Speaking with Brian Milder (CEO) Tue March 15
Questions
What is the type of technical assistance required and quantum of financial incentives that would move local banks in India?
We know banks have PSL targets and maybe this incentive helps them achieve those?
Background info on Aceli from Dec 2021 “Learning Report”
Incentives that encourage existing private lenders to increase their lending to agri SMEs
Two offerings for lenders: (i) First-Loss Coverage ranging from 2-8% for loans of $25K-$1.75M and (ii) origination incentives and impact bonuses for funding smaller SMEs.
Examples of things that garner impact bonuses: gender inclusivity, Food Security and Nutrition (domestic consumption rather than export) and Climate Smart Ag
Also provide technical assistance to borrowers (Agri SMEs)
205 loans at $130k average loan size in Year 1, ~50% first time borrowers
High leverage on incentives: $26.6mn in lending unlocked by $2.2mn in donor incentives
5 Year Targets: “Our target here is $200M in incremental income for over one
million farmers and workers relative to $60M in total cost (i.e., $3+ in incremental income for every $1 in donor funding). These costs include $40M in financial incentives for lenders, $10M in technical assistance to SMEs and lenders, and $10M in project management (note: the costs of data & learning and innovation are not included in these figures).“Ultimately, we aim to demonstrate a high-leverage, high-impact model and build an evidence base that convinces policymakers in Kenya, Rwanda, Tanzania, and Uganda to fund similar financial incentives on a larger scale. This would provide an exit for donors while strengthening the enabling
environment to sustain continued investment and inclusive growth in the agriculture sector.
