TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

1. EXECUTIVE SUMMARY 1.1 Project Brief

EMMARK CONGO is a well-established consumer goods trading enterprise that has been doing a fast-growing business in western DR Congos Kinshasa for the last 6 months. EMMARK CONGO sells its fast moving consumer goods (FMCG) line of products through an established departmental store in Kinshasa city which is the capital city of DR Congo that offers a potential market catchment area of well over 12 million consumers. EMMARK CONGO has so far managed to establish a strong product distribution network within Kinshasa city itself and is seeking to expand its product distribution and delivery network to cover other prospective FMCG highconsumption cities to the east and south of DR Congo like Goma, Bukavu, Butembo (all in Kivu Region) and Lubumbashi in Katanga Province. Currently, EMMARK CONGO imports single container-loads of FMCGs from Europe (mostly the UK) worth about US$ 160,000 into DR Congo and the stock sales turn around period is usually about one month. Sales turnover is always in the region of two-and-a-half (2.5) times the landed cost value of each container-load of FMCGs. Market demand for FMCGs in Kinshasa is quite high going by the fact that domestic industrial production for an overwhelmingly large part of consumer goods used by Congolese is still at a very low level as the country is more renowned for its production of high-value minerals like Gold, Copper, Diamonds, Tantalum and Tin rather that for its industrial production of basic consumer goods. Another reason for the high mark-ups and fast consumption rates on imported consumer packaged goods in DR Congo is that the government does not impose high import duties on such imports since there is no significant local industrial base to protect and at the same time such imported basic consumer goods must be sold off at market prices that are both affordable and attractive for the domestic consumers. In the absence of a strong domestic industrial production capacity for basic consumer packaged goods, imports will remain the only viable option to meet the needs of domestic consumers in large urban centres like Kinshasa, Goma, Bukavu, Lubumbashi, Bandundu, Mbandaka, Kananga, Mbuji Mayi, Matadi, etc. DR Congos population is currently estimated at about 75.5 million inhabitants and with such a large and fast-expanding market of consumers in the foreground, EMMARK CONGO would like to capitalize on its robust business growth potential to expand its business portfolio both in the volume and range of consumer packaged goods and durable products that it can offer on such a large and become competitive in 1

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

the short-to-medium-term. The immediate strategy for EMMARK CONGO in this sense is to recourse to flexible and responsive bank trade-finance instruments like Revolving Stand-by Letters of Credit (SBLCs) and Usance Letters of Credit for time periods of 180 days that will enable the company to increase supply volumes, to promote its line of products/merchandise in this new market and to gain competitive advantages; it will allow the company to structure its payment plan under the contract according to its import interests; it will also enable the company to protect its cash flow so that it can win new business and support existing business contracts in the market. The most appropriate monetary value of Revolving SBLCs and/or Usance Letters of Credit that EMMARK CONGO seeks in order to expand and diversify its import trading business would in the range of US$ 1.5 million to US$ 1.6 million for each 180day trading cycle. EMMARK CONGO will commit a mix of cash and physical asset collateral to secure performance of its obligations on these trade facilitating bank instruments. 1.2 Opportunity Rationale

Presently in Kinshasa, the concert of running a consumer packaged goods business through the operation of a centralized large departmental store with a well-established distribution network has increasingly gained in popularity as consumers can shop for practically all their needs in one place at pocket-friendly prices. Currently there is a new trend and large investments have been made in super storesand hyper markets by few multinational and local companies i.e. Shoprite Checkers (with a daily sales turnover of US$ 200,000 350,000), Kin-Mart Supermarket, City Market, Alimentation, Express, Peloustre, Zatrimex, Extra Plus, etc. The Kinshasa consumer market has liked this concept due to the availability of all basic commodities and utilities under one roof which saves their time and for which people are quite conscious these days. The key factors that make this project viable in DR Congo are:

Easy access to wholesale markets Plentiful availability of human resources/salesmen No process/transformation involved Sale of a variety of goods under one roof Margin for innovation Easy diversification towards new product mix

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

2. PURPOSE OF THE DOCUMENT

The objective of this business case study is to highlight the need to pace a fast growth business potential of trading in Fast Moving Consumer Goods/Consumer Packaged Goods (FMCGs/CPGs) by EMMARK CONGO in the Kinshasa area of DR Congo that it has so far recorded since it established there a comprehensively-stocked departmental store with a well-coordinated supply chain/distribution network to serve a diverse range of consumers. This brief document/study also serves as the basis of an important investment-expansion decision with a view to solicit trade finance facilitation instruments from the banking sector in order to scale up EMMARK CONGOs FMCG trading portfolio, grow the business turnover volume, and ultimately become competitive in a fast-growing and dynamic DR Congo market that opens up a whole new range of business expansion prospects for any trading investor that is willing and capable of playing for higher investment and venture finance stakes to capture such an opportunity. The document also provides background trading enterprise information, SWOT analysis and product market analysis, which have some bearing on the project itself. This particular business case study is regarding a wholesale/retail departmental store with an interlinked urban goods distribution network which comes under the trade sector.

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

3. CORPORATE INFORMATION 3.1 Project Description

EMMARK CONGO is the DR Congo-based trading subsidiary of EMMARK TRADING based in Kampala, Uganda. EMMARK TRADING started its operations in 2012 and works in active collaboration and partnership with DYNAPHARM AFRICA that deals in a wide range of nutritional supplements and cosmetics/personal care products and is strongly represented in many countries in Africa including: Angola, Burundi, Mozambique, Tanzania, Kenya, Uganda, Mali, Nigeria, Sierra Leone, Senegal, DR Congo, Republic of Congo-Brazzaville, South Africa, South Sudan, Zambia and Zimbabwe. Presently, EMMARK CONGO that has been active in DR Congo since the beginning of 2013 operates through a large centralized departmental store with a bonded warehouse in downtown Kinshasa and well-established supply chain distribution network. The additional equity assets of EMMARK CONGO are its management structure and a few FMCG distribution trucks. The company plans to expand the scale and scope of FMCG line-of-business five-fold through the application of bank trading instruments like importation Stand-by Letters of Credit and Usance Letters of Credit carrying a 180-day import credit-trading period. The company also plans to expand on its goods distribution supply chain capacity through the acquisition and operationalization of more distribution trucks and opening up of additional regional distribution urban centres in eastern and southern DR Congo such as Goma, Bukavu, and Lubumbashi. 3.2 Company Profile Brief

