted annual audits. V/WO managers and presidents were required to obtain signed permission from all group members plus an AKRSP resolution to withdraw savings from the group deposit account. AKRSP staff would often visit groups to verify withdrawal claims.
By the end of 2000, well over four thousand V/WOs had accumulated an impressive amount equivalent to USD 8 million in savings, and revolved four times that amount as micro credit. Almost all of this capital generation and reinvestment had taken place in rural areas and the impact was felt in both productive and social sectors across the entire region, from Baltistan to Chiral.
2.2 Birth of the Microfinance Sector
Having developed a functioning rural financial market in the most remote valleys of GB and Chitral, AKRSP set out to formalize, professionalize and institutionalize the microfinance sector. In 2000, AKRSP partnered with International Finance Corporation (IFC) and Aga Khan Fund for Economic Development (AKFED) to incorporate the First Micro Finance Bank (FMFB) in Pakistan, with branches in all parts of the country. By this time, nine RSPs, modeled on AKRSP, were operating in all provinces of Pakistan and they were all engaged in community-based micro credit. In 1996, AKRSP created Pakistan Microfinance Network (PMN), thus laying the foundation for a vibrant microfinance sector in the country. PMN presently includes 12 MFIs, and they account for 90% of all microfinance in the country.3
2.3 V/WO Banking
The informal V/WO savings and credit program, nicknamed as village banking (V/Banking), continued in many areas even after AKRSP withdrew its support and supervision for this program after establishing FMFB, and continues to this day as a residual activity. The key advantages of V/WO Banking were its flexibility, lower cost of delivery and social collateral. On the other hand, the informal nature of the operations required continuous support and questions of sustainability were being asked.
During the fieldwork for this study, we found VOs and WOs were still engaged in small-scale savings, as if it had become ingrained as a copping strategy. As summarized in the following Tables 1 and 2, VOs and WOs in the SDP command area were engaged in small amounts of savings. Of these, 3 VOs and 1 WO were also involved in Village banking.
Table 1: VOs Savings in SDP Command area (PKR)
3 http://www.pmn.org.pk
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S.No
Name of VO
# of active members
Total Savings
Internal lending (yes/no)
# of loans given in 2013
Amount given
1. Alasar bank 36 30000 N - -
2. Biafu 35 26000 N - -
3. Rizvia 26 27000 N - -
4. Biyorsing 30 8000 N - -
5. Zganthong 21 15000 N - -
6. Pehchan 25 80000 Y 5 35,000
7. Astana bala 25 25000 Y 3 50,000
8. Arif abad 26 75000 N - -
9. Hassan abad 28 70000 Y 4 10,000
10. Hoto ranga 35 70000 N - -
Source: Survey
The V/WO savings and credit model was particularly successful in two related aspects: a) female empowerment and, b) education funding. Women, who have long been denied access to traditional forms of wealth and asset ownership, and access to financial services, have especially benefited from savings groups.
Table 2: WOs Savings in SDP Command area (PKR)
S.NoName of WO# of active members
Total savings
Internal lending (Y/N)
# of loans given in 2013
Amount given
1. Bain 27 20,000 N - -
2. Biafu 20 15,000 N - -
3. Jaffaria 27 22,000 N - -
4. Braqchan 25 10,000 N - -
5. Dramba 20 15,000 N - -
6. New ranga 25 60,000 N - -
7. Katpana 30 50,000 N - -
8. Ranga yarkhor 30 300,000 N - -
9. Mairaj (wo) 28 35,000 Y 1 25,000
10. Ranga thorkhor 27 380,000 N - -
11 Zrasna thorkhor 40 30,000 N - -
Source: Survey
3. FINANCIAL SERVICES EXTERNAL TO VALUE CHAINS3.1 Business Environment
Located at the mouth of the Skardu Valley, the SDP command area, which includes Skardu Town and its suburbs, is the business hub of Baltistan Division. Skardu is the gateway to Baltistan. The Gilgit-Skardu road provides road access with KKH to the west, and then branches out to connect all the other valleys in Baltistan. Skardu town is the administrative HQ and commercial hub of Baltistan Division. It also has an airport, though commercial
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flights are weather-dependent and uncertain. The movement of all goods and people into and out of Baltistan is through this central location.
A summary typology of financial service available in SDP command area is provided in the following Table. For greater clarity, these services are divided into the following three categories.
Table 3: Financial service providers
Financial services external to value chains
Financial services internal to Value chains
Support services from government and NGOs
Formal banks In-kind credit to producers/ suppliers from traders/ processors
Technical training
Credit societies Traders’ credit and pre-purchase advances to producers from buyers
Business training
Welfare societies Suppliers’ credit to traders R&D services
Village and Women’s Organizations
Cooperative marketing and sharing costs/ benefits
Partial investment grants
Money lenders Self-financing Subsidized inputs
Family members Credit linked to purchase agreements
Extension services
Buyer’s advance Contract farming Sponsoring value chain walks
MFIs Consumer credit to farmers from shopkeepers
Support infrastructure, such as farm to market roads and subsidized electricity
3.2 Financial Institutions
Skardu town is home to regional offices and branches of all commercial and development and microfinance institutions and commercial banks, as well as other financial institutions that operate in Baltistan. In addition, private finance is also available from a host of informal sources, such as welfare societies and VOs and VOs.
