Presentation Fin4Ag S13 by Prof. Badr El Din A. Ibrahim

1. CTA-AFRACACTA-AFRACA
Revolutionizingfinanceforagri-chainRevolutionizingfinanceforagri-chain
1 4-1 8 July 201 41 4-1 8 July 201 4
Nairo bi , KenyaNairo bi , Kenya
Successful Models in Agricultural
Microfinance Sponsored by
the Central Bank of Sudan, (CBoS).
Prof. Badr El Din A. Ibrahim,
President,
MicrofinanceUnit,
Central Bank of Sudan
badr_el_dinbadr_el_din@@hotmail.comhotmail.com

2. Contents
 Introduction
 Connecting Farmers to Markets
 The Agricultural Bank of Sudan Microfinance
Initiative, )ABSUMI(
 MASARA, Rural Productive Family Project, North
Kordofan
 Women Associations- Gedarif (Eastern Sudan)
 Hibiscus (Karkadi) - Value Chain Model
 Lessons to belearned.

3. Introduction
 TheSudanese central bank-led, Islamic, gap-filling, full-fledged &
nationally-integrated microfinance regulatory &supervisory model is
described by the World Bank's Consultative Group to Assist the Poor
(CGAP) as :
” Alabo rato ry fo r Islamic micro finance delivery where
develo pments co uld shed light o n effective Islamic micro finance
practices" .
"Trendsin Sharia-Compliant Financial Inclusion", ConsultativeGroup to Help thePoor, CGAP, TheWorld Bank,
Fo cus No te, No. 84, March, 2013“
 The IMF Sudan Article of Consultation, Sep. 2013, Stated that: “The
micro finance secto r is smallbut gro wing rapidly… . The results o f
this push have been impressive to date… In terms o f active clients,
Sudan & Bangladesh are easily the glo balleaders in Islamic finance
micro finance, with Sudan likely to take to p spo t given current gro wth
rates”
 The IDBhighly appraised the o utco me and the visio n o f the US$ 60-Millio ns MF
Partnership with the CentralBank o f Sudan & declared its replicatio n in o ther

4.  Themicrofinancein Sudan isled by theMicrofinanceUnit
of theCentral bank of Sudan (CBOS).
 MicrofinanceUnit/CBO overlook themicrofinancesector.
The Unit is a national microfinance legislative and
regulatory body providing: licensing of MFIs, wholesale
lending to MFIs& specialized banks, sharing in MFIs’
capital, HR up-grading & technical & institutional
assistanceto all institutionsworking in microfinance
sector, coordinatewith stakeholdersvianetworking,
provision of awarenessprograms, &design &sponsoring
of pioneering national micro agricultural projects, to
set a good example forfurtherextensions by banks
&MFIs.
 This presentation come underthis last objective of

5. Connecting Farmers to Markets
Program
Objective The Model
Achieve financial inclusion of rural
farmers to consolidate value chain and
to enable small-scale farmers to get out
of the cycle of underproduction &
poverty, become self-sufficient &
produce forsurplus.
Create a commercially-viable program
(with no donors financial support) for
all stakeholders (farmers, banks, insurance
Cos., extension and food procurement Cos.)
linking farmersin traditional
agricultural rain-fed states to all
markets(crop market, crop
insurance market, extension
services - seed selection,
fertilizerusage, harvesting
techniques etc.).

6. Stakeholders &Roles
Federal Ministry of
Agriculture (FMA) .
Together with WFP, select
farmersthrough association,
provideextension training
servicesto beneficiaries
(training on micro-credit,
micro-insurance, management
of personal finances. Jointly
with CBoS, providetechnical
extension training on seed
selection, fertilizer, crop &
water mgt, weeding,
harvesting etc.
United Nations
World Food
Program (WFP):
Selection of farmers
& provision of food
for farmers.
Banks: Select the
‘creditworthy’
farmers from within
WFPlist & provide
financeloans
disbursement &
repayments, &
periodical reporting.
•Shiekan Insurance Company :
provideIslamic insurance co vering
finance, assets& physical disability
or death.
The Central
Bank of Sudan
(CBoS). Together
FMA, & Banks
support
assessment of
farmers’ credit
viability, &
provide financial
support for
training services,
takecoordination
leadership to
provide
reporting.
The Strategic
Reserve
Corporation of the
government act as
abuyer of last
resort and theWFP
also buysthe
surplusproduct for
itsown program of
schools& for food
for work.
6
(Source: CBOS/MFU)

