What is Turkey MSME Finance Facility?

The EBRD Turkey MSME Lending Programme combines long term loans by the European Bank for Reconstruction and Development (EBRD) with advisory and training components (Technical Assistance, TA) to a number of selected Turkish partner banks. The TA component of the programme was launched in November 2010.

The overall objective of the Programme is to help Partner Banks (PBs) participating in the EBRD MSME Finance Facility in Turkey introduce and/or further accelerate Micro- Small and Medium Sized Enterprise (MSME) lending techniques to the least economically developed regions of the country, thereby increasing funding to MSME borrowers, specifically to agricultural borrowers.

Besides the measures supporting MSME lending, the programme consists of specific technical assistance measures to increase credit to the agriculture sector and enable PBs to lend at stable levels in the agriculture market.

For the time being, Akbank, DenizBank, Garanti Bank, Isbank, TSKB, Vakifbank and Yapi Kredi Bank are the seven partner banks of the Technical Assistance programme.

The first privately owned development The first privately owned development The first privately owned development The first privately owned development bank in Turkey joined the projectbank in Turkey joined the projectbank in Turkey joined the projectbank in Turkey joined the project

EBRD has launched a new financing framework focusing on agriculture; the Turkey Agribusiness SME Financing Facility (TurAFF). TurAFF provides medium-term funding to partner banks which are on-lent to small and medium-sized enterprises, as well as farmers and agri-businesses. The first financing agreement under TurAFF was signed with the Industrial Development Bank of Turkey (TSKB), which is the first privately owned investment and development bank in Turkey. TSKB has recently joined the technical assistance component of the project as well. The consultant team has designed an agricultural lending workshop exclusively for TSKB, focusing on the evaluation of agricultural investment projects. Some members of the project evaluation team at TSKB also participated to an agricultural study tour in Germany on June 4-7, 2013

TURKEY

MSME Finance Facility NEWSLETTER

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The contents of this publication are the sole responsibility of Frankfurt School of Finance & Management and can in no way be taken to reflect the views of the European Union, EBRD or U.S. Agency for International Development.

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The technical assistance component of the project in Phase II (May 2012 – October 2013) is funded by the European Union.

This project is funded by the EBRD.

The technical assistance component of the project in Phase I (November 2010 – April 2012) was funded by the USAID.

The technical assistance component of the project is provided by Frankfurt School of Finance & Management

2 Executive Vice Presidents, 1 Department Head and 9 middle managers and technical staff at TSKB had a chance to receive information about agricultural investment finance and apex banking in an international context, become familiar with activities of the German Landwirtschaftliche Rentenbank (a specialist bank in agricultural finance), visit a successful dairy cattle farm and other enterprises operating in the food processing, packaging and distribution. One of the companies visited during the study tour was the world leader in cocoa processing, also supplying a number of Turkish companies, nearly all of which are customers to TSKB.

Akbank launched agricultural banking activitiesAkbank launched agricultural banking activitiesAkbank launched agricultural banking activitiesAkbank launched agricultural banking activities

Akbank launched agricultural banking activities in April 2013. Following the intense discussions during the development of an agricultural lending strategy, the consultant team has developed a tailor-made version of agricultural client assessment programme (CAP) in line with Akbank’s preferences. The CAP tool has been tested in pilot provinces. Four regional seminars have been organized for Akbank’s 251 regional and branch staff across pre-selected regions to present the CAP Tool. Together with Yapi Kredi Bank and Isbank, Akbank has become the third project partner bank to base its agricultural lending mechanisms on CAP tool database.

Technical Assistance Services

Intensive training programmes, seminars and workshops are among the major components of the Technical Assistance measures within the framework of EBRD MSME Finance Facility. The following training programmes are provided:

o “First Step in MSME Lending”

o “The Certified Expert in MSME Lending”

o “Marketing & Sales Training for Agriculture Customer Relationship Managers”

o “Agricultural Lending”

o “Small Enterprise Lending”

o “Medium Enterprise Lending”

o “Financing Agri-investments”

o “Training of Trainers”

o “On the job training”

As of June 2013, 2,028 loan officers and relationship managers from Akbank, DenizBank, Garanti Bank, Isbank, TSKB, Vakifbank and Yapi Kredi Bank have been trained in various training programmes.

In addition to the trainings and seminars mentioned above, PBs receive consultancy especially in agricultural lending. For that purpose, the consultant team developed a unique agro-credit assessment tool to support PBs’ staff with little or no agricultural knowledge in the decision making process. The consultant team also developed a new financial product “Value Chain Finance” (VCF) which

networks farmers to improve their capacity to get finance individually or as groups.

