SELF EMPLOYMENT IN

AGRICULTURE
PROPOSED WAY FORWARD
ASSET- LIABILITY COLLATERAL
MODEL
PREPARED BY:
MGHWENO. OWEN, N
MICHAEL. FIDEL, T
FIVAWO. AGNES, B
(Sokoine Undergraduates)

Graduates Presentation for the 2 nd steering committee meeting formed

jointly by CRDB Bank, DAEA, Development Partners and Sokoine
Graduates
March 12th 2011
Email: owennelson2005@yahoo.com
 CONTENTS
 Introduction
 Field of opportunities at Sokoine University
 Where graduate fit in Agriculture
 Greatest obstacle
 Graduates suggested solutions
 Proposed solution
 About the model
 Conditions for the model’s efficiency
 Advantages of the model
 Limitations of the model
 ASSET-LIABILITY COLLATERAL MODEL
 Recommendations
INTRODUCTION
Arising from the Forum on self Employment in
Agricultural sector that was organized jointly by
CRDB Bank and DAEA-SUA on February 12th
2011, the following proposal has been written to
adhere the need of having a steering committee
resulted from the Forum.

Sokoine University of Agriculture is anticipated

to have thousand graduates each year as an outlet
to the society, 90% of them being undergraduate
level.
Field of opportunities at Sokoine University
The University is an extreme multifunction unit as it
creates academicians who can grab various
opportunities both agricultural based and non
agricultural based.

Sokoine offers degree and non-degree programs at

undergraduate and graduate level in the disciplines of
Agriculture, Veterinary Medicine; Animal Science,
Range Management, Wildlife, Forestry, Agronomy  
and Information Technology, Library, Records and
Information Management
Where Graduates fit in Agriculture
Sokoine graduates have a magnificent role to play in
our country and the world at large when speaking of
agriculture.

As stated by DAEA in the last Forum, these graduates

are primary actors i.e

 Input suppliers, farmers, trade and transport

servers, processors, distributors and retailers,
consumers and most of all environmentally
concerned disposal managers.
GREATEST OBSTACLE
Most graduates fear to engage into
self employment in agriculture, the
greatest obstacle being inadequate
finance
Graduates Suggested solutions
1. Use of Graduates certificate as collateral
Advantages:
◦ Financial acquisition as per valuation of certificate
◦ High commitment motive to graduates
Disadvantages:
◦ Career development might be hindered
◦ Collateral has no real commercial value
◦ Hinder diversification priority
◦ Certificate value measurement may be complicated
Graduates Suggested solutions….
2. Use of collateral with title deed
 Advantages :
◦ Financial acquisition as per securities held
◦ Commitment motive to graduates
 Disadvantages:
◦ Most graduates are dependent with no or
minimum valued assets
◦ Third party claims might exist if the collateral
is family owned or otherwise
Graduates Suggested solutions…..
3. Use of development partners only(e.g.
PASS)
 Advantages:
◦ Financial acquisition based on partners
guarantee to pay
 Disadvantage:
◦ High risk of willful default
◦ D.P might not be willing to support a mere
graduate
Graduates Suggested solutions….
4. Use of Group enforcement
 Advantage:
◦ Financial acquisition based on the groups
registration as a legal entity
◦ Easy to monitor group rather than individuals
 Disadvantage:
◦ Difficult to form groups with similar
character graduates (in terms of location,
interest e.t.c)
◦ No specific collateral
 PROPOSED SOLUTION
ASSET- LIABILITY COLLATERAL MODEL
About the model
This proposed model is designed to serve the quest of the Forum.
It illustrates how graduates may be provided with loan and
enforce loan repayment . The model has taken into consideration
four key actors:
 Graduates
 Consultation unit ( DAEA)
 Guarantors (Development Partners + DAEA)
 CRBD Bank

However the Government will be directly or indirectly involved.

The model stress out on having the loan given in terms of input
assets rather than Cash. The assets will be a liability to the
graduate until it is completely paid. Also the asset will be used as
the security to ensure minimum risk to the lender.
 ASSET – LIABILITY COLLATERAL MODEL

CONSULTATION UNIT GUARANTORS

( DAEA and others /DEVELOPMENT
PARTNERS

CRDB BANK
GRADUATES LOAN
BUSINESS (FINANCIAL FACILITATOR)
1 2 3
PROPOSAL APPLICATION

4 (Input delivery) 6 (Cheque submission)

8 INPUT 10
DEALERS

5 (Confirmation Cheque) 7(Cheque Payment)

9( Profit accumulation) LOAN

IMPLEMENTATION REPAYMENT
Condition for the model’s efficiency
 A comprehensive written business proposal to guide the idea
 Initial starting scale for any business should be small
 Mutual benefit based contract to describe mode of payment and
legal rules
 No cash involved, cheques only based on two signatories (bank
and borrower)
 Initially the title deed is held by the Bank until the loan is fully
paid
 Borrower should open a current account to enable acquisition of
cheque book for Input transaction monitoring
 Borrower should present monthly reports on the business
progress to the Bank
 Borrowers monetary transactions should be issued by respective
Bank
Advantages of the Model
 The created security will be legally signed
 There’s an assurance that no other lenders will claim on the assets
 No third party claims on security
 The security produce a real commercial value as compared to
certificate
 Easy to reinforce repayment incase of borrowers failure to business
 High motivation for borrowers commitment no hindrance of
graduates career to develop
 Asset may be transferred to another person who is willing to repay
the debt incase of graduates failure
 The model has mutual benefit for both borrower and lender
 Success of the model meets the goals for development partners and
DAEA ‘s incubator program
 The model will adhere to the nations policy on “YOUTH
EMPLOYMENT” and “MKUKUTA” at large
Limitations of the model
The model can only succeed if all parties
work together.
The model only explains a skeleton of the
business to be implemented as much of it is
expected to appear in the business proposal
Recommendations
 The proposed model is a nation’s solution equipment
for unemployment, but this can only be proved if its
given a chance to be applicable in the reality. Putting
the model in reality may be done through the use of
pilot group of graduates who have feasible business
ideas.

 Alsothe model can best work if the Bank gives a

mutual priority concerning the interest rates involved,
the success of the model is only an introductory
success for the Bank, Graduates, consulting units,
development partners and the government as a whole.
Thank you very much.