Table 4 below shows the number and type of banks and other financial institutions located in the SDP command area.
Table 4: Type of Financial Institutions/ branches in Gilgit Baltistan
Banks/ Institutions Number
Commercial Banks 14 Development Banks 2 Post Offices (as FIs) 3 Micro Finance 2
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Cooperative Societies 16 Village Organizations 64 Women's Organizations 35 Total 115
Source: Monitoring, Evaluation and Research (MER) Section, AKRSP.
3.2.1 Service Provision
The formal banking sector includes 14 commercial banks, two development banks, and two micro finance institutions, the FMFB main branch and one of its retail units, located in Skardu town. However, the survey findings show none of the commercial banks issued any loans in support of the agricultural development. This is consistent with historical trends in which commercial banks in GB have been taking deposits and ‘exporting’ capital to their head offices for investments in large industries in the mainland. Commercial banks typically offer consumption loans to salaried people. Because of this neglect, local branches of mainland banks are not permitted to develop financial products for local markets.
Table 5: Agricultural credit given by formal banks in the command Area in 2013 (PKR)
#Name of Bank # of loans
Amount disbursed
Start up capital
Working capital
Average interest rate Remarks
1. ZBTL 200 35,000,000 15,000,000 20,000,000 14.50% Political
2. FMFB 146 3,000,000 - 3,000,000 23% High Iterest
3. MFU 912 9,291,212 4,000,000 5,291,212 19%High
interest
4. Akhuwat 500 10,000,000 10,000,000 - 0% Interest free
Source: Survey
The survey results show that ZBTL (Agricultural Bank) disbursed PKR 35 million; the largest amount disbursed and gave credit for both start-up investment and working capital. The average loan size was PKR 175,000. ZTBL is providing loaning facilities to all areas related to the agriculture in the area under two main heads, i) Agriculture Development loans: these are long term loans for the purchase of machinery and other components; and ii) Agriculture production loans: these are small loans offered to the farmers for purchase of inputs, such as seed, fertilizers and pesticides.
The FMFB disbursed PKR 3 million, the average loan amount being about PKR 20,000, and it only financed working capital. The financing provided by microfinance Unit (MFU) is significant both in terms of quantum and number of beneficiaries.
The most unusual source of financing is Akhuwat, a welfare society funded through ‘community donations’ that offers small amounts to poor households and women to set up micro home based enterprises in the farm sector. Overall, the data shows that the public sector is still the main source of agricultural finance, while Akhuwat is the largest provider of finance for poor families and women.
The business model of Akhuwat follows principles of Islamic finance, which takes the form of a business partnership between the provider of finance (financial equity) and provider of labor (sweat equity).
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3.2.2 Service Quality and Governance
From the survey results, it is clear that the only investment products available for agriculture are from the public sector, microfinance and non-profit welfare sectors. While useful, these services are no substitute for commercially available credit, which is key to spurring private sector-led growth. A typical problem in public sector supplied investment capital is that it typically goes to more influential borrowers, who may not even be entrepreneurs. More often than not, these loans are written off.
Similarly, microfinance, and welfare provided credit is often too little and too late. While filling a key service gap, it has little potential for scaling up and sustainability, in its present form. However, because of its flexibility, low delivery cost, and social collateral, the community backed informal finance can be upgraded and formalized into Local Credit Unions (LCUs).
3.3 Conclusions and Recommendations for Financial Services External to Value Chains
3.3.1 Conclusions:
a) SDP command area is the commercial hub of Baltistan and ideally located for developing business clusters around: a) production inputs, b) product amalgamation, c) processing and value addition and, d) trade and transportation.
b) Developing promising agricultural value chains in the command area can have positive spillover effects for the whole of Baltistan region.
c) Relative to other parts of Baltistan, the command area has good access to financial services, but much of this is public sector/ supply driven not market driven
d) Because of lack of participation of commercial banks in the agricultural sector, products and services are limited,
3.3.2 Recommendations:
a) Partnering with private banks will be the best strategy to improve local capital market functioning
b) Investment by commercial banks in agricultural value chains (current benchmark being close to zero, according to the results of this study) can be incentivized by either topping up their margins, or reducing their risk through guarantees
c) Let the commercial banks do their own due diligence and risk assessment, as well as use their own capital, but the project can ‘reward’ them for lending to agricultural sector
d) For goodwill and participation of poor and women, providing a grant to Akhuwat to be used as a revolving credit fund without interest rate, is another recommendation.
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4. FINANCIAL SERVICES INTERNAL TO VALUE CHAINS4.1 Summary of Priority Value Chains
Under component 1 and 2, four value chains have been prioritized. These are: Apricots Tomatoes Fresh cherries, and Green Peas
The comparative analysis and prioritization summarized in the following Table represents a well-diversified portfolio of crops, and provides a reasonable balance between agro-ecology, economy and social benefits. The values assigned to different crops are not weighted. Still, the comparisons are useful because they reflect the experience of technical staff and the perceived benefits of value chain actors. Moreover, the scores under each category of benefits helps in making informed decisions for value chain actors. For instance, dried apricots rank highest in the priority list from an overall perspective, but green peas and cherries come ahead of apricots from market demand perspective, and all crops except apricots rank higher from future market potential. The risks and rewards become known under this classification, and if someone wants to take a little extra risk to get an extra return, the classification makes that decision easier.