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Training ProgrammesTraining ProgrammesTraining ProgrammesTraining Programmes

In order to increase agricultural and MSME lending capacity of seven partner banks, various classroom and on-the-job training programmes were delivered as a part of the Technical Assistance component of the EBRD MSME Finance Facility. Through the training programmes launched on April 2011, the consultant team trained a total of 2,028 partner banks staff within 89 classroom training programmes. The total number of training days reached 258 including extensive ToT training and coaching sessions. The table below depicts the number of training participants and training days for each training programme delivered within EBRD MSME Finance Facility.

Training ProgrammeTraining ProgrammeTraining ProgrammeTraining Programme Number of Training DaysNumber of Training DaysNumber of Training DaysNumber of Training Days Number of Bankers TrainedNumber of Bankers TrainedNumber of Bankers TrainedNumber of Bankers Trained

MSME Certification Training 90 394

Marketing & Sales Training 4 38

First Step in MSME Lending 48 596

Introduction to CAP tool 1 24

Agricultural Lending 53 833

Financing Agri-investments 1 13

Small Enterprise Lending 3 14

Medium Enterprise Lending 3 12

Germany Study Tour 1 & 2 6 52

Alata Study Tour 2 26

Training of Trainers (ToT) 47 26

TOTALTOTALTOTALTOTAL 258258258258 2,0282,0282,0282,028

At the end of each seminar, the participants were awarded with a certificate issued by Frankfurt School of Finance & Management. 94.8% of the training participants rated the training as “excellent” or “good”, proving the high quality and relevance of the programmes.

The contents of this publication are the sole responsibility of Frankfurt School of Finance & Management and can in no way be taken to reflect the views of the European Union, EBRD or U.S. Agency for International Development.

MSME Lending training delivered by Mr. Sahabettin Yasin Özkan, an internal trainer of Vakifbank

For sustainability of training programmes and creation of an internal capacity within the partner banks for continuation of training programmes, the consultant team has completed a training of trainers (ToT) programme at Isbank, Vakifbank and Yapi Kredi Bank. After attending an intensive ToT programme, 3 Vakifbank internal trainer candidates started to deliver MSME Lending Certification programme on their own. Six MSME certification training programmes was delivered in 4 consecutive days by three internal trainers of Vakifbank under the coaching and monitoring of the

consultant team. During these sessions, 140 Vakifbank staff have been trained.

The consultant team has completed a training of trainers programme for the delivery of Agricultural Lending training at Isbank as well. 12 trainer candidates who have completed the ToT programme jointly organized by Frankfurt School and Isbank, started to run these seminars in their regions.

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For the continuation of the agricultural lending trainings previously initiated by the consultant team, the training of trainers programme at Yapi Kredi Bank was realized in February 2013.

In addition to 5 agricultural banking regional managers, the two previously selected internal trainers and two specialists from agricultural banking marketing and loan underwriting departments attended the seminar, attaining the number of internal trainers at Yapi Kredi Bank to 9.

MSME Finance Facility Programme Regions

Adıyaman, Ağrı, Amasya,

Ardahan, Artvin, Batman,

Bayburt, Bingöl, Bitlis, Çankırı,

Çorum, Diyarbakır, Elazığ,

Erzincan, Erzurum, Gaziantep,

Giresun, Gümüşhane, Hakkari,

Hatay, Iğdır, Kahramanmaraş,

Kars, Kastamonu, Kayseri,

Kilis, Malatya, Mardin, Muş,

Ordu, Osmaniye, Rize,

Samsun, Siirt, Sinop, Sivas,

Şanlıurfa, Şırnak, Tokat,

Trabzon, Tunceli, Van, Yozgat.

The The The The EvolvingEvolvingEvolvingEvolving Agricultural Finance Agricultural Finance Agricultural Finance Agricultural Finance workshop workshop workshop workshop

The “Evolving Agricultural Finance” workshop, hosted by Isbank, took place on May 9, 2013 on the fringes of the EBRD’s annual general meeting organized in Istanbul. The workshop aimed to draw the financial sector’s attention to the importance of risk assessment in agriculture for sustainable growth in agricultural lending, as well as towards new trends in agricultural finance. It also served to the purpose of giving an overview of lending mechanisms, market strategy and future perspectives of the leading Turkish commercial banks active in agri-business finance, as well as opportunities and challenges faced by the sector. The workshop has also been an opportunity for information sharing on EBRD’s experiences across other regions; such as Georgia, Russia and Tajikistan.

The contents of this publication are the sole responsibility of Frankfurt School of Finance & Management and can in no way be taken to reflect the views of the European Union, EBRD or U.S. Agency for International Development.

