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Category: Collateral Financing

EAX Signs on More Banks in its warehouse Receipts Financing program

EAX Signs on More Banks in its warehouse Receipts Financing program

Last week, the East Africa Exchange added another local commercial bank to its growing list of certified members – Urwego Opportunity Bank (UOB), a microfinance institution operating in Rwanda since 2007. UOB agreed to be a member of the Exchange to be able to provide warehouse receipt financing to EAX members, namely farmer cooperatives, traders and brokers. An electronic warehouse receipt financing agreement has been drafted and currently still under review which provides all the steps of the receipt financing process.

 EAX now has a total of four commercial banks signed on as members, all agreeing in principle to develop new financing products for farmers and traders. Those are Ecobank, Banque Populaire du Rwanda (BPR), Guaranty Trust (GT) Bank and Urwego Opportunity Bank (UOB). The agriculture sector employs more than 65% of Rwanda’s population, accounts for one-third of the nation’s gross domestic product, yet less than 10% of total loan lending is allocated from banks to this sector. In order to achieve true development of the agricultural value chain and improve the lives of rural communities, greater access to financing and a diverse set of credit facilities id critical. This will give farmers the working capital they need to sustain their business activities in between each harvesting season as well as give them greater purchasing power for seeds, fertilizers and other inputs. The banks are ready to accept warehouse receipts which represents agricultural products as the sole collateral for loans.

 EAX hired Collateral Management International (CMI) a globally recognized collateral manager with 90 years of grain handling experience to oversee its warehouse operations and offer a guarantee of quality and quantity of all deposited grains. This essentially reduces the bank’s risk to zero, which should in turn ease the lending process for EAX members to trade effectively and efficiently.

 The same warehouse receipt financing agreement was signed by Ecobank in March 2015.