Table 6: Comparative Analysis and Prioritization of VCs for SDP Command area
CRITERIA USEDD
ried
Apr
icot
Tom
ato
(see
dlin
g)
Fres
h C
herr
ies
Gre
en P
eas
AGRO-ECOLOGYa) Adapted to the agro-climatic conditions H M M Mb) Land-use advantage H H M Mc) Off season advantage M H H Hd) Soil fertility M M M H
ECONOMIC RATIONALEa) Market demand M M H Hb) Relative income per unit of land M H H Hc) Processing/value addition advantage H M L Lc) Storage and transportation advantage H M L Md) High volumes available for marketing H L L Le) Market potential under future improved cross-border trading conditions
M H H H
f) Employment generation H M M Lg) Food Security (defined as self-provisioning) H M L Lh) Prior experience with production and marketing H L M M
SOCIAL BENEFITSa) Equity/wider benefits H L L Lb) Women involvement H M M Mc) Youth involvement M L H Hd) Involvement of poor households H L L L
Source: Adapted from the components 1&2
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Overall, dried apricots come at the top with the H score of 11; next are green peas with an H score of 6, followed by fresh cherries 5 H scores. Early tomatoes for local market get a score of 4 H and 8 M.
Table 7: Relative Scores
Score Dried apricots Tomato Seedlings Fresh Cherries Green PeasH (High) 11 4 5 6M (Medium) 6 8 6 6L (Low) 0 5 6 5
4.2 VC Actors and their Financial Needs
In this section, key financing needs and issues along the value chain map are summarized for all the four value chains selected for this study. The information provided here is based on survey results and opportunities and gaps identified by the stakeholders, as well as analysis of potential approaches, innovations, financial products, and services needed to increase value chain functioning.
4.2.1 Dried Apricots
Annual production of apricots in GB is estimated at 114,286 ton. Baltistan region alone has an annual production of 40,649 tons or 35.6%. Owing to their perishable nature and distance location of down country consumption markets, apricots are mostly dried and sold to generate cash income. Apricot kernel oil, used in cosmetic industry, is another high-priced by-product.
Apricots fit neatly into local farming systems, food security and labor allocation strategies used by subsistence-oriented farmers, and in the agro-ecological logic of mountain areas. Historically, early maturing varieties provided high value nutrition to landlocked local populace during famine-like conditions in early summer, when the previous year’s stored food was already exhausted, and harvest of main food crops was weeks away. There are more than 60 varieties, which may represent one of the oldest and well-preserved genetic stocks of apricot cultivars in the world. Of these only two or three varieties are currently believed to have a commercial potential.
Apricot trees do not compete with staple crops for scarce land and water resources, as they are largely grown on marginal slops, not in terraces, and are allotted junior irrigation rights after cereals. Traditional apricot cultivation practices provided multiple benefits, at little input and management cost. This helps in understanding why farmers today may be reluctant to adopt new, management-intensive commercial varieties, growing and managing trees scientifically in proper orchards, or reducing the number of varieties. These are serious questions and must be placed in their proper context, in devising strategies for further development of apricot value chain.
Major Flow
Local Retailing
International
DomesticDry fruitsShops
ProcessorsOutlet
Processor
Wholesaler
Rep of Processor
Rep. of wholesaler
IndividualGrowers
LocalCollector
MarketingWholesale ProcessingProduction
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Medium FlowLimited Flow
As described in the RMA report, and summarized in the above VC map, the supply chain of dried apricot is active and quite dynamic. Almost all farmers in the command area grow small quantities of apricots, which are of mixed varieties. Small quantities of commercial varieties are then pooled to generate marketable volumes. FEGs and representatives of wholesalers and processors do most of the collection for processing. Processing involves two stages: drying at the farm and FEG level and cleaning, grading and packaging at the secondary processing level. Local agents of wholesalers and representatives of processors collect the primary product from the individual farmers and FEGs for a pre-agreed price, according to the quality of the produce. They also provide inputs, such as drying trays, plastic for drying tents and sulfur whose cost is deducted from the sale of their produce. The produce is then reprocessed (washing, grading and packing) under the supervision of technical hands and supplied to the retailers, national wholesalers and exporters.
The following chart summarizes key stages in apricot VC, market actors and their issues and financing needs.
Chart 1: Apricots: VC Actors and their Financial Needs
VC STEP VC ACTOR FINANCING NEEDS AND ISSUES
Cultivation of certified plants of market-demanded varieties
Grafting of new varieties on traditional ones
Private nursery Public nursery Service providers
Farmers need access to certified and market demanded varieties
Public sector (DOA) is expected to provide this service, but it does not have the resources
Private commercial nurseries require sizeable initial investment
Financial institutions are reluctant to finance nurseries, which are perceived as ‘public goods’ and government responsibility
Primary production of mix varieties
Farmer FEGs
Very small quantities of market-demanded varieties at the individual farm level
FEGs work as informal cooperatives to pool their product Financing at the primary production level is not a major
issue
Collection & primary processing (drying)
FEGs Representative of
processor Representative of
processing
Financing is needed for transportation, trays, plastic, labor At present some R&D money is available under the SDP
for training and demonstration purposes For scaling up, specific financial products are needed from
MFIs and commercial banks, which are not available Advance payments from secondary processors are also
available but not always guaranteed
Secondary processing (cleaning, grading and packaging)
Wholesaler Processor
Financing needed for plant, equipment, warehousing, transport and working capital
Limited asset-based financing available from ZBTL Commercial banks not willing or equipped to appraise
investment proposals Non-financial business development services (BDS)
missing
Trading Processor’s retail outlets
National wholesaler
Working capital needed for retail shop owners National wholesale markets are notoriously complex, and
monopolistic
Marketing Exporter Importer Letter of Credit is a must for direct export, according
government policy
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But importer wants to first inspect the goods before making payment
Summary of findings and recommendations for Apricot VC
Almost all actors in the value chain are in the informal sector, which makes it difficult to obtain finance from banks and other financial institutions, which are in the formal sector. Moreover, both financial and non-financial business development services (BDS) are needed for the value chain up gradation.
