Sesame Business Network Ethiopia

MONEY, MONEY, MONEY QUIZ – ANSWERS

20 April 2015, Mekelle

Sesame Stakeholders Network Meeting

A. the biggest challengeB. well understood and only small challenges

prevailC. making use of mobile bankingD. attractive for finance institutes since it is a

low risk businessE. dominated by women

1. The sesame finance sector in NW Ethiopia is…. የሰሊጥ የገንዘብ ኣቅርቦት ዘርፍ በሰሜን ምዕራብ ኢትዮÉያ

1. Answer

• Risks are high. A wet year like 2014 can be desastreous for the finance sector.

• Women participation in the sector appears low. The Support Programme will tap into this in the future.

36%62%

36%62%

• Not well understood. CC & PC study revealed a lot but we need further follow-up. Challenges relate predominantly to sectoral issues.

• Mobile banking is not used yet but could be useful for the sector.

A. Informal moneylenderB. Microfinance instituteC. Own pocketD. EquebE. Primary cooperative

2. What is the most important source of finance for smallholders ዋና ገንዘብ ምንጭ የኣንስተƒ ገበሬ?

2. Answer

Investor Tigray

Investor Amhara

Small-scale Tigray

Small-scale Amhara

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

30.3%

47.7%

50.3%

59.4%

69.7%

52.3%

49.7%

40.6%

Own Borrow

(≤30 ha)

(≤30 ha)

(30> ha)

(30> ha)

A. BanksB. Primary cooperativeC. Informal moneylendersD. RelativesE. Microfinance institute

3. What is the most important credit source for smallholders ዋና የብድር ምንጭ ለኣንስተƒ?

MFI42%

Pr. Coop22%

IML24%

Relative7%

Friend4%

SACCO1%

3. Answer

A. Amhara 4,300 birr; Tigray 8,600 birrB. Amhara 1,000 birr; Tigray 14,700 birrC. Amhara 6,000 birr; Tigray 8,000 birrD. Amhara 5,000 birr; Tigray 6,000 birrE. Amhara 1,900 birr; Tigray 7,100 birr

4. What is approx. the average loan size of primary cooperatives to all small-scale

member farmers in Amhara & Tigray ሕስ ማ በኣማካይ ለአባለቻቸው የሚሰጡት

ብድር ?

MFI Pr. Coop IML

8,007

1,866

16,365

14,021

7,082

11,041

AmharaTigray

4. Answer

A. 0 – 5 hectare (Micro)B. 5 – 10 hectare (Small-scale)C. 10 – 30 hectare (Intermediate)D. 30 – 100 hectare (Small investor)E. 100 – 1,000 hectare (Large investor)

5. Which category sesame farmers take more than 80% of their credit from the

informal sector? የተናው ክፈል ኣምራች ገበሬ ነው 80 የሚያገ ው ብድር ከህገ ወጥ ብድር‚

ኣቅራብዎት የሚጠቀም

59.4%

9.6%

13.0%

17.3%

Small investor’s credit sources

IMLRelativesFriendsFormal

5. Answer

Informal total: 82.7%

A. Statement 1 and 3 are trueB. Statement 2 is trueC. Statement 3 is trueD. Statement 2 and 3 are trueE. All statements are true

Which statement is true?

6. Look at the statements below:1. Informal moneylenders can be found in any village2. Microfinance insitutes can be found in any village3. Receiving credit without interest is possible

• Informal moneylenders were found in every village, not more far away than a few minutes walk

• Some villages did not have a microfinance institute yet

• Family and friends are sometimes providing loans without charging interest

6. Answer

A. 10 daysB. 1 dayC. 5 daysD. 28 daysE. 50 days

7. A farmer requests a loan from an informal moneylender. How many days does it take to

receive the requested money? ኣንድ ኣምራች ገበሬ ከህገ ወጥ ብድር ኣቅራቢ የብድርጥያቄ

ብያቀርብ ምላሽ የሚሰጥበት ቀን

7. Answer

Bank

SACCO

Micro finance insitute

Cooperative

Friends

Relatives

Informal money lender

0 20 40 60 80 100 120

111

28

28

21

10

6

5

Waiting period between loan application & loan reception

Days

A. Primary cooperativeB. Informal moneylenderC. BankD. Saving and credit cooperativeE. Family and/or a friend

8. Which credit provider charges the lowest annual interest rate?

የተƒ ውብድር ሰጪ ኣንስተƒ ወለድ የሚያስከፍል

8. Answer• Primary cooperative – Fixed rates, minimum of

about 14%• Informal moneylenders do not offer annual

interest rates• Bank – Fixed rates, minimum of about 9.5%• Saving and credit cooperative – Fixed rates,

minimum of about 12%• Family & Friends can rely on social ties for

repayment

A. Informal moneylenders can be governmental workers (or bar ladies)

B. Without credit from informal moneylenders, sesame yields would be lower

C. Informal moneylenders can receive 800% annual interest rate from loans

D. If farmers cannot take a loan from informal moneylenders then it is because they could not be found

E. Credit from informal moneylenders is not preferred by farmers

9. Which statement is false?

• Anyone can be an informal moneylender. From government officials, to priests, to cooperative leaders.

• Informal moneylenders supply credit on the moment it is needed the most. Before harvest!

