Agriterra Internal Capitalization Program <p>[14-08-2017] FL: <em>project closed manually in database. No track record of set to active and finished.</em><br></p><p>Background<br>Literature as well as cooperative experts state that lack of internal capitalization is one of the key reasons why cooperatives in Africa are having hard times to survive  grow  compete and realize new business ambitions. Lack of member equity to leverage investments is a major problem for many cooperatives in developing countries  </p>
<p>Inside capital formation by members within a cooperative becomes increasingly important to attract ‘outsider’ finance from banks and other moneylenders. Without capitalization – inside mobilization of finance of members – it is hard for any cooperative to become bankable and get a loan. By overlooking the capitalization of the cooperatives  many remain weak  creditworthiness stays low and investment capacity is hardly available. Agriterra acknowledge this problem and aim to look into ways that can stimulate internal capitalization and self-financing of the cooperatives.</p>
<p>Agricultural cooperatives have different ways to build internal capital. The self-financing principle is of high importance. When members have trust in their cooperative  they are willing to leave or invest their capital in the cooperative. It is a significant indicator of commitment towards the cooperative  and thus a healthy member base. Around 40% of the financing of the cooperative should be own equity in order to have a healthy balance sheet and gain trust from banks to provide loans for investment and working capital. Different modalities are applied at different cooperatives around the world to maintain or increase the own equity position  such as:<br>• Shares<br>• Member account – allowing equity on the names of the members<br>• Member loan<br>• Membership fee<br>• Retained earnings<br>• Proportional capital return based on transaction level of a member with the cooperative</p> <p>Objectives</p>
<p>• To learn about different options for internal capitalization.<br><br>• To share best practices in self-financing/internal capitalization from different unions.<br><br>• To teach the participants how to use the different modules which have been created recently within Agriterra.<br><br>• Selected cooperativess should be able to make together with the local business advisors an action plan for internal capitalization</p> <p>Agriterra has several clients in different countries where the process of internal capitalization within cooperatives hardly takes place. Since capitalization and building own equity is key for coops and unions to become independent and realize sustainable growth  it is important to gain further understanding of what the options can be for Ethiopian unions and cooperatives to build own equity. Issuing shares is one option  but it often happens ad hoc and non-structured. Agriterra would like to assess how coops and unions can built up capital in a more structured way  for example based on member accounts or proportional contributions based on the transaction level members have with their union. </p>
<p>The idea behind this assignment is to organize a workshop session at customers of Agriterra ( cooperatives or Unions of Cooperatives)in order to stimulate farmer owned enterprises at the Agriterra clients in the field. Agripool experts in the field of internal capitalization will be selected to give training. They should be able to discuss self-financing options  best practices in internal capitalization and jointly pave steps forward for actors involved that<br>• promote more awareness about the different self-financing modalities.<br>• stimulate more farmer owned enterprises to start capitalization/self-finance processes.<br>• offer farmer owned enterprises more options for internal capitalization.</p>
<p>Objectives<br>• To learn about different options for internal capitalization.<br>• To share best practices in self-financing/internal capitalization from different unions.<br>• To teach the participants how to use the different modules which have been created recently within Agriterra.</p>