Recommendations Develop financial/ non-financial BDS for apricot VC, including business plans for key segments Create a forum, call it ‘Apricot Business Coalition’ (ABC), for VC actors to interact and access
BDS Host an investor conference for apricot VC actors, and invite public and private sector partners
4.2.2 Tomatoes
Annual production of tomatoes is around 6,455 ton in GB. With an estimated production of 55 tons, Skardu district contributes less than 1 % to the total GB production (RMA Report, 2014). The bulk of tomatoes consumed in GB are imported from down country. The growing season is short, limited to the months of September and October only, in single cropping zone. Storage is also not an option, as there is an oversupply of tomatoes during the winter months from the harvest in Sind and Punjab, and prices fall dramatically. The prices of tomatoes fluctuate between PKR 170/ kg during the spring and summer months, to PKR 30/kg during winter months.
The selection of tomatoes as one of the four VCs in SDP command area follows the logic of import substitution, during the summer months, when tomatoes are supplied from cold stores in Punjab, and when the prices are at their annual peak. This is possible by early production with the use of protected cropping (Green Houses) and sequential sowings to provide product to the local market for a maximum period of at least 6 months.
The proposal is to specialize in the supply of seedlings grown in green houses, to other parts of Baltistan, as well as production and supply of fresh tomatoes from June to end October, to cover the under supply from the mainland. A further advantage is to dry the surplus product, using the same drying technology as apricots.
The value chain (figure 1) is fairly simple, as producers can directly supply fresh product to retailers in Skardu town, which is the largest wholesale market in Baltistan. The market for seedlings already exists on a small scale, which can grow overtime as farmers in other parts of Baltistan become aware of the benefits of early tomatoes.
Again, the central location of SDP command area is an advantage, as there is daily
Consumer
Wholesaler
Commission Agent
Retailer
Assembler/ Beopari
Producer
Figure 2 Illustrative VC Map for Tomatoes, taken from RMA Report
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transportation from Skardu town to all parts of Baltistan. However, special packaging will be required for the safe delivery of fragile seedlings.
Chart 2: Tomatoes: VC Actors and their Financial Needs
VC STEP VC ACTOR FINANCING NEEDS AND ISSUES
Production of seedlings in green houses
Farmer FEG
Farmers need access to credit to purchase inputs, such as certified seed and green house technology
Green houses may need sizeable initial investment
Production of fresh tomatoes under contract farming
Farmer FEGs
Short-term agricultural production loans are needed Farmers face difficulties in proving their bankability Supplier credit or in-kind credit to producers needed
for contract farming
Collection & transportation
FEGs Representative
of wholesaler
Sizeable amounts of working capital is needed, especially for making advance payments to growers
For scaling up, specific financial products are needed from MFIs and commercial banks, which are not available
Marketing Local mandi Retail shops
Buyers’ credit
Summary of conclusions and recommendations for tomato VC
Early production of tomatoes for local market is a relatively new idea, and it is technology, management and capital intensive. For this VC to work, investment in high quality green house technology is paramount.
Recommendations Investment plans must follow various assumptions and tested under different sensitivity analysis Only certified and high quality technology should be used, and sub-standard technology must be
discouraged Banks and other financial institutions must be included in the discussion around this VC
4.2.3 Cherries
The SDP command area can grow good quality cherries, when the supply in the rest of the country has come to an end. However, poor road infrastructure between Skardu and Islamabad is the main challenge.
Cherries are a high value fruit, with high demands not only in Pakistan but also in China, Middle East and South East Asia. Presently, cherries are mostly sold to pre-harvest contractors. They harvest, grade, pack and sell locally to traders and consumers and also transport to down country markets for sale, but because of high perishability, the wastage is high. This value chain has good potential for upgrading, especially given future trade opportunities in the region.
As with other high value products, modern and market-demanded varieties are in short supply and critical missing services along the value chain are supply of certified varieties, processing, packaging, and transportation and establishing a cold chain. Cherries are selected as a priority VC, keeping planned improvements in road and air transportation, such as up-gradation of Skardu airport as an all weather international airport, widening and extension of
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Skardu-Gilgit road, and improvement of KKH, all part of the China-Pakistan Economic Corridor.
The following map illustrates an upgraded VC for fresh cherries, under the future scenario.
