Financial Access publishes Research Paper on Innovative Financing Schemes for Oil Palm Smallholders
Financial Access, together with SNV Netherlands Development Organisation, has undertaken profound research on past and current policies and financing schemes for oil palm smallholders in Indonesia and Malaysia and prepared a research paper and an info brief which have been published by the Center for International Forestry Research (CIFOR).
The report proposes potential models to increase the mobilization of long-term finance to smallholders in the palm oil sector. Furthermore, it identifies and reflects on the key enabling conditions that would help overcome the bottlenecks in smallholder long-term financing and create an enabling environment for sustainable oil palm investments. These are: 1) incentives to meet sustainability requirements including Good Agricultural Practices, RSPO certification and deforestation-free production; 2) land tenure security; 3) improved market linkages between smallholders and mills; 4) support for FSPs to assess and manage risks; and 5) strong and effective smallholder organizations.
The full research paper and an info brief have been published by the Center for International Forestry Research (CIFOR) and are available here:
- Research Paper – Innovative Financing Schemes for Oil Palm Smallholders
- Info Brief – Innovative Financing Schemes for Oil Palm Smallholders
Netherlands-Indonesia Financial Sector Expertise Exchange Programme (NIFSEEP)
Financial Access acted as an initiator and programme manager for the Netherlands- Indonesia Financial Sector Expertise Exchange Programme (NIFSEEP). The programme aimed to transfer specialist knowledge and skills to the financial sector in Indonesia. It focused on infrastructure finance, sustainable energy finance, SME banking and sustainability and creation of a platform for ongoing co-operation and commercial development between European and Indonesian participants.
By sharing specialized knowledge with banks, institutional investors, regulators and banking executives, NIFSEEP provided a platform for establishing long-term business, client and partnership arrangements between the financial sectors of Indonesia and the Netherlands, with a focus on tailored training, advisory, financial, investment and other services. The NIFSEEP Programme consisted of a number of recurring events, such as seminars, round-table discussions and workshops in the Netherlands and Indonesia. As a result of NIFSEEP’s success, similar initiatives were developed for other countries. The program has been seen as path-breaking in the design and implementation of public-private approaches to financial mobilization.
Implementation of the strategy and concept of distribution via Post Offices – PT Bank Negara Indonesia
We assisted in the review of the strategy and business case of the planned strategic cooperation between BNI and Pos Indonesia and presenting our findings to management and stakeholders. Our responsibilities included:
- Assessment of the commercial viability of the chosen strategy and propose alliance with Pos Indonesia;
- Review of the proposed organisation structure;
- Review of the proposed multi-channel distribution strategy, using Pos Indonesia’s nationwide postal network;
- Preparing a diagnostic analysis including identification of the main gaps, development of benchmark study, definition of recommendations,
- quick wins and work plan for implementation with relevant action points for the short and long term.
Technical Assistance and Implementation Support – Bank Danamon
We were engaged by Bank Danamon to perform a review of the back office operations, concentrating mainly on the IT support processes and the back office workflows and processes related to the retail banking business. Our responsibilities included:
- Design and development of new processes, procedures and IT systems;
- Establishment of “quick- wins”;
- Development of a detailed work plan for implementation.
Restructuring Advisory – Lippo Bank
We performed a Strategic & Operational Review of the Bank in the areas of IT & Business Systems, Commercial Management, Corporate Governance & Compliance, Financial Management, Human Resource Management, Internal Audit, Operations, Risk Management, Strategy & Planning & Organisation, Treasury & Funding. As a result of this review we signed a long-term technical assistance Agreement with the bank to provide 14 international banking experts to the bank. The objective of their involvement was, in close cooperation with their assigned local counterparts, to enhance the performance and increase the value of the bank, and enable the bank to compete effectively with international and local banks operating in Indonesia. Our main objectives were:
To achieve structural performance enhancement across all the bank’s operations through a medium-term performance enhancement programme;
- To transfer international banking best practices in operational, commercial and risk management areas;
- To develop financial and operational performance benchmarks and to measure progress against these benchmarks.
Renewable Energy Financing Training
At the request of the Dutch Ministry of Energy and Natural Resources, Financial Access conducted a training program for Indonesian government officials and representatives of Indonesian (renewable) energy companies visiting the Netherlands under the bilateral EWG initiative between The Netherlands and Indonesia.
Moluccas Nutmeg Access to Finance Programme – Development of an agrifinance scheme for nutmeg smallholder farmers in North Moluccas, Indonesia
The Moluccas Nutmeg Access to Finance Programme (“MNA2F Programme”) is aimed at the creation and improvement of affordable access to finance for nutmeg smallholder farmers in North Moluccas, Indonesia. For this initiative, with financial support from the Government of the Netherlands, Financial Access works together with ICCO Cooperation and a financial institution. Increasing access to finance will enable the farmers to improve sustainable farming practices, raise disposable income levels and reduce poverty levels. The programme entails a combination of capacity development, ‘best practices’ knowledge sharing and training, development and formalization of a value chain financing scheme and the delivery of analytic, loan process and credit risk management and credit scoring tools to partner banks.
Berbak Green Prosperity Partnership (BGPP) – Development of a replanting finance scheme and risk assessment system for oil palm smallholder farmers in Jambi Province, Indonesia
In this programme a financing solution was developed to address the replantation needs of independent oil palm smallholders, thereby reducing expansion-driven deforestation and improving economic livelihoods of farmers. Financial Access, in collaboration with SNV, developed a tailored credit scoring methodology, allowing the creation of portfolios of bankable farmers which meet the risk criteria of partner banks and investors and which enabled improved access to long-term replanting finance for smallholder farmers.
Oil Palm Smallholder Farmer Access to Finance Project
The main objective of the project was to enable the mobilization of sufficient capital at affordable cost to independent smallholder farmers for large-scale oil palm replanting and to increase the production of sustainable palm oil in Jambi Province, Sumatra. In close cooperation with SNV en Financial technology firm Simbuka, Financial Access has collected detailed farmer production data and other relevant information to develop individual credit risk profiles of hundreds of farmers on an individual and portfolio (farmer group) basis. This has resulted in the development of a tailored and cost-effective financing model and credit scoring tool for commercial banks and microfinance institutions to significantly improve credit risk assessment for farmers requiring long-term financing for replanting
Maize Farmer Access to Finance Programme – Development and implementation of a workflow management and credit scoring tool for a microcredit institution in Sumbawa, Indonesia
Under the AIP-PRISMA, SAFIRA Programme, Financial Access has supported a local MFI in Sumbawa with the development and delivery of a workflow management and credit scoring tool to improve internal credit processes and to expand lending to smallholder maize farmers. Services provided during the project included:
- Mapping and of internal workflows and credit application processes;
- Development and implementation of an automated workflow management and credit scoring tool;
- System implementation and user training for staff.
The project resulted in the streamlining of loan origination processes, a significant increase in farmer loan volume growth and improved operational efficiency.