Name: EMMARK CONGO Type: Private LLC Industry: FMCG Founded: 2012 Headquarters: Kampala, Uganda Equity Assets: Centralized departmental store & bonded warehouse; management structure in place; FMCG products distribution network/supply chain and distribution trucks Key People: Emma Barigye Kiremire (C/MD), Esther Ampumuza Products: Groceries and food items; soaps, detergents and chemicals; crockery and plastic items; ice cream and beverages; electronic and electrical appliances; general items; etc. Current Revenue: USD 750,000 every six (6) months Employees: 32 4

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

3.3 Vision, Mission and Philosophy EMMARK CONGO is a customer-focused company committed to consistently offer better quality products and services that maximize value to the customer. This customer-centric philosophy has been well emphasized at EMMARK CONGO through:

Continuously exploring & developing new products & processes. Laying emphasis on cost effectiveness. Maintaining effective Quality Management System. Complying with safety, environment and social obligations. Imparting training to all involved on a continuous basis. Teamwork and active participation all around. Demonstrating a sense of belonging and exemplary behaviour towards organization, its goals and objectives.

EMMARK CONGO is a phenomenon and synonymous with Value for Money. The brand transcends the specific dynamic of any particular product category, which is best captured in its above mission statement - a statement of sustained innovation, an unceasing effort to deliver better value to consumers, through better product quality. 3.4 Sponsor/Cost/Location

Project Sponsor and Major Shareholders of Project Company EMMARK CONGO started business in 2012 as a distributor/wholesaler of a wide range of fast-moving consumer goods products in DR Congo and it is a 100% subsidiary of the Uganda-based EMMARK TRADING. The ultimate beneficiaries of EMMARK CONGOare Ugandan and Congolese business personalities. Shareholding Structure of Project Company The total authorized share capital of the company is USD 907,546 which is distributed amongst the shareholders through the following shareholding structure:

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

Table 1: EMMARK CONGO Shareholding Structure Name of Shareholder Value of Shareholding (in USD 92,385 57,304 100,000 19,500 10,584 40,000 34,000 20,000 30,000 50,000 453,773 453,773 907,546 %age of Total Share Capital 10.18% 6.31% 11.02% 2.15% 1.17% 4.41% 3.75% 2.20% 3.31% 5.51% 50.00% 50.00% 100.00%

Prof. Bernard Kiremire Emma Barigye Kiremire Esther Ampumuza King Oine Deo Katongole Grace Ashabe Jane Barigye Ambrose Mutafungwa Daniel Vanderleo Apolomille MaluMalu Sub-Total Shareholders Capital Floating Shares TOTAL SHARE CAPITAL Location of Project Company

The EMMARK CONGO wholesale/retail departmental store and bonded warehouse are centrally and conveniently located in downtown Kinshasa the capital of DR Congo. Plans are afoot to expand the same FMCG departmental warehouse concept to other big cities in DR Congo to the east and south especially Bukavu, Goma and Lubumbashi. In the medium-term, the project company will also roll out to expand its continental presence to other countries in the SADC region such as Angola and Zimbabwe and even further east to Somalia. 3.5 Key Success Factors

The EMMARK CONGO wholesale/retail departmental store is full of opportunities for success which it is ready and willing to catch using the following strategies: Customer card system can be one of the best strategies for the retention of existing customer and developing new customers. Card System maintains data base of customer which can be later on used for permanent promotional and marketing activities. Customer Card System is one of the best Customer Relationship Management (CRM) practices used globally. 6

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

Provision for state-of-art facilities in the departmental store to attract and retain customers. Use of regular and sustained marketing through distribution of fliers and use of Cable TV. Ample and secure outside car parking space for customers vehicles. Employment of well-trained and motivated staff capable of serving customers with etiquette. Offer of free gift schemes and surprise gifts to customers, valuable customer dinners can be additional success factors.

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

4. SERVICES & PRODUCTS 4.1 Product Description

The FMCG industry is one of the most rapidly emerging industries nowadays in the DR Congo as well as global markets. In DR Congo, it is one of the top four (4) single largest markets in the country, which shows how important the industry is and how much it contributes towards the Congolese economy. This industry essentially comprises Consumer Non-Durable (CND) products and caters to the everyday needs of the population. Also known as Consumer Packaged Goods (CPG), Well established distribution network, Low penetration levels, Absolute profit made on FMCG products is relatively small but they sell in large quantity & earn large profits, Intense competition between the organized and unorganized segments, Lower per capita consumption,and Low operating cost. Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG) are products that are sold quickly at relatively low cost. Though the absolute profit made on FMCG products is relatively small, they generally sell in large quantities, so the cumulative profit on such products can be large. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, teeth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, light bulbs, batteries, paper products and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products and drinks, although these are often categorized separately. FMCG have a short shelf life, either as a result of high consumer demand or because the product deteriorates rapidly. Some FMCGssuch as meat, fruits and vegetables, dairy products, and baked goodsare highly perishable. Other goods such as alcohol, toiletries, pre-packaged foods, soft drinks, and cleaning products have high turnover rates. An excellent example is a newspaperevery day's newspaper carries different content, making one useless just one day later, necessitating a new purchase every day.

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

4.2 Product Characteristics Products belonging to the FMCG segment generally have the following characteristics: They are used at least once a month They are used directly by the end-consumer They are non-durable They are sold in packaged form They are branded

Main characteristics of FMCGs:

From the consumers' perspective: o Frequent purchase o Low involvement (little or no effort to choose the item products with strong brand loyalty are exceptions to this rule) o Low price From the marketers' angle: o High volumes o Low contribution margins o Extensive distribution networks

High stock turnover 4.3 Industry Segments

The main segments of the FMCG sector are:

Personal Care: oral care; hair care; skin care; personal wash (soaps); cosmetics and toiletries; deodorants; perfumes; paper products (tissues, diapers, sanitary); shoe care. Household Care: fabric wash (laundry soaps and synthetic detergents); household cleaners (dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and mosquito repellants, metal polish and furniture polish). Branded and Packaged Food and Beverages: health beverages; soft drinks; staples/cereals; bakery products (biscuits, bread, cakes); snack food; chocolates; ice cream; tea; coffee; processed fruits, vegetables and meat; dairy products; bottled water; branded flour; branded rice; branded sugar; juices etc. Spirits and Tobacco