`Figure 3: Supply Chain Plan for Cherries
Chart 3: VC Actors and their Financial Needs
VC STEP VC ACTOR FINANCING NEEDS AND ISSUES
Production in proper orchards
Nursery owners Farmers
Establishing new nurseries requires long-term financing Financing at the farm level is a major issue
Buying, picking and post-harvest handling
Processing, packaging storage and transportation
Packaging and transportation
Wholesaler Service providers
Processor Transporter
Sizeable amounts of working capital needed to pay for the raw product, labor and transportation
There are no fresh fruit processing facilities in Baltistan, with a proper cold chain. Investment needs include capital investment in plant, packaging, transportation, insurance and working capital
For fresh products, federal government provides subsidized rates on PIA, but this is not feasible due to
Picking
Initial Packing
Transportation
Cold Storage
Wholesalers’ agents collects raw product from the farm/ orchard using trained labor
Initial packing of the raw product in special trays
Quick transportation of the raw product to processing facilities using light pick-up trucks
Raw product collected from orchards is stored in the cold store on the same day
Final product is washed, graded & packed at the processing facilities and kept in the cold store
Processing & final Packing
Supply towards Client
Cold container leaves for Islamabad / or the Skardu airport for international cargo
From collection to cold storage of the raw materials will take one day to complete the process
Cold container arrives at the auction market in ISB/ or to the client’s facility at export destination
Reached client
Farmers procure certified plants from commercial nurseries and establish orchards,
Production
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without cold chain infrequent flights and non-availability of cargo service in small aircraft. This subsidy can be provided through NATCO, which can provide a daily service, using fast pick up trucks between Skardu and Islamabad
Marketing Wholesale markt Supper markets Exporter
Subject to terms of payment from end buyers
Summary of conclusions and recommendations for Cherries
This VC is recommended given the future potential. The biggest advantage is climate and off-season. Cherries can be harvested in Skardu from early July to end August or early September, when supplies from all parts of Pakistan, including low lying areas of Gilgit have already come to an end. Since plant growth rate in SDP area is slow, one forward looking idea may be to invest in dedicated commercial nurseries in low lying areas of Gilgit, from where grafted plants can be transplanted directly to orchards in SDP command area. Since this is a futuristic idea, including the possibility of air transportation in near future from an all whether airport which is planned, the VC should be planned along modern scientific lines, including processing and establishment of a cold chain.
Recommendations
Commercial banks must be coopted into this VC, with appropriate incentives Public-private financing mechanisms are needed, especially in the provision of new technology,
i.e., certified plant material and transportation Grants available from the project should be redesigned to promote investments in modern
processing facilities for fresh fruit, starting with cherries, including the establishment of a cold chain for air and surface transportation.
4.2.4 Green Peas
Green peas are the fourth priority VC selected for SDP command area under this study, and it follows the same logic of market demand and higher prices in the off-season markets of the south. As shown in the following extract taken from RMA Report (Table 1: Market Supplies and Prices of Selected Commodities), green peas fetch the highest price of PKR 4 k to 8 k when the supply chain firmly shifts to the northern temperate region during the height of summer in the south.
Table 4: Highest Price AdvantageGreen Peas/ supply J F M A M J J A S O N D Unit Unit Price (PKR)Punjab 50 kg 1000 – 2000KPK 50 kg 3,000 – 7000GB 50 kg 4000 – 8000
Source: Extracted from RMA Report
Cultivation of green peas under similar climatic conditions and elevation is presently done successfully in the Babusar Valley of Diamer District in GB. In SDP command area, limited quantities are also grown and marketed locally. The window of opportunity can be extended even further to the rest of October, by introducing cold tolerant varieties. The period is when GB has a virtual monopoly over the supply, and the fresh product can fetch the highest price.
The main supply side financing issues in production and supply revolve around technology, crop inputs, management, and post harvest and transportation. The longer distances to markets mean higher transportation costs. The transportation issue is critical for green peas, which must be supplied to market fresh, using swift transport. But hiring dedicated light transport involves paying for both ends of the journey, going down country with goods, but coming up country empty, because most of the goods are transported through bulky trucks. Although these trucks go back empty, and may charge less in transport costs, but trucking is a slow process for green peas.
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Green peas must be produced with the highest quality standards and with precision so that the right quantities are harvested at the right time to supply the market throughout the window of opportunity. The most preferred supply management strategy should be daily supply of manageable quantities in a rapid and regulated manner, using light pick-up trucks. Poultry suppliers from the south already use this strategy.
`Figure 4: Supply Chain Plan for Cherries
Green peas can be developed as a high-value VC, with good potential for incremental value addition and vertical and horizontal growth. However, in order to realize this high potential the VC development will require substantial capital investment. The financing strategy must leverage public money to raise private and in many instances, community capital. Investments in support services, such as research, extension and supply of high quality and certified production inputs, are as important as investment in the supply chain itself.