Evolving Agricultural Finance Workshop

Presentations used during the

workshop have been uploaded

to the project website under

“Results” section. Please visit

www.msmeturkey.com for the

details.

MSME Finance Facility Newsletters

Previous editions of MSME

Finance Facility newsletters are

uploaded to programme

website. You can download

these editions from

www.msmeturkey.com.

For your requests and

suggestions on the newsletter,

please inform us via e-mail:

msmeturkey@int.fs.de

The Evolving Agricultural Finance workshop which was organized under the technical assistance component of the EBRD Turkey MSME Finance Facility, provided a unique platform by bringing together main actors involved in agricultural finance i.e. key decision makers and practitioners from the EBRD, the Turkish financial sector, financial institutions in EBRD’s regions of operations, international financial institutions, and regulatory & supervisory bodies.

Opening and welcome speeches of the Evolving Agricultural Finance workshop were delivered by Mr. Nick Tesseyman, FI Managing Director at EBRD, Mr. Suat İnce, Executive Vice President of Isbank, and Dr. Gürsel Küsek, General Director of Agricultural Reform, Republic of Turkey Ministry of Food, Agriculture and Livestock. The workshop received huge interest from the leading representatives of the sector.

Opening speeches are followed by two panels focusing on risk assessment in agriculture, lending mechanisms and new trends in agricultural finance in Turkey and in EBRD’s other countries of operations. Financing through the warehouse receipt programme and financing women in agriculture were also covered by two keynote speakers representing the Ministry of Customs and Trade and the Ministry of Family and Social Policies.

The programme ended with an award ceremony as an acknowledgment of the efforts made by EBRD’s partner institutions in Turkey in developing the agricultural sector by supporting the producers, MSMEs and agro-industries.

4 The contents of this publication are the sole responsibility of Frankfurt School of Finance & Management and can in no way be taken to reflect the views of the European Union, EBRD or U.S. Agency for International Development.

Technical Assistance Services: Frankfurt School of Finance & Management Nispetiye Cad. Ece Apt. B Blok No: 49 / 17 Etiler 34337 Beşiktaş Istanbul / Turkey Tel: (90) 212 352 20 77 Fax: (90) 212 352 20 76 E-mail: e.kocoglu@int.fs.de Web: www.msmeturkey.com

MSME Finance Facility Newsletter Volume 5 June 2013

This project is funded by the European Bank of Reconstruction and Development

(EBRD).

The EBRD is a multinational institution set up with the specific aim of assisting countries to develop into market-oriented economies. The shareholders include 61 countries from both the region and the rest of the world, plus the European Commission and the European Investment Bank.

The EBRD invests and operates in 29 countries from central Europe to central Asia. Investing primarily in private sector clients whose needs cannot be fully met by the market, the Bank promotes entrepreneurship and fosters transition towards open and democratic market economies. Please visit www.ebrd.com for more details.

The technical assistance component of the project in Phase I (November 2010 – April

2012) was funded by the U.S. Agency for International Development (USAID).

USAID is an independent federal government agency that receives overall foreign policy guidance from the Secretary of State. USAID works in agriculture, democracy & governance, economic growth, the environment, education, health, global partnerships, and humanitarian assistance in more than 100 countries to provide a better future for all and supports long-term and equitable economic growth and advances U.S. foreign policy objectives.

USAID provides assistance in five regions of the world: Sub-Saharan Africa, Asia, Latin America and the Carribean, Europe and Eurasia and the Middle East. Please visit www.usaid.gov/locations/ europe_eurasia/countries/tr/ for more details.

The technical assistance services within the project are provided by Frankfurt School of

Finance and Management.

Frankfurt School of Finance & Management (former Bankakademie) is the leading private business school and advisory institute in Germany with more than 50 years of experience in consulting, qualification and training services in all areas of banking and finance.

International Advisory Services, operating since 1992, is committed to improving financial markets and increasing financial access to finance for low-income populations in developing and transition countries and emerging markets. Please visit www.frankfurt-school.de for more details.

www.msmeturkey.com

The technical assistance component of the project in Phase II (May 2012 – October

2013) is funded by the European Union.

The European Union is made up of 27 Member States who have decided to gradually link together their know-how, resources and destinies. Together, during a period enlargement of 50 years, they have built a zone of stability, democracy and sustainable development whilst maintaining cultural diversity, tolerance and individual freedoms. The European Union is committed to sharing its achievements and its values with countries and peoples beyond its borders. The European Commission is the EU’s executive body.

“This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of Frankfurt School of Finance & Management and can in no way be taken to reflect the views of the European Union."