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

4.4 Product Mix The EMMARK CONGO departmental store regularly sells FMCGs to customers in the following proportions: Table 2: Range of FMCG Goods Traded by EMMARK CONGO
Category of Items Groceries and food items Baby garments and baby products Crockery and plastic items Soaps, detergents and chemicals Cosmetics and artificial Jewellery Ice cream and Beverages Stationery and Greeting Cards/Gifts Watches and Clocks Electronic and electrical appliances General items Bakery items Total Proportion 55% 5% 4% 15% 5% 5% 1% 1% 2% 2% 5% 100% Avg. Gross Margin 130% 330% 280% 80% 280% 80% 180% 280% 280% 130% 180%

The income statements and profitability are prepared on the basis of 151 percent margin. Figure 1: Some Key Drivers in the 21st Century FMCG Supply Chain

10

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

5. SWOT ANALYSIS 5.1 Market SWOT Analysis

Strengths: Low operational costs Presence of established distribution networks in both urban and rural areas Presence of well-known brands in FMCG sector Weaknesses: Lower scope of investing in technology and achieving economies of scale, especially in small sectors Low exports levels "Me-too products, which illegally mimic the labels of the established brands. These products narrow the scope of FMCG products in rural and semi-urban market. Opportunities: Untapped rural market Rising income levels, i.e. increase in purchasing power of consumers Large DR Congo domestic market- apopulation of over 75 million consumers. Export potential High consumer goods spending Threats: Slowdown in rural demand Tax and regulatory structure 5.2 Company SWOT Analysis

Strengths: EMMARK CONGO has managed to establish a strong market presence in DR Congo including a strong brand portfolio; Good distribution network in Kinshasa; consumer understanding; distribution reach(networking) and high quality manpower; Economical products with a wide product line; 11

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

As the importation is done on a large scale it has the benefit of economies of scale.

Weaknesses: The company's weaknesses identified hereby include: Increased consumer spending on education, consumer durables, entertainment, travel, etc. resulting in lower share of wallet for FMCG; Complex supply chain configuration and unwieldy number of stock keeping units (SKUs) with dispersed manufacturing locations; Price positioning in some categories that allows for low price competition and high social costs in the FMCG trading business. Limited financing to expand product import and sales capacity to respond to high market demand and gain competitive advantages with other large suppliers in Kinshasa.
Opportunities: EMMARK CONGO sees its opportunities as: Market and brand growth through increased penetration especially in other large urban centers of DR Congo; Brand growth through increased consumption depth and frequency of usage across all categories; Upgrading consumers through innovation to new levels of quality and performance; Current market consumption patterns in DR Congo for FMCGs show that there is still quite a large demand-supply gap to fill up; Emerging modern trade to be effectively used for introduction of more upscale personal care products; Growing consumption in out of home categories; Low market share for EMMARK CONGO in DR Congo to be rectified by recourse to trade finance to scale up supply capabilities and the application of a focused aggressive marketing campaign. Positioning EMMARK CONGO as a sourcing hub for smaller FMCG wholesale/retail dealers elsewhere in DR Congo and leveraging the latest IT technologies. Threats:

Perceived threats: span low-priced competition now being present in all categories; grey imports; spurious/counterfeit products in rural areas and small towns; changes in fiscal benefits.

12

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

6. PRODUCT MARKET ANALYSIS 6.1 Market Segment

Food products is the largest consumption category in DR Congo, accounting for nearly 21 per cent of the countrys GDP. Figure 2: DR Congo FMCG Market Segments

DR Congo FMCG market segment

2% 12%

Baby Care Fabric Care Food Products Hair Care Household OTC Products
43%

22%

5% 4% 4% 8%

Others Personal Care

13

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

6.2 Advantage to DR Congo Figure 3: Advantage to DR Congo

LARGE AND GROWING YOUTH POPULATION EMERGENCE OF ORGANISED RETAIL BUSINESS

INFRASTRUCTURE

DEVELOPMENT

Advantage DR Congo
SIGNIFICANT INCREASE IN CONSUMPTION LEVELS INCREASING DISPOSABLE INCOME

GROWING URBANISATION

6.3 SUPPLY

Five Forces Analysis of FMCGs

Abundant supply in metros Competition is beefing up their distribution network to penetrate the rural areas.

DEMAND
At an average annual GDP growth rate of 6.17% registered for the period 2003 - 2012, the present consumer demand is set to boom by almost 60% over the subsequent period.

Most FMCG companies are awaiting to tap this latent growth market.

14

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

BARRIERS TO ENTRY Huge investment in promoting brands, setting of distribution network and intense competition. BARGAINING POWER OF SUPPLIERS Many established players have a slight edge in bargaining power given the keen competition among suppliers. Some of the companies have backward integration, which reduces the suppliers clout.

BARGAINING POWER OF CUSTOMERS Due to increase in branded products, there is less chance that the consumer can influence, but intense competition within FMCG companies result in value for money deals for consumers. (e.g. getting one FMCG product free with one FMCG product unit bought).

COMPETITION In the FMCG trading sector of DR Congo, the average gross profit margins on imported FMCGs are high (in the range of 150%) and they also sell in huge turnover volumes. To beat the competition companies mainly use various strategies like discounts and freebies. Unbranded players are growing at the rate of 10%. Local players have no large distribution network so they are giving fight to the branded products by giving huge margins to retailers which is an important part of supply chain. 6.4 Factors that will drive growth in this sector

Increasing rate of urbanization, expected to see major growth in coming years. Rise in disposable incomes, resulting in premium brands having faster growth and deeper penetration. Innovative and stronger channels of distribution to the rural segment, leading to deeper penetration into this segment. Increase in rural non-agricultural income and benefits from government welfare programmes. 15

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

7. BUSINESS & MARKETING STRATEGIES 7.1 Overview

EMMARK CONGO has employed various innovative techniques to capture the DR Congo FMCG urban consumer market in a big city like Kinshasa. It has for instance introduced various small budget FMCG consumer goods to attract the urban consumers in downtown Kinshasa. EMMARK CONGO has targeted mainly on the third class consumers to market its diverse range of FMCG products. The company has introduced toilet soaps, detergents and other FMCG consumer attractive goods at a low cost. EMMARK CONGO has also come up with various other marketing strategies such as pricing and supply chain management process and distribution strategies by using its own distribution trucks to make incisive inroads into the urban DR Congo consumer products market. The companys distribution fleet of trucks makes timely and costeffective deliveries to smaller FMCG product wholesalers and retailers throughout the Kinshasa area. 7.2 Packaging

