African Agro Development Bank

Lending to agricultural sector requires special framework. The establishment of specialized Agricultural Development Banks by many developing countries in the sixties helped in both developing lending policy and extending credit and other banking facilities to agricultural sector. Being commercial banks, they were expected to balance market orientation with focus on developing agriculture, by lending to activities from primary production to exports which may not be prima facie viable. Relationship managers in the banks acted as intermediaries between the applicants unfamiliar with the formalities and the hardcore credit risk managers, guiding the applicants on preparing fundable projects and offering an initial appraisal. The applications later went through a more rigorous assessment of business, management, and industry risks. The case on African Agro Development Bank includes three loan proposals: for a small loan from a poultry farm, a request for credit enhancement from a group of maize growers, and for financing food processing that produced pineapple for exports. The caselets provide sufficient information for the participants to learn to assess the relevant market, business, and credit creditworthiness and decide on the proposal.