Chart 5: VC Actors and Financial Needs
VC STEP VC ACTOR FINANCING NEEDS AND ISSUES
Supply of production inputs
Production
Lead enterprise Contract farmers
Farmers FEGs
Production credit, suppliers credit, in kind credit to contract farmers and FEGs
Substantial amounts are involved, but short-term agricultural credit is difficult and expensive to obtain
Financing at the farm level is a major issue
Buying, picking and post-harvest handling
Packaging and transportation without cold chain
Wholesaler Service providers
Trader Transporter
Sizeable amounts of working capital needed to pay for the product, labor and transportation
This is a key bottleneck in the VC; dedicated light and rapid transport is expensive and unreliable
Aggregation
Packing
Transportation
Marketing
Lead agribusiness companies Local supply companies Contract farmer/ FEUs
Specialized packing in 50 kg attractive bags with a brand name
Quick transportation using light pick-up trucks, possibly using subsidized and dedicated public transport for some years
Wholesale markets in Isb/ Lahore Super markets Five star hotels
Processing & retail packing
Product is processed and value added to, such as organic and fair-trade certification, and targeted at high-end retail stores/ export
Highest quality and well-suited inputs and production technologies, and crop management
Production
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Marketing Wholesale market
Supper markets Exporter
Subject to terms of payment from end buyers Premium prices are possible from high quality products
delivered to high-end markets like five start hotels
Summary of conclusions and recommendations for Green Peas
Green Peas can be a strategic VC based on the natural comparative advantage of GB and potentially, with good competitive advantage, too. Green peas can be to GB, what French beans are to Kenya. Under an AKDN intervention, French beans are grown in Kenya and exported to France, for a hefty margin. The pluses are many: market-driven, off-season advantage and high-end segment, but also requiring hi-tech management, specialization, and high capital input. The VC development strategy should focus on leveraging financial resources internal and external to, and in support of VC. Public, private, and community level investment opportunities should be identified along the supply chain, and innovative financial products developed to support different services. To develop, drive and upgrade this high-value VC, lead local companies are needed that a supply chain approach is needed corporate approach is needed, such as lead enterprises. In the long-term, as the transportation bottleneck are removed, value from further down the VC can be captured, by introducing new innovations, such as organic, fair-trade, and green certification.
Recommendations
Supporting lead companies to co-invest in this VC, through risk capital from the project budget Creating a smart, dedicated, and reliable transport system through public, project and private
participation. Branding the product for high-end markets, and incrementally adding further value through
product and market innovations, and targeting export markets with green, fair and organic certification and attributes.
5. SUPPORT ACTORS IN VCs5.1 Overview
Skardu has a good concentration of support organizations, both in the public and civil society sectors. The primary mandate for agricultural development lies with public sector agencies, but marketing and entrepreneurship development is their weakest point. Other NGOs, including UN agencies have in the past provided key support services, but their presence is missing for nearly two decades. Good news is that IFAD is planning to return to the region, which can be a great development.
Over time, more and more support actors are emerging and that surely is creating a multiplier effect. But coordination and harmony is needed around key priorities, such as developing a common vision of mountain agriculture, and pooling of experience, expertise and resources. The way forward should be to breakdown sector boundaries and crowding-in all public and private and community services in support of selected high value VCs.
5.2 Public sector actors
Government is the largest provider of key services, such as trunk roads, valley and link roads, irrigation, and research and extension services. The public sector is technically competent, but lacks operational funds that limit its contribution and effectiveness. For instance, MARC and DoA have only enough budgets to pay salaries but not for importing much-needed germplasm and support production of market demanded and certified varieties of plants and production inputs. Reforms and innovative approaches are needed in the public sector to facilitate agriculture development, and developing these selected VCs can be a good start. One of the recommendations of this report, therefore, will be to set aside some project funding for specific services from proactive public sector agencies. One such innovation could be for NACTO to offer dedicated and reliable transportation services for agricultural commodities,
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under a partnership agreement with the project. Other ideas to improve public sector services would be co-financing of mother nurseries and restocking, using imported quality germplasm, and leasing out public facilities, such as green houses, processing units and green houses, to private operators.
5.3 Community level Actors
At the community level, Local Support Organizations (LSOs) have emerged as good platforms for delivery of key market services and facilitating transactions, such as pooling and processing of market bound produce, and provision of production and post-harvest services. Financial products can be developed in which LSOs can organize contract farming, distribute production inputs, aggregate supplies, and provide production and post-harvest services through their members. The following Table provides a summary of support actors, operating in the command area, with their issues and potential roles to contribute to the development of selected VC.
Chart 6: Support Actors in selected VCs
SUPPORT ACTOR KEY ROLE ISSUES
Department of Food & Agriculture, Govt. of Gilgit-Baltistan
Policy making for agriculture related sub-sectors.
Research & Development (R&D) for new products.
Extension services to producers. Key services, like storage and seed
provision. Capacity building of producers and
marketing groups
Low capacity and lack of resources Role in marketing not defined No facility and plan for marketing
and promotion.
Mountain Agricultural Research Center (MARC)(Federal Agency)
Research on relevant crops in mountain setting
Supply of germplasm
Under-funded Remote control from PARC in
IslamabadFederal Seed Certification & Registration Department
Registration of Companies involved in Seed Business,
Certification of crop and vegetable seeds. Testing and laboratory services. Implementation of seed policy
Low capacity and lack of resources No clear mandate in promoting seed
marketing
Pakistan Center for Scientific Research (PCSIR)
Technology development / transfer for food processing
Capacity building and
Not linked with industry Too small operations
Chamber of Commerce & Industries, GB
Linkage to main marketing actors at national and international level.
Membership for marketing group. Support to get government subsidy for
export and import.
Low capacity and lack of resources Politicized, membership dominated
by non-business people
NGOs and CSOs Organizing marketing groups. Capacity building Linkage with market. Support in business planning Link with financial services in the market. Help in collective marketing and input
supply
Low capacity and lack of resources Limited mandate and boundaries High turnover of human resource
Transporter/communication, inputs, credit institution, input suppliers etc.