Attractive packs Vibrant colors Pack that show the important features of product Protective packaging (especially for coffee products) Size-wise packing (for some cooking oils and toothpaste products) Done according to segmentation of the Market Packaging is enhanced and improved upontime after time Affordable small-sized packs (especially for soft drink beverages). 7.3 Advertisement

Huge investment expenditure on advertisement Frequent broadcasts Targeted advertisement especially during peak hours During live matches During popular TV shows Target TV channels in Kinshasa Through banners, posters, trial packs, events, hoardings, FM radio, etc. Based on Market Research 16

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

7.4 Marketing Regular and sustained marketing is required for a successful business of a departmental store. The important marketing channels that are used by EMMARK CONGO are flyer distribution, billboards, banners, Cable TV, etc. Regular advertisement expense usually falls in the range of 0.5% to 1% of sales in the departmental store business. Some of the marketing and promotional techniques that are employed by EMMARK CONGO are as under: Use of existing customers as the best referrals. Knowing customers needs. Introduction of home delivery services free of cost for shopping of more thanUSD 20. Frequent clearance sales 7.5 Pricing

Every retailer has a basic philosophy towards pricing their product. In the case of EMMARK CONGO, it is important is that it creates and sticks to a strategy for pricing so as to convey a clear message to the consumer. The market has certainly created the need for all retailers, even those at the higher end, to become more value-oriented. That is not to suggest that EMMARK CONGO necessarily needs to compete on price, only that it has awareness about providing consumer perceived value. Some value pricing strategies that are employed by EMMARK CONGO are as follows: Provides the consumers with incentives to become repeat customers by offering them future discounts. Frequent clearance sales Inclusion of gifts within specified amounts of purchases at the departmental store. Display Featuring of discounted prices regularly.

17

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

8. COMPANY MANAGEMENT & ORGANIZATION STRUCTURE 8.1 Overview

EMMARK CONGO is acutely aware of the imperative need to put in place and maintain a winning consumer goods organization that will underpin its ability to drive growth and keep costs down. In order to do so, EMMARK CONGO needs to operate with an efficient and effective management organizational structure that can take advantage of scale; strengthen and amplify the degree of centralization and specialization in the marketing, sales, and back-office functions; and most importantly use a specialized but skeletal staffing structure in an emerging FMGC market like that one of DR Congo. Generally speaking, the experience that EMMARK CONGO has so far gathered in its almost one-years trading in consumer packaged goods in DR Congo is that:

It pays to have a locally deployed marketing function, in which most marketing employees work in country offices supported by a small set of centers of excellence. Our own experience is that companies that take this approach tend to grow faster and to have lower costs than those with a large proportion of centrally located marketing personnel. In the emerging FMCG markets, staff size doesnt matter: we have so far found no link between the number of employees in such a market and a companys growth rate there. What matters is having a skill mix tailored to local market dynamics. 8.2 Company Organizational Structure

Going by the company organizational observations deducted in the sub-section above, EMMARK CONGO has created and deployed a lean but market-focused organizational structure with 32 employees on board. This organization structure is specifically designed and tailored to achieve the principal marketing objects of the company that include: high volume sales of consumer packaged goods; execution and maintenance of an extensive distribution network; and achieving high stock turnover in relatively short periods of time. To be able to achieve these key marketing objectives, EMMARK CONGO has instituted a core management structure that comprises of four departments that include: procurements and logistics department (which also includes stores); sales and marketing department; accounts and finance department; and the administration and 18

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

human resources department which is based at EMMARK TRADING Headquarters in Kampala, Uganda. Another key consideration is that it is important to have a lean but highly efficient and effective management structure that can deliver sustained business growth, cut costs and attain economies of scale, drive expansion of the consumer product distribution and supply chain logistics, build up enterprise competitiveness, and enable the company to protect its cash flow and structure its bank trade-finance instruments payment plan under the contract according to its FMCG importation interests. The business operations of EMMARK CONGO are basically driven by the first three departments (i.e. procurements and logistics department; sales and marketing department;; and accounts and finance department) and it is these three for which detailed job descriptions are given in Sub-section 8.4 on roles and responsibilities below. 8.2.1 Procurement and Logistics Department

The Procurement & Logistics department ensures that the materials and services needed for the EMMARK CONGO consumer goods trading enterprise in DR Congo are available on time, in full and under competitive conditions. High commodity prices as well as rising oil prices and transportation costs are undermining consumer packaged goods companies ability to maintain margins. In part, this is a function of not having a true understanding of their total cost of ownership and its impact on the extended supply chain. Global sourcing is one part of the solution and is a viable solution for a consumer packaged goods company like EMMARK CONGO that is willing to invest in improving the core components of its procurement operations. In addition to EMMARK CONGO having a well-established procurement organization for its direct materials it also needs to ensure indirect suppliers operate at the same level of efficiency to achieve high performance. This is particularly important as the growth in new and emerging markets brings more opportunities to find synergies and savings among members of the supply network but also brings added complexity. Employees in the Procurement & Logistics department think in processes instead of departments, are ambitious and professional and can quickly react to events. Both large and small decisions have a direct impact on EMMARK CONGOs trading activities.

19

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

Internally, the Procurement & Logistics department works together with Project Management and the Accounts and Finance department, because the importance of the purchase quote and the related financial significance of purchasing and logistics are relatively large. 8.2.2 Sales and Marketing Department

Cooperation between multiple departments in a company is essential for increased profits. Production departments and marketing or sales departments have different functions, but a similar overall objective. Both departments look to enhance sales and profits by supplying products that customers need or want. Marketing and sales support within the production department can help tie customer preferences to the production process. The EMMARK CONGO marketing and sales departments work together based on a solid plan to maximize profits while creating long-term clients and adding value to the companys products. The functions of the sales and marketing department is to increase product sales for the company. EMMARK CONGO has also introduced a functional customer marketing department within the sales and marketing department as an essential component for building high-impact strategies and messaging that conveys maximum value about a EMMARK CONGOs products and services to retailers. This team can also be called upon to act as skilled mediators between sellers and marketers, two groups often in a state of conflict. The sales and marketing departments new incarnation has produced one unified marketing team focused on brand building and a steady pace of new product introduction to create a large, innovative product portfolio. It has also brought together disparate company sales teams by assigning them to a strictly defined customer segment to whom they are expected to sell the whole range of FMCG goods. 8.2.3 Accounts and Finance Department

