Download Advancements in Agricultural Leasing in Russia

Ag Leasing in Russia –
Advancements and Remaining
Challenges
Stephanie Charitonenko
Chemonics International, Inc.
EastAgri Annual Meeting
May 4-5, 2006
Berlin, Germany
Creating an Enabling Environment for
Leasing
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Situation Pre-1998
1998 Federal “Law on Leasing”
Improvements to the Tax Code
2002 Amendments to the Law on Leasing and
the Tax Code
Development and Growth of Leasing
Companies in Russia
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Before 1998 – few leasing companies
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2001 benchmark – more leasing companies,
but virtually no interest in ag leasing
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2005 benchmark – ag leasing emerges
Advancement of Ag Leasing in Russia
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Dominance of the state-owned ag leasing
company, Rosagroleasing
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Growth of private ag lessors through donor
technical assistance and investments
Remaining Challenges of Agricultural
Leasing in Russia
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Macro - regulatory and tax issues
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Meso and micro - industry and firm-level
issues
Lessons Learned from Development of
Agricultural Leasing in Russia (Top 5)
1.
2.
Establishment of an adequate legal/
regulatory and tax policy environment is
prerequisite
Socially responsible investors and financial
institutions demonstrate the viability of
leasing as a financing option by investing in
leasing companies that develop the industry
(use of partial guarantees may be helpful)
Lessons Learned from Development of
Agricultural Leasing in Russia (Top 5)
3.
4.
Donor interventions in the leasing industry
should entail a combination of investment
and technical assistance
Encourage portfolio diversification as an
effective risk mitigation tool for leasing
companies to safeguard against defaults
Lessons Learned from Development of
Agricultural Leasing in Russia (Top 5)
5.
Assist in developing a national leasing
association, which can evolve from a strong
leasing development facility. This facility
can continue to function as both advocate for
key stakeholders in leasing policy and
legislation and provide training services to
industry players and the public.
Use of USAID’s DCA to Expand
Access to Ag Credit in Moldova
Stephanie Charitonenko
Chemonics International, Inc.
EastAgri Annual Meeting
May 4-5, 2006
Berlin, Germany
Reasons for Using Guarantees and
Associated Challenges

Reasons for using guarantees
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Weak legal/judicial environment
Attractiveness of bank investment in government
debt rather than in ag enterprises
High degree of asymmetric information
Lack of experience and risk mitigation mechanisms
Challenges
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Additionality, moral hazard, sustainability
(demonstration effect)
What is the DCA?
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USAID’s Development Credit Authority is a
partial guarantee program
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There are four types of DCA guarantees
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Agricultural lending constraints it addresses
Successful Use of the DCA in Moldova
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Program background
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Objectives
Participating financial institutions
Program achievements
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Increased number and amount of ag loans
Reduced collateral requirements
Development of new products
Lessons Learned from Successful Use
of DCA in Moldova
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Design is key:
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Degree of guarantee coverage
Targeted participants, beneficiaries, or sectors
Fees
Links between DCA and other program components and
other donor projects
Parallel work on improving the legal/judicial
environment is important (for sustainability)
DCA must be complemented with TA and training to
participating financial institutions (to help overcome
market failures)
HEALTH, 1%
DCA Global Reach
As of October, 2004
Global (2)
EDUCATION, 1%
MICROFINANCE,
18%
WATER, 8%
HOUSING, 17%
SME, 14%
INFRASTRUCTURE,
16%
Latin America & Caribbean (31)
Ecuador (3)
Guatemala (3)
Honduras (2)
Jamaica (2)
Mexico (2)
Nicaragua (3)
Peru (6)
Haiti (2)
Panama
Regional (7)
ENVIRONMEN T, 3%
ENERGY, 5%
Europe & Eurasia (36)
Armenia (4) Kazakhstan (2)
Bosnia (4) Romania
Bulgaria (7) Russia (3)
Croatia (2) Ukraine (5)
Moldova (6) Kyrgyzstan
Georgia
Africa (26)
Ghana (1)
Kenya (4)
Mali (1)
South Africa (6)
Uganda (7)
Zambia (4)
Ethiopia (2)
Rwanda
AGRICULTURE,
16%
Asia & Near East (21)
Bangladesh (2)
Egypt (2)
India (2)
Morocco (10)
Philippines (2)
Vietnam (3)