Service provision in their respective sector on market terms.
Major sources of market information Provide informal linkage with the market
players
Weak infrastructure Low capacity for investment. Lack of lead enterprise.
Lead enterprises/ Entrepreneurs/ marketing Associations processors, wholesaler, retailing
Main actors who under take buying and selling functions
Provide embedded services to market agents and stakeholders.
Main actors to determine the price. Packaging services to producers and
consumer.
Lake of capacity, entrepreneurship, resources etc.
Lack of linkage, MIS and market access.
Availability of inputs Scale and quality of the produce Weak market infrastructure
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Producers Associations Primary place to pool, grade and packaging of product
Effective role in pricing of the produces.
Lack of knowledge on pre & post harvest management.
Lack of entrepreneurship ad market led horticulture production
Summary of conclusions and recommendations for Support Actors
Support actors have a pivotal role in VC development, from policy and regulation to research, infrastructure, input supply and for targeting subsidies and other essential services, which the private sector cannot provide. However, public sector service providers need to change their image and orientation from passive provision of free services, to a sector development mode, focus on key supply chains, be more entrepreneurial, work in support of the private sector, and leverage their underutilized and under performing capacity, assets and resources.
Recommendations
The key recommendation is for the SDP management to recognize public sector actors as service providers, and include them in relevant service contracts to deliver well-defined services
Create an innovative transportation service under PPP arrangement, ideally through a partnership with NATCO, in which the project pays for the capital cost of 2-3 pick up trucks, while the NATCO provides dedicated services and recovers its running costs from discounted freight charges paid by traders
Provide small grants to LSOs and affiliated FEGs, V/WOs, individual service provides and local companies, to invest in bulk supply of production inputs, such as seed and plants, fertilizer, chemicals, packing material, and production and post-harvest services, as well as in product aggregation, processing, and storage facilities, and local and long-distance transportation facilities
6. FINANCIAL GOVERNANACE6.1 Baseline Situation
The baseline situation is characterized by low investment, poor access and many service gaps. Presently, commercial banks do not lend to agriculture due to the complexities and risks in agricultural production and agribusiness. As a result of this, local branches do not have specialized staff for evaluation of credit risk, analyze certain high-potential agricultural value chains, and calculate the economic potential of emerging agribusinesses.
From the development finance side, ZTBL and FMFB are the only lenders to agriculture. Their mandate and local networks enable them to be close to their clients and offer loans, deposits, and payment services. However, being a public sector lending facility, ZTBL may be prone to political influence and lacks resources and entrepreneurial capacity to offer a diversified portfolio, offering customized loan products for different agricultural enterprises and maintaining specialized staff. FMFB being a retail facility has high delivery costs, which translate into high cost of financing for small borrows. Also, although development banks might have extensive agricultural sector knowledge, they frequently lack the operational professionalism of a commercial bank.
All formal lending institutions require collateral for their loans, often worth twice the loan value or more. Most of them look to land as collateral, but there are many legal, tenure and social issues that complicate land as an effective collateral. Generally speaking, land ownership is customary, owned by family members, typically the male members, and unless it is divided and legally registered in their individual names, collateral formalities cannot be completed. Moreover, once divided, the value of the land may be insufficient to equal the required value of collateral. Legal processes to transfer land are highly complex, expensive and often prone to fraud.
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V/WOs and welfare societies are well positioned to service the farmers and micro enterprises in the informal sector, without too many strings attached to their financing, but their scale is limited and they need professional support and capacity building. There is a history of community-level microcredit, and it still continues on small scale, which can be renewed.
Within the value chains, farmers are very small actors who have to face more powerful traders and off-takers, especially the pre-harvest buyers of primary produce. The SDP has organized small farmers into FEUs, which helps to bridge the gap between the individual small farmer and the large market players, while ensuring that the farmers can assume a more equal market position within the supply chain. This approach is sound, but it has not translated into easy access to appropriate financial services.
6.2 Strategy for Improving Financial Governance
The primary objective is to catalyze private sector investment in developing and upgrading of four VCs that have been selected to help transform agriculture in the command area. The investment model proposed is one that develops and democratizes financial markets and empowers local actors. The strategy is financial inclusion, ensuring easy and equal access of VC actors to available financial and support services, as well as developing new innovative products and customization.
6.3 Investing in Support Infrastructure
The command area is accessible to all parts of Baltistan and well connected with Gilgit Division. A tender has already been floated to widen the Skardu-Gilgit Road, and a proposal is under consideration by the Civil Aviation Authority of Pakistan to upgrade the Skardu airport to an international airport.
This will connect the entire GB, and particularly the command area with regional markets, especially China and Central Asia. Keeping these future prospects in mind, the project can invest in support infrastructure and in creating a Mini “Opportunity Zone’ in the command area for the whole of GB. This implies targeted investments / financing input supply businesses, auction markets, processing and storage facilities, cold chains and transport logistics.
6.4 Democratizing Financial Markets
Specifically, the up gradation strategy should incentivize crowding-in of service providers as much as possible, providing a variety of customized investment products and services for every segment of the VC. Financial resources available within the project can be leveraged to increase the functioning of local financial markets, improve and sustain access to public, private, and community sector sources of finance.