The Accounts and Finance Department of EMMARK CONGO has two subdepartments: that one of finance and a separate one dealing with company accounts matters. The functional roles for each of these two sub-departments are given as follows:

20

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

Accounts Department: Determination of payroll Accounting for receivable cash collections Accounting for payables cash payments Tracking of procurement and inventory Company property accounting Finance Department: Preparation of company budgets Financial management of borrowed funds and bank trade finance instruments Management of Investments of EMMARK CONGO Management of Taxes Management of Financial Risks

8.2.4

Administration and Human Resources Department

The Administration and Human Resources Department of EMMARK CONGO has two core functions: administration and human resource management. The functional roles of each of these two departmental components are given below: HR Department: Manpower Planning Job analysis and Job description Determining wages and salaries Recruitment and Selection Performance Appraisal Training & Development Employee welfare and motivation Labour management relations Implementing organizational policies Dismissal and redundancy Administration Department: The Administration component of the department is tasked with providing administrative and logistical support to the entire organization. Mandate of the Administration Department includes:

General office Management and Running. Registry Management. Assets Management. Property Management. Security and Safety.

21

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

Figure 4: Organization Structure of EMMARK CONGO BOARD OF DIRECTORS

CHAIRMAN/MD

DIRECTOR PROCUREMENT & LOGISTICS

DIRECTOR SALES & MARKETING

DIRECTOR ACCOUNTS & FINANCE

DIRECTOR ADMIN & HR

Stores Manager (1)

SPM (1)

Sales Staff (4)

Trade Finance Expert (1)

Accounts Officer (1)

SCLO (1)

Helpers (6)

Asst. Accounts Officer (1)

Drivers (6)

Cashiers (2)

Loaders (6)

Billing Staff (2)

Legend: SPM: SCLO:

Sourcing & Procurement Manager FMCG Supply Chain Logistics Officer

22

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

8.3 Staffing The manpower requirements are specifically tailored to the business opportunities and organizational dictates of the FMCG trading enterprise in DR Congo. The following Table 3 presents the manpower structure for EMMARK CONGO: Table 3: EMMARK CONGO Staffing Structure Staff Description Sourcing and Procurement Manager Stores Manager Trade Finance Expert/Specialist FMCG Supply Chain Logistics Officer Accounts / Financial Officer Asst. Accounts / Financial Officer Sales Staff / Order Bookers Billing Staff Cashiers Helpers / Cleaners Drivers Loaders Total 8.4 Roles and Responsibilities of Company Staff

Number 1 1 1 1 1 1 4 2 2 6 6 6 32

FCMG Stores Manager:

Providing excellent customer service; Managing stock effectively; Adhering to store plans and visual layouts; Maintaining hygienic, safe & well organized sales floor; Ensuring store readiness for daily trade; Keeping inventory records and stocktaking.

Sourcing & Procurement Manager: Responsible for the execution of the geographic category strategies and development of sourcing plans at a local/regional level; Ensuring that the category sourcing and contract(s) meet the business requirements through the execution of the strategic sourcing process;

23

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

Applying global policies, standards and platforms including the agreed Sourcing Management methodology and approach and to deliver robust terms and conditions that manages the Company's service delivery and commercial risk; Managing negotiation and supplier selection within the framework of the sourcing strategies; Applying the agreed global policies, standards and platforms; Owning commercial supply base management and building strong internal and external business relationships to ensure the delivery of the category goals; Facilitating the creation of supplier SLA's and performance check-points; Managing and resolve contractual performance issues and escalating where required.

Trade Finance Expert: Assist the CMD and Director of Accounts and Finance (DAF) in structuring trade finance deals - Liaising with insurance companies, banks, and counter-parties to obtain timely information and also in execution of deals. Maintaining and enhancing relationships with the existing banks and developing new banking relationships. Managing collateral and inventory financing processes with the banks. Creating databases of Letters of credit and ensuring compliance with all UCP regulations. Ensuring timely issuance of Letters of credit by co-coordinating with the banks and suppliers and also ensure that export Letters of credits are received as per contracted time lines. Compiling all relevant documents for negotiating letters of credit and smoothly resolving discrepancies by coordinating with the counterparts and banks. Closely monitoring credit limits and utilization and report the same to the DAF. Constantly seeking to improve the quality /type of credit limits by working closely with the banks and also improving pricing received on these limits. Preparing cash flow statements and report surplus/ deficits on a timely basis to the DAF. Monitoring developments in trade finance arena and provide innovative ideas in financing deals. Implementing policies and procedures for trade finance department and work towards improving internal policies and procedures. FCMG Supply Chain Logistics Officer: His/her key task is to organise the safe and efficient storage and distribution of FMCG goods, and to ensure that orders are satisfied correctly. Other responsibilities include: 24

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

organising shipments coordinating drivers, vehicles, loads and journeys operating IT systems negotiating and agreeing contracts developing and confirming schedules planning for and negotiating technical difficulties preparing paperwork for regulatory bodies liaising with staff.

Accounts / Financial Officer: Handling of Day-to-day Cash payments and bank payments/ receipts Monitoring of creditors and payments on due dates Accounting of bills relating to expenses Scrutiny of Trial Balance and necessary corrections /alterations Inventory Management & Accounting Handling Taxes: VAT, Income Taxes, etc. Handling Statutory compliance & Maintaining records Bank Reconciliation Asst. Accounts / Financial Officer: Responsible for daily routines in the process of accounts receivable & payables. Handle General Ledger accounting entries, including preparing accounting voucher and filing. Assist in the month-end closing and prepare for account schedules. Reconcile and follow up outstanding invoices and suppliers' statements. Provide general support to the EMMARK CONGO accounting teams. Sales Staff/Order Bookers: Salesmen do sales budget setting, route planning, trade negotiations from store level to national buyers. They also routinely visit customers at their designated area as per schedule provided and book their orders. Salesmen also price the goods and stack them in the shelves according to their specifications. Furthermore they assist the FMCG customers in locating the products. Helpers/Cleaners: Helpers are next in place to the salesmen who assist them in their activities. Their core job description is to dust the products twice daily so that the customers dont get a negative image of the departmental store. Additionally, they also help the cashiers to pack the goods in plastic bags.

