Rural Invest Introduction Lesson 1 PDF

INTRODUCTION TO RURAIINVEST ARRUPE 2024 DR D MUCHADA  INTRODUCTION Agriculture is the backbone of most developing countries. For any business land , labour and capital are the most important assets In Africa, more so in Zimbabwe we have vast tracks of land and at one poi...

INTRODUCTION TO RURAIINVEST ARRUPE 2024 DR D MUCHADA  INTRODUCTION Agriculture is the backbone of most developing countries. For any business land , labour and capital are the most important assets In Africa, more so in Zimbabwe we have vast tracks of land and at one point Zimbabwe was known as the breadbasket of Africa We have lots of arable land which can bring fortunes if properly used and when the farmers are well supported  The power of Agriculture Investing in agriculture is a way of addressing poverty and hunger Food security is every countries number one priority to reduce poverty 80% of food in the world is produced by smallholder farmers According to the world bank report three quarters of the worlds poor live in rural areas and depend on agriculture Therefore its important that these businesses are enabled to plan, and access finance in order to be socially and economically viable Agriculture provides employment and other related businesses that contribute to economic development  cont Most rural businesses would benefit from support from funders /financiers NGOs ,Governments and the private sector often play a significant role in this sector Climate change, resource scarcity and at times drift to urban centers are some of the issues that they deal with Rural farmers and businesses are envisaged to bring transformation and are being supported for value addition  Sustainable development Goals Amongst the 17sustainable development here are the goals we can also play a role in : Goal 1-No Poverty Goal 2-Zero Hunger Goal 8-Economic growth  What is RuralInvest RuralInvest is a toolkit which is used to support the work of field technicians in their work to assist entrepreneurs in having bankable business plans RuralInvest started in an effort to improve the poor quality and badly formatted business plans that were being prepared The poor business plans negatively affected the entrepreneurs possibility of accessing finance for their businesses  Cont Food Agricultural Organisation (FAO) has developed the methodology from data collection on simple spreadsheets to the development of a full fledged business plan in a software that is constantly upgraded Beneficiaries are small and medium entrepreneurs or communities and cooperatives.  Important Concepts in Rural Invest An investment project-has a starting and ending time and is where one puts some money expecting a return. It has specific objectives and area where it is operational A business plan is required where there is need to access funding Business plan- highlights objectives and how to achieve them  Cont’d RuralInvest toolkit can be used for income generating projects e.g. transport, businesses and agriculture The objective of RuralInvest toolkit is to standardize the assessment, monitoring and evaluation of the local investments by governments and funders  Who are the users of Rural Invest? Technicians who help entrepreneurs in preparing proposals for their activities Rural Invest is mostly used by small scale investors of USD 500 000 and below Profit and Non Profit projects Profit- the revenues realized should be more that the costs incurred. This should also cover the replacement of assets at the end of their useful life  ENTREPRENEURS These are project promoters/owners They make decisions on the project They can be individuals, groups, cooperatives, whole communities or villages with an idea The entrepreneurs are given an opportunity to identify implementation needs and financing requirements. They are working hand in hand with RuralInvest users – field technicians are able to help them to translate their investment ideas into bankable business plans  Field Technicians-RuraIInvest users Help entrepreneurs in the field finalizing their investment idea, collect relevant data and input in the software to develop a bankable business plan They have the technical and feasibility understanding of the RuralInvest methodology They assist the entrepreneur for his discussion with the bankers, making sure they own their business plan and understand the requirements of the financial institutions  Field Technicians skills Basic understanding of financial concepts Ability to communicate with rural groups and individuals Basic understanding of production system of area they are working on Can work with computers –MS windows Have their 3 online badges and their RIV certification after the face to face training/course  Field technicians NB. Field technicians are not there to influence the data they are given by the promoter Influencing may affect ownership of the project by the entrepreneur Any figures or statistics you may have from the government or other projects are used as pointers as businesses are not the same They are there to assist the entrepreneurs in preparing and appraising their projects They go through all the necessary aspects of the project and help the entrepreneur own the project  Field Technicians Technicians create an enabling and open environment for stakeholders Point the entrepreneur on where to get relevant information on economic and technical issues Any recommendations that the technician gives to the promoter has an impact on the outcome of the application to the financier Therefore the technician needs to be practical and free from bias and subjectivity  Participatory approach RIV allows the project promoters to participate in developing the concept plan and business plan Technicians due to their understanding of technical aspects assist the promoter to appreciate their business plan Entrepreneurs fully understand their project, and all they need is guidance on turning their vision into a solid business plan  Financing agencies Financial institutions and donors are the usual funders of projects Banks provide short term and long term loans Donor agencies provide grants and matching grants Matching grant whereby the entrepreneur provides an amount and the donor agency matches that amount as a grant Business plans are required for the financiers to make an informed decision to provide the funding or not  Financing agencies Riv software provides a business plan in two formats as PDF and Excel (the excel allows further calculations that may be required by financing institutions) Note that financing agents always want to review the financial projections of activities of the entrepreneur before giving any funds  Riv learning stages Data collection- entrepreneurs develop the business concept Business concept helps in determining if the project is feasible before developing a full business plan The entrepreneur provides all the necessary information with the help of the technician to develop a more detailed investment idea Note that at this stage all information is being collected and documented on paper and not in the RIV system  Business concept Business concept is first developed and if it is promising then a full business plan is developed The software will generate a report which has a qualitative and quantitative part Only the full year of production is assessed  Business Concept The indicators that they will use are Gross Annual Income Payback period Net annual income taking into account annual reserve Positive outcome of Gross Annual Income and Net annual income indicate a promising venture worth developing into a business plan Negative outcome may indicate the need to reassess and adjust certain costs and expenses before developing the concept into a business plan  Business Plan The technician will collect more data from the entrepreneur necessary to develop the business plan-multiple year The marketing, financial, operational and sustainability of a venture are examined A detailed assessment is needed over years. It helps obtain more detailed financial indicators It helps to determine the feasibility and profitability of the project A detailed qualitative analysis is key  Business Plan Ability to interpret financial indicators Determine the feasibility and profitability of the project It will help interpret the sensitivity analysis How to compare the “With project” Scenario and “without Project Scenario”