7. Connecting Farmers to Markets Program -
cont.
First experiment Financing
In 2011 thetarget was100000 rural
farmersWFP-targeted farmers (with 5-10
feddans -1.038 acres - each) in nineStates
viafour commercial & MF banks
(Agricultural Bank of Sudan, Saving &
Social Development Bank, Family Bank &
Khartoum Bank).
Financefrom Aman (portfolio of a
consortium of privatesector banks&
Zakat fund).
Other stakeholders: Shiekan insurance
Co. provide micro-insurance+ State
Ministry of Finance (extension) +CBoS
(finance) & WFP(food for work).
Repayment: 86%, in somecase
repayment islow.
(Source: CBOS/MFU)

8. Cont.
Problems identified The new version, 2013
Lowerrepayment , weak
coordination among stakeholders,
no special training coursefor the
target group, late finance, small
number of agricultural advisers,
loose time table of training and
financing, weak selection of the
target group, no precise
determination of av. finance .
• Recommendations: add other
stakeholders (e.g. FAO to provide
improved seeds, tools& training),
concentrate on basic agricultural
products, independent body for
supervision, introduction of
livestock &non-agricultural
activities, precise reporting &
analysis, revision of WFPfood
Thecreation of amodel with no constraints
(including lower repayment) aremadein
2013 version (No resultsso far).
• In 2013, 16000 rural farmers(135000 in
small rural agricultureand 25000 animal
raising) weretargeted in 7 States. Finance
wasmadeviaSMDF (SDG 36 mill., app. US$
6.3 Mill.) (SMDF isacompany shared by the
CBoS& theMONE & other donors),
Khartoum Bank (SDG 20 millions, app. US$
3.5 mill.), other banks(ABS, Commercial
FarmersBank, Saving & Social Development
Bank SDG 18.3 mill, app. US$ 3.2 mill.).
• 4 MFIs wereused to extend financing.
Other stakeholdersarethesame, but The
National Insurancecompany replacesShiekan
Co. (viatheComprehensiveInsurance
Document , CID.(Source: CBOS/MFU

9. Cont.
2013version
State Targeted clients Total
Agri. Livestock
North Darfur 20,000 5,000 25,000
South Darfur 20,000 5,000 25,000
West Darfur 20,000 zero 20,000
Kassala 20,000 5,000 25,000
Gezira 10,000 zero 10,000
Blue Nile 15,000 zero 15,000
North Kordofan 30,000 10,000 40,000
Total 135,000 25,000 160,000

10. Connecting Farmers to Markets Program:
The Comprehensive Insurance Document, CID:
introduce
“microtakaful
in micro-
lending”.
use micro-takaful to
enhance microfinance
outreach”, mainly via
portfolios(portfolio of linking
small farmersto market, and
other microfinanceprojects(.
build a“dual-
functioning
microtakaful model”
asan insuranceand a
guaranteefor finance
“coverthree
microtakaful necessary
formicrofinance ”
(money lend, assets& Takaful-
physical disability or death(.