25

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

Cashiers: Are responsible for managing funds and maintaining books of accounts. The cashiers are required to record all transactions manually and verify the same with the billing status as shown on the computer. The cashiers also receive payments from outdoor sales staff and match it with the daily sales figure reported by sales staff. Before commencing work, previous days position is crosschecked with the cash position to ascertain and verify the cash balances. Billing Staff: These are the people responsible for handling cash and closing the position at the end of the day once all sales transactions have been entered. The cashiers would subsequently crosscheck the figures before commencement of days operations.

26

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

9. FINANCIAL PLAN 8.1 Trade Expansion/Scale-Up Requirements

EMMARK CONGO requires an Import Letter of Credit worth USD 1.5 1.6 million for a maximum period of 180 days to finance the importation of fastmoving consumer goods into DR Congo where it has an established and promising market presence with a good trading history. Current trading turnover by EMMARK CONGO is about USD 750,000 for every six (6) months trading cycle. EMMARK CONGO seeks to scale-up its FMCG products trading portfolio fivefold to about USD 3.75 million for every six (6) months trading cycle. EMMARK CONGOwould also like to use the applicableImport Letter of Creditto implement additional business expansion strategies that include: Promoting its line of products/merchandise in the booming DR Congo market in order to gain competitive advantages; Structuring its payment plan under the FMCG goods importation contract in accordance with its import interests; Protecting its cash flow so that it can win new business while retaining the confidence and support of existing customers. EMMARK CONGO works in active partnership and collaboration with DYNAPHARM AFRICA and they can together can put up and offer substantial collateral security to secure the required ban trade-finance facilitation instruments that will include: A solid and sound trading history; Substantial business assets in DR Congo including a FMCG products distribution centre and bonded warehouse and a product distribution fleet of vehicles; Competent and dynamic management structure in place; FMCG supply chain network in place. 8.2 Trade Financing Options

1) Stand-By Letters of Credit (SBLCs) for 180-day credit periods; OR 2) Usance Letters of Credit for 180-day credit periods; OR 3) Mix of L/C and Cash Loans for 120 days with Cash: L/C Ratio building up from 30: 70 to 50: 50 as trading progresses and business confidence grows, OR 4) Use of secured Import Loans within the SBLCs for 90/120 days

27

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

8.3 Functioning of the Stand-by Letter of Credit Figure 5: Functioning of the Stand-by Letter of Credit
3. Issuing of the SBLC

Issuing Bank

7. Forwarding of documents 8. Making payment

Advising Bank
6. Forwarding of documents to the advising bank

10. Forwarding of documents to the customer

2. Application of the SBLC

4. Advising of the SBLC

EMMARK CONGO

1. Entering into agreement 5. Dispatch of goods

Exporter of Goods (UK/USA)

8.4

Financial Reporting

Based on mutual understanding with the project financiers, the following reports will be submitted: 1. Inception report and first annual work plan to be submitted at the end of the first month for the first full project financing year. 2. Annual reports submitted at the end of the first month for the subsequent project financing years. 3. Budget and forecast requests to be submitted semi-annually, to include the budget request for operating funds for the coming 6 months and a forecast for the following 6 month period. 4. Quarterly status reports both narrative and financial to be produced at the end of the month following each quarter of the project financing year. 5. Audit reports due together with the progress reports by the end of March for the previous calendar year. 6. Final project report due three months following the end of the project financing. 28

9. Making payment

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

8.5 Key Assumptions for Trading Process 8.5.1 Operating Assumptions

Hours operational per day Days operational per year Stock inventory remaining in store Category of item Groceries and food items Baby garments and bay products Crockery and plastic items Soaps detergents and chemicals Cosmetics and artificial jewellery Ice cream and beverages Stationery and greeting cards/gifts Watches and Clocks Electronic and electrical appliances General items Bakery items

No. of days 7 30 30 15 30 7 30 30 30 30 3

8.5.2

Economy Related Assumptions

10% 10% 40%

Electricity/Fuel cost growth rate Salaries growth rate Corporate tax rate (DR Congo)

8.5.3

Cash Flow Assumptions

0 days 15 days

Accounts receivable (average) Accounts payable (average)

8.5.4

Expense Assumptions
0.3% 1% 0.5% 4% 10% 20% 1% 10% 0.2% 0.18%

Telephone expenses (% of Revenue) Repair and maintenance (% of Equipment & Building) Entertainment Expenses (% of Revenue) Insurance of stocks (% of stock) Capacity Utilization Growth Rate Amortization of Pre-operating Cost Advertisement (% of Revenue) Electricity growth rate Travelling and conveyance (% of Revenue) Supply Chain Distribution Expenses (% of Revenue)

29

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

Printing and stationery (% of Revenue) Proportion of VAT (@ 16%) taxable sales and purchases Revenue price growth rate Sales price growth rate 0.1% 70% 6% 6%

8.5.5

Financials Assumptions
5 8% 5 2 180 1,500,000

Projection Period (Years) Interest rate on Stand-by Letters of Credit SLBC tenure (Years) SLBC Repayments per Year SLBC Operating/Application Cycle (Days) Value of each SLBC (USD)

30

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

8.6 Revenue Calculation (In USD)
Optimum Year 1 0-6 7 - 12 months months
3,750,000 3,750,000

Year 2 13 - 18 19 - 24 months months

3,975,000 3,975,000

Year 3 25 - 30 31 - 36 months months

4,200,000 4,200,000

Year 4 37 - 42 43 - 48 months months

4,462,500 4,462,500

Year 5 49 - 54 55 - 60 months months

4,725,000 4,725,000

Projected Revenue (USD) (USD 20,833 per day)

Sales Price growth rate Accumulated Purchase Price growth rate Accumulated

6% 6%

12% 12%

19% 19%

26% 26%

Revenue (USD):
1 Groceries and food items 2 Baby garments and baby products 3 Crockery and plastic items 4 Soaps, detergents and chemicals 5 Cosmetics & artificial jewellery 6 Ice cream and Beverages 7 Stationery & greeting cards/gifts 8 Watches and clocks