• High repayments (e.g. shi-beu-shi), in short timespan• If informal moneylenders did not supply credit halfway

through the season, harvest of sesame could perhaps not be done.

• Farmers make use of IML out of necessity. High costs are not favourable

9. Answer

A. May (Genbot) during land cleaningB. June (Sene) during the first ploughingC. September / October (Meskerem) during

third weedingD. October (Meskerem/Tikemt) during

harvesting E. November (Tikemt/Hedar) during marketing

10. When does a sesame farmer runs most short on cash መቸ ነው ሰሊጥ ኣምራች ገበሬ ገንዘብ የሚያጥርበት?

• 50% own funds is first being used for activities like land cleaning and ploughing

• Loans are released in June/July and they are used for the costly activities of first and second weeding. Third weeding is a relatively cheaper activity for which money is still present.

• Other expensive activity is harvesting and now money from formal institutes is finished

• Marketing sesame is relatively cheap and after marketing is doen, the farmer has again cash at hand

10. Answer

A. He cannot sow sesameB. He replaces sesame with sorghumC. He collects a loan from a microfinance

instituteD. All of the aboveE. None of the above

11. What happens when a farmer runs short on cash halfway (August) through the season

ኣንድ ገበሬ ሰሊጥ እያለማ በማከል ብር ብያጥርበት ምን ያደርጋል?

• Sesame is already sown in August. The crop is standing already.

• Microfinance institutes release loans in June/July.

11. Answer

A. 2,500 birrB. 5,000 birrC. 7,500 birrD. 10,000 birrE. 500 birr

12. How much do farmers currently spent on average for one hectare sesame

በኣሁኑ በኣማካይ ሰሊጥ ለማምረት በኣንድ ሄክታር የሚወጣውወጪ ?

12. Answer

5,000 birrExtra finance to perform 20-steps

Missed finance

Advised investment level per hectare: 12,000

birr / hectare

A. Land cleaningB. Sowing of sesame (broadcasting)C. Fertiliser application (recommended rate)D. Labour salaries for harvestingE. Transport of sesame to market

13. What is the most costly activity per hectare ሰሊጥ ለማምረት ከምንጠቀምባቸው ከፍተƒ ¦ ጪ የያዘው ?

• Land cleaning costs about 1,000 birr per hectare. Land clearing is costly, costing about 3,000 birr per hectare

• Conventional sowing is not labour intensive. Row planting is and it costs about…. Birr

• Purchase of fertiliser costs about 2,300 birr per hectare. • Harvesting is expensive but still cheaper than purchase

of fertiliser• Transport of sesame to market do not cost more than

100 birr per quintal

13. Answer

A. 500 birrB. 1,250 birrC. 2,000 birrD. 2,750 birrE. 3,500 birr

14. Currently the average cost price of one quintal of sesame is about…

በኣማካይ ኣንድ ኩንታል ሰሊጥ ለማምረት የሚጠይቀው ወጪ

• 5,000 birr per quintal; 4 quintal per hectare average yield.

• 2013 was a year of great profits; 4,200 birr quintal at spot market

• 2014 situation: 5,000 birr cost; 2 quintal per hectare. 2,500 birr per quintal

• 2014 low market prices of 2,200 birr

14. Answer

A. Credit costs represent 5% of production costsB. Credit costs represent 10% of production costsC. Credit costs represent 15% of production costsD. Credit costs represent 20% of production costsE. Credit costs represent 25% of production costs

19. What is the share of credit cost in relation to current total production cost

(incl. credit costs) የወለድ ወጪ ከጠቅላላ ወጪ የሚዘው

ፐርሰንት?

Micro

Small-scale

Intermediate

Small investor

Large investor

0% 20% 40% 60% 80% 100%

87%

85%

84%

79%

83%

13%

15%

16%

21%

17%

Production costs Credit costs

19. Answer

What happens to credit when everyone accepts 20-

steps?

Share of informal credit per hectare is …. (1), and its share of credit costs are …. (2).Share of formal credit per hectare is ….(3), and the share of its credit costs are ….(4).A. (1) Low; (2) Low – (3) High; (4) HighB. (1) High; (2) Low – (3) Low; (4) HighC. (1) Low; (2) High – (3) High; (4) LowD. (1) High; (2) High – (3) High; (4) HighE. (1) Low; (2) Low – (3) Low; (4) Low

15. Complete the following sentences related to smallholders?

15. Answer

Credit uptake Credit costs

36.0%

62.0%64.0%

38.0%

Informal Formal

(1) Informal credit share is

LOW

(3) Formal credit share is HIGH (2) Informal credit cost is HIGH

(4) Formal credit cost is

LOW

A. They cannot manage their money properlyB. They think that a loan is a giftC. They are susceptible to external conditions

that may cause crop failure and hence repayment defaults

D. They find it more important to first repay informal moneylender loans

E. Farmers are reliable credit takers

16. Farmers are unreliable credit takers because….

A. They do not trust farmersB. They have finance constraints themselves

as wellC. They find sesame production too riskfulD. They do not understand sesame farmingE. They provide sufficient credit

17. Finance institutes provide insufficient credit because….

Sesame Business Network Ethiopia

The end

Amasegnalehu!!!

Any questions?