11. The Agricultural Bank of Sudan Microfinance
Initiative, ABSUMI.
Objective The model Extensions
Started 2010 to cover up to
2013 based on small loans
of around US$ 130 to rural
farmersgiven on Murabaha
& Musharaka (Islamic
partnership( to perform
agricultural activities
(mainly livestock fattening ,
small agricultural activities
& incomegenerating
activities(.
A target of 1 million
family in 10 years is
underway.
Thepilot project reached 510 Saving
groups(small saving mobilization(
composed of morethan 9 thousands
women membersin 90 villagesvia
total lending of morethan millions
SDG (app. US$. 175,000 equally
shared between theCBOS/ABS.
• Resultsof thetrail phaseshared a
zero risk &a 100% repayment
rate.
• Theextension islargely dueto the
successof thepilot project and the
enthusiasm of thestakeholders to
expand to fill in thegap between
demand and supply of microfinance
servicesin rural areas.
In 2013 cover
40000 families
werecovered,
divided in 5000
clientsin 8
localities in
Kordofan
(western Sudan(
& two white
NileState
(central Sudan(,
& Kassala
State(eastern
Sudan(.
(Source: Central
ABSUMI Unit(.

12. MASARA Rural Productive Family Project, North
Kordofan.
Objective The model Impact &
challenges
This is a self food-
dependency &poverty
alleviation project among
poorwomen (760( in North
Kordofan State(western Sudan(.
It isalso acapacity-building in
rural small agriculture and
microfinanceawarenessproject
in rural areas.
Finance agriculture &
livestock in addition to training
&groupings of women in
associations (15(.
Started in 2011 with finance
from theCBoS/MFU, (3.8
SDG millions, app. US$ 6.7
millions( through Saving &
Social Development Bank.
Theaveragefinanceis2
millions(App. US$ 3.5
millions& the repayment is
100%.
Theproject targeting 50000
women in 100 villagesin all
localitiesof Kordofan State.
There is positive
socio-economic
impact
(improved heath
conditions,
education for
children (.
Challenges:
seasonal rain
and marketing.
(Source: CBOS/MFU(

13. Women Associations- Gedarif (Eastern
Sudan(
Objective The model
Help women
in groups
to be self-
sufficient in
sorghum &
peanuts.
Financeof women groupsin agricultural projectsvia Mudaraba
mode of finance (agency profit & lossjoint venture/limited
partnership) of 1 SDG mill. from theCBOSto theABS(averageloan
sizeSDG 400, app. US$ 70), & themodeof financeis Salammode of
finance (thebuyer paysthefull negotiated priceof theagricultural
product that theseller promisesto deliver at afuturedate).
The groups: (100; 25-30 memberseach) administer & follow -up
repayments.
Commercial companiesprovidestorage facilities &agricultural
tools.
Islamic Takaful (Islamic micro-insurance) isused
Guarantees: through sheikhs & personal guarantees
Repayment 98%, net profit is 75 thousands, rate of return is
(7.5%(
Extension: preparation underway for 4 timesextension
(Source: CBOS/MFU)

14. Hibiscus (Karkadi)- Value Chain Model
Objective The model
Hibiscus Kerkadi : Dueto cultural practices& believes
hibiscus is a female crop &monopolized by local
&town traders to the farmers’ disadvantages.
Hibiscusvalechain providesagood opportunity to
empowerpoorfemale farmers in rural areas to
produce on a large-scale &increase productivity
and open export marketing opportunities , as
hibiscusisoneof themost important crop for thepoor,
and it resistsdrought & bests. Moreover, it islabor
intensive.
Increase the production &productivity of Hibiscus
Kerkadi , &the share of farmers via market study
&training, consolidation of production
associations, improvement of quality & increase
farmers’ income, provision of improved seeds
Pilot project of
27 thousands
clientsin 3
western states
(South
Kordofan,
North
Kordofan &
South Darfur),
including 60
villages.
(Source: CBOS/MFU

15. Lessons to be learned
 Rural-based small agricultural microfinance projects
are both successful &wide in term of clients
coverage.
 Islamic (agricultural-related( modes of finance
(slammode) prove to generate high repayment.
 Moreover, other reasonsfor high repaymentsare:
dedicated &honest productive rural farmers , use of
Islamic micro-insurance (Takaful( as a guarantee .
 A multiple& coordinated stakeholdersproviding different
services, closesupervision & following up via
independent body areingredientsfor successful
projects.
 Extensions of these model at different rural