Proportion 55% 5% 4% 15% 5% 5% 1% 1% 2% 2% 5% 100%

2,062,500 187,500 150,000 562,500 187,500 187,500 37,500 37,500 75,000 75,000 187,500 3,750,000 2,062,500 187,500 150,000 562,500 187,500 187,500 37,500 37,500 75,000 75,000 187,500 3,750,000 2,186,250 198,750 159,000 596,250 198,750 198,750 39,750 39,750 79,500 79,500 198,750 3,975,000 2,186,250 198,750 159,000 596,250 198,750 198,750 39,750 39,750 79,500 79,500 198,750 3,975,000 2,310,000 210,000 168,000 630,000 210,000 210,000 42,000 42,000 84,000 84,000 210,000 4,200,000 2,310,000 210,000 168,000 630,000 210,000 210,000 42,000 42,000 84,000 84,000 210,000 4,200,000 2,454,375 223,125 178,500 669,375 223,125 223,125 44,625 44,625 89,250 89,250 223,125 4,462,500 2,454,375 223,125 178,500 669,375 223,125 223,125 44,625 44,625 89,250 89,250 223,125 4,462,500 2,598,750 236,250 189,000 708,750 236,250 236,250 47,250 47,250 94,500 94,500 236,250 4,725,000 2,598,750 236,250 189,000 708,750 236,250 236,250 47,250 47,250 94,500 94,500 236,250 4,725,000

9 Electronic and electrical appliances 10 General items 11 bakery items

Total

31

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

8.7
Gross margin % of Sales:
1 Groceries and food items 2 Baby garments and baby products 3 Crockery and plastic items 4 Soaps, detergents and chemicals 5 Cosmetics & artificial jewellery 6 Ice cream and Beverages 7 Stationery & greeting cards/gifts 8 Watches and clocks 9 Electronic and electrical appliances 10 General items 11 bakery items 130% 330% 280% 80% 280% 80% 180% 280% 280% 130% 180% 825,000 75,000 60,000 225,000 75,000 75,000 15,000 15,000 30,000 30,000 75,000 1,500,000 130% 330% 280% 80% 280% 80% 180% 280% 280% 130% 180% 825,000 75,000 60,000 225,000 75,000 75,000 15,000 15,000 30,000 30,000 75,000 1,500,000 15,865 6,250 5,000 9,375 6,250 1,442 1,250 1,250 2,500 2,500 625 52,308 130% 330% 280% 80% 280% 80% 180% 280% 280% 130% 180% 874,500 79,500 63,600 238,500 79,500 79,500 15,900 15,900 31,800 31,800 79,500 1,590,000 16,817 6,625 5,300 9,938 6,625 1,529 1,325 1,325 2,650 2,650 663 55,446 130% 330% 280% 80% 280% 80% 180% 280% 280% 130% 180% 874,500 79,500 63,600 238,500 79,500 79,500 15,900 15,900 31,800 31,800 79,500 1,590,000 16,817 6,625 5,300 9,938 6,625 1,529 1,325 1,325 2,650 2,650 663 55,446 130% 330% 280% 80% 280% 80% 180% 280% 280% 130% 180% 924,000 84,000 67,200 252,000 84,000 84,000 16,800 16,800 33,600 33,600 84,000 1,680,000 17,769 7,000 5,600 10,500 7,000 1,615 1,400 1,400 2,800 2,800 700 58,585 130% 330% 280% 80% 280% 80% 180% 280% 280% 130% 180% 924,000 84,000 67,200 252,000 84,000 84,000 16,800 16,800 33,600 33,600 84,000 1,680,000 17,769 7,000 5,600 10,500 7,000 1,615 1,400 1,400 2,800 2,800 700 58,585 130% 330% 280% 80% 280% 80% 180% 280% 280% 130% 180% 981,750 89,250 71,400 267,750 89,250 89,250 17,850 17,850 35,700 35,700 89,250 1,785,000 18,880 7,438 5,950 11,156 7,438 1,716 1,488 1,488 2,975 2,975 744 62,246 130% 330% 280% 80% 280% 80% 180% 280% 280% 130% 180% 981,750 89,250 71,400 267,750 89,250 89,250 17,850 17,850 35,700 35,700 89,250 1,785,000 18,880 7,438 5,950 11,156 7,438 1,716 1,488 1,488 2,975 2,975 744 62,246 130% 330% 280% 80% 280% 80% 180% 280% 280% 130% 180% 1,039,500 94,500 75,600 283,500 94,500 94,500 18,900 18,900 37,800 37,800 94,500 1,890,000 19,990 7,875 6,300 11,813 7,875 1,817 1,575 1,575 3,150 3,150 788 65,908 130% 330% 280% 80% 280% 80% 180% 280% 280% 130% 180% 1,039,500 94,500 75,600 283,500 94,500 94,500 18,900 18,900 37,800 37,800 94,500 1,890,000 19,990 7,875 6,300 11,813 7,875 1,817 1,575 1,575 3,150 3,150 788 65,908

Purchases & Stock Calculation (in USD)

Year 1
0 - 6 mths 7 - 12 mths

Year 2
13 - 18 mths 19 - 24 mths

Year 3
25 - 30 mths 31 - 36 mths

Year 4
37 - 42 mths 43 - 48 mths

Year 5
49 - 54 mths 55 - 60 mths

Purchases (USD):
1 Groceries and food items 2 Baby garments and baby products 3 Crockery and plastic items 4 Soaps, detergents and chemicals 5 Cosmetics & artificial jewellery 6 Ice cream and Beverages 7 Stationery & greeting cards/gifts 8 Watches and clocks 9 Electronic and electrical appliances 10 General items 11 bakery items Total Purchases

Stocks (USD):
1 Groceries and food items 2 Baby garments and baby products 3 Crockery and plastic items 4 Soaps, detergents and chemicals 5 Cosmetics & artificial jewellery 6 Ice cream and Beverages 7 Stationery & greeting cards/gifts 8 Watches and clocks 9 Electronic and electrical appliances 10 General items 11 Bakery items Total Stocks

52 12 12 24 12 52 12 12 12 12 120

15,865 6,250 5,000 9,375 6,250 1,442 1,250 1,250 2,500 2,500 625 52,308

32

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

8.8 Operating Expenses (in USD)

Year 1 0-6 7 - 12 months months

13 - 18 months

Year 2 19 - 24 months
18,700 1,100 19,875 11,925 8,800 39,750 700 7,155 2,218 7,950 3,975 1,620 2,000 125,768

25 - 30 months

Year 3 31 - 36 months
20,570 1,210 21,000 12,600 9,680 42,000 1,000 7,560 2,343 8,400 4,200 1,503 2,000 134,066

37 - 42 months

Year 4 43 - 48 months
22,627 1,331 22,313 13,388 10,648 44,625 1,200 8,033 2,490 8,926 4,463 1,394 2,000 143,438

49 - 54 months

Year 5 55 - 60 months
24,890 1,464 23,625 14,175 11,713 47,250 1,500 8,505 2,636 9,450 4,725 1,295 2,000 153,228