That will require reforms, innovations and under-writing certain under performing sectors, such as recapitalizing and reorganizing more informal and flexible community-based financing mechanisms, for which there is a good base. Creating an enabling financial ecosystem that is broadly beneficial and particularly empowers local VC actors, and contributes to democratizing financial governance.
6.5 Financial Products and Services
The integrated financing needs for the four selected VCs are illustrated in the figure 5. What are the key barriers and what instruments are needed to consolidate and upgrade VC financing is summarized in the following Chart 7 on the next page.
Figure 5: Financial needs along VC
Input suppliers
Prim ary Producers
Processors / traders Transporters Marketers
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Pre-harvest finance Start-up/ inventory finance Trade/ transport finance
Char 7: Proposed instruments to upgrade Financial Governance
NEEDS BARRIERS INSTRUMENTS
Pre-harvest Finance: credit for high quality production inputs, labor and management
Small farmers are too small for formal banks to lend to
Cost of delivery in retail banking /FMFB is two high between 28% and 32%
Suppliers input credit leads to unfavorable terms of trade for farmers
Complex collateral requirements mean farmers are automatically excluded from the formal sector
Formalize and professionalize community finance Restock community level savings with
small grants to be used as revolving credit funds for members
Upscale and formalize V/WOs as formal Credit Unions at LSO level
Engage a private sector company/ Audit firm, to build their professional capacity
Supplement and compliment public support services Provide conditional operational funds to
public sector agencies to deliver certified seed and plant material to private distributers
Prequalify selected public sector agencies, such as DoA and MARC to participate in service and supply contracts, and co-investment proposals (but not for grants)
Build the capacity of key staff in relevant sectors
Start-up/ Inventory Finance: start-up and working capital for agribusinesses in the middle segments of the VCs: production, aggregation, processing and trade
Extremely limited access to investment capital, only limited and highly collateralized financing from ZBTL
Commercial banks unwilling and unable to lend to agriculture
Corporate sector does not have reliable information to invest
Leverage private capital: lower the risk for commercial banks to lend to agriculture, by providing limited guarantees or topping up their low margins, or both
Leverage development finance: form JVs with peer projects, such as IFAD to devise innovative PPP investment projects in mountain agriculture, from high-quality mother nurseries to processing plants, auction facilities, storage capacity, cold chains and transportation
Facilitate entry of corporate sector: undertake joint research and feasibility studies with industry leaders
Trade/ Transport finance:
The transportation sector is organized for one way trade, from south to north, not the other way round
Invest in a smart reverse transport service: co-invest with NATCO, or a private local transport/ goods forwarding company that specializes in rapid logistics of fresh fruit and vegetables to down country
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7. CONCLUSIONS AND RECOMMENDATIONS7.1 Conclusion
The specific conclusions and recommendations are provided under each area of opportunity. In this last section, we present some generic findings and possible ways forward.
The four value chains are selected on the basis of a composite matrix of benefits. The calculus includes market-demand, natural advantage (off-season, natural growing conditions), and future competitive advantage. The future competitive advantage is expected to come from improved market access to high-end markets under the Economic Corridor project, including all weather air cargo, ungraded KKH, and a possible rail link. But this needs to be planned and strategized, such as branding and adding higher value attributes.
These value chains can best be developed using new technology—for instance latest and market demanded varieties that are typically not locally available, and must be initially imported, at a considerable cost. Financial markets are presently fragmented and not well-suited to supporting commercial farming and financing of small agribusinesses. But this can change under a new strategy in which agricultural development can be reorganized along the lines of a supply chain, driven by a core portfolio of high-potential VCs.
Financial services along the value chain can be upgraded using an open-mind approach, such as working with all formal and informal service providers, not only to improve service provision, but also to increase access and market participation. This requires strategic partnerships and deployment of smart subsidies and incentives to leverage VC finance from all public, commercial and community sources.
7.2 Recommendations
1. The first recommendation calls for creating a loose coalition of value chain actors in SDP, and using this forum for on-going communication on all developments in the VCs, as well as to benefit from it as a sounding board or an impact monitoring tool
2. Related to this recommendation is harmonizing and incentivizing collaboration among institutional actors for R&D, product and market development, financing, policy and regulation. In essence this means better professional interaction, and coordinated actions in planning, project development and financing by support agencies. Ultimately, these VC must be owned by local actors, communities, government and other support agencies
3. Consolidate and vertically integrate FEUs and link them with informal V/WO banking. Reorganize and formalize V/WOs in SDP command areas into Credit Unions at the UC/ LSO level, and train them through a lead audit firm
4. Invest in a smart agro-logistic company, either partnering with NATCO or with a private transport company
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5. Invest in innovative mobile phone Apps to improve the performance of under-developed transportation services, especially market-bound transportation to down country. A student from GB currently studying at Asian Women’s University in Bangladesh is working on an App that will send SMS alerts to mobile phones of subscribing truck drivers, informing them of just-in-time cargos to be hauled along their route, while returning to their basis after delivering their main one-way cargo at their destinations in GB)4
6. Drag (incentivize) commercial banks into value chain financing, using incentives such as guarantees or topping up their margins.
7. Co-invest with relevant public sector service providers to develop support infrastructure and increase supply of high quality production inputs, such as certified plants and seed, to private distributors
4 Copyright: Ms. Aqsa Kiran
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