Myanmar’s Yoma Bank introduces agribusiness finance programme in support of dealers and farmers
YOMA BANK, Myanmar's fourth largest bank by assets with over 3000 employees and 74 branches across the nation, recently launched its first poultry loan as part of the bank’s agribusiness finance programme.
Arnold Tijdens, agri-finance consultant at Yoma Bank, said it is a unique opportunity to introduce new financing solutions to Myanmar’s agricultural sector, and has positive ramifications for the country at large.
“This product is available for dealers and farmers who are selling feedstock as well as dealers who are selling agro chemicals, fertilisers and seeds. We already disbursed the first loans for customers from De Heus,” he said.
He said the loan aimed at facilitating livestock farmers with working capital to buy animal feed from De Heus, a Dutch feed miller with factories in Yangon and Mandalay.
He considers the loan as a win-win situation for all parties involved. Individual farmers and dealers get access to the formal financial system to grow their poultry business, whereas De Heus is positioned to grow feed sales on the back of their clients’ increased purchasing power.
“De Heus is an existing customer of Yoma Bank and in the course of 2017, they interested us to look for ways to finance their customer base who are livestock farmers in Myanmar. As this represents a large group with a relative short cash cycle this appeared to be an interesting opportunity for Yoma Bank to design a special product for,” he said.
Livelihood and Food Security Trust Fund (LIFT) has funded the initiative, which aims to deliver financing solutions to agricultural players who are currently excluded from the formal financial system. Rabo Bank, the world’s largest food and agriculture bank, has provided technical assistance to design loan products for the nation’s agriculture sector.
Tijdens said the new loan is set to revolutionise SME financing in Myanmar’s poultry sector. Borrowers are not required to put up hard collateral typically requested by banks in Myanmar, but rather earn unsecured bank credit based on their positive track record, he added.
A farmer can borrow the minimum of 5 million kyats and the maximum of 250 million kyats at 13 per cent interest rate. The repayment of the loan is related to their cash cycles so poultry farmers who are rearing broilers have a regular cash cycle between 5-7 weeks but for the ones who rear layer chicks this longer.
“It requires a flexible and creative approach to shy away from the usual hard collateral requirements banks usually take as security. The key is that the bank gains a good understanding of the business it is financing, in this case agriculture, to assess the risks. The sector knowledge allows you to come up with a good product which matches the cash flow of the agricultural cycles,” he said.