Administrative Salaries Legal & Audit Fees Entertainment Telephone, Fax & Postage Electricity Advertisement Repair of Building & Equipment Distribution vehicles delivery Insurance of stocks Travelling and conveyance Printing & stationery Depreciation Amortization Total

17,000 1,000 18,750 11,250 8,000 37,500 500 6,750 2,092 7,500 3,750 1,750 2,000 117,842

17,000 1,000 18,750 11,250 8,000 37,500 500 6,750 2,092 7,500 3,750 1,750 2,000 117,842

18,700 1,100 19,875 11,925 8,800 39,750 700 7,155 2,218 7,950 3,975 1,620 2,000 125,768

20,570 1,210 21,000 12,600 9,680 42,000 1,000 7,560 2,343 8,400 4,200 1,503 2,000 134,066

22,627 1,331 22,313 13,388 10,648 44,625 1,200 8,033 2,490 8,926 4,463 1,394 2,000 143,436

24,890 1,464 23,625 14,175 11,713 47,250 1,500 8,505 2,636 9,450 4,725 1,295 2,000 153,228

33

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

8.9 5-Year Projected Income Statement (In USD)
Year 1
0 - 6 mths 7 - 12 mths

Year 2
13 - 18 mths 19 - 24 mths

Year 3
25 - 30 mths 31 - 36 mths

Year 4
37 - 42 mths 43 - 48 mths

Year 5
49 - 54 mths 55 - 60 mths

Cash Inflows: SBLCs Sales/Revenue Total Cash Inflows Cost of Sales: Add opening stock Purchases Less closing stock VAT (16%) Total Cost of Sales Gross Profit Cash Outflows: Operating Expenses: Operating Profit SBLC Repayments SBLC Interest Profit before Taxation Taxation (40%) Profit after Taxation
Acc. Profit brought forward Un-appropriated Profit carried forward
117,842 3,800,158 1,500,000 60,000 2,240,158 896,063 1,344,095 117,842 3,800,158 1,500,000 60,000 2,240,158 896,063 1,344,095 125,768 4,030,450 1,590,000 63,600 2,376,850 950,740 1,426,110 125,768 4,027,312 1,590,000 63,600 2,373,712 949,485 1,424,227 134,066 4,257,233 1,680,000 67,200 2,510,033 1,004,013 1,506,020 134,066 4,254,094 1,680,000 67,200 2,506,894 1,002,758 1,504,136 143,436 4,522,645 1,785,000 71,400 2,666,245 1,066,498 1,599,747 143,436 4,518,984 1,785,000 71,400 2,662,584 1,065,034 1,597,550 153,228 4,787,114 1,890,000 75,600 2,821,514 1,128,606 1,692,908 153,228 4,783,452 1,890,000 75,600 2,817,852 1,127,141 1,690,711 1,500,000 3,750,000 5,250,000 1,500,000 3,750,000 5,250,000 1,590,000 3,975,000 5,565,000 1,590,000 3,975,000 5,565,000 1,680,000 4,200,000 5,880,000 1,680,000 4,200,000 5,880,000 1,785,000 4,462,500 6,247,500 1,785,000 4,462,500 6,247,500 1,890,000 4,725,000 6,615,000 1,890,000 4,725,000 6,615,000

52,308 1,500,000 -52,308 -168,000 1,332,000

52,308 1,500,000 -52,308 -168,000 1,332,000

52,308 1,590,000 -55,446 -178,080 1,408,782

55,446 1,590,000 -55,446 -178,080 1,411,920

55,446 1,680,000 -58,585 -188,160 1,488,701

58,585 1,680,000 -58,585 -188,160 1,491,840

58,585 1,785,000 -62,246 -199,920 1,581,419

62,246 1,785,000 -62,246 -199,920 1,585,080

62,246 1,890,000 -65,908 -211,680 1,674,658

65,908 1,890,000 -65,908 -211,680 1,678,320

3,918,000

3,918,000

4,156,218

4,153,080

4,391,299

4,388,160

4,666,081

4,662,420

4,940,342

4,936,680

1,344,095

2,688,190

4,114,300

5,538,527

7,044,547

8,548,683

10,148,430

11,745,980

13,438,888

1,344,095

2,688,190

4,114,300

5,538,527

7,044,547

8,548,683

10,148,430

11,745,980

13,438,888

15,129,599

34

TRADE FINANCE FOR FMCG TRADE EXPANSION & FACILITATION

10. CONCLUSION The business case study considers raising trade facilitation credit through the available bank trade finance instruments such as Stand-by Letters of Credit and Usance Letters of Credit in order to scale up business turnover for a promising FMCG trading enterprise by EMMARK CONGO in Kinshasa the capital of DR Congo. The FMCG goods sector is one of the fast-rising trading sectors not only in DR Congo but all over the world, and EMMARK CONGO would now like to capitalize on the market presence it has established in the DR Congo market to roll out and also consolidate its FMCG supply chain and distribution network so as to increase its trading output five-fold, promote its line of merchandise in this relatively new market and gain competitive advantages in the short-to-medium-term. In the short space of time that EMMARK CONGO has been doing business in DR Congo, business has been quite strong with periodical indicative sales of USD 750,000 every six months or so. Market prospects are quite strong at the moment to the extent that EMMARK CONGO has a more that average possibility of scaling up sales to five times that six-month turnover to about USD 3.75 million going by the prevailing market sales and demand indications. The reason for such strong company performance prospects are due to its diversification, vertical and horizontal integration, breadth and depth of its FMCG product line and innovative and customer-oriented product introduction. Thus EMMARK CONGO now needs to focus on its distribution channels, networking, marketing strategies, sales promotion etc. in order to scale up and enjoy more success in the market. The only way this goal can be realized by EMMARK CONGO is to seek recourse to the available flexible and innovative bank trade-finance instruments to grow business and build market competitiveness so that it can both expand and protect its cash flow in order to increase its market penetration and support existing retail/wholesale purchases going forward. EMMARK CONGO has now built up a solid trading history; accumulated sizeable business assets that include a well-established FMCG products distribution centre and bonded warehouse and a product distribution fleet; built up a functional supply chain network; and put in place a competent and dynamic management structure that collectively count as substantial company equity collateral that it can use to secure the requisitioned bank trade-finance instruments while also guaranteeing the future performance of the FMCG products retailing/wholesaling business. 35