The African Development Bank has signed a loan agreement for a soft commodity finance facility (SCFF) with the Export Trading Group (ETC). This Facility is innovatively structured as two successive loans of US $100 million, each with a tenor of up to 2 years, thus signifying the African Development Bank’s strong commitment to the promotion of agriculture in Africa.
This SCFF is one of the core Trade Finance instruments in the Bank that will provide pre- and post-shipment finance along various stages of ETC’s commodity value chain operations in the 17 countries expected to benefit from the initiative. The intervention will help local farmers and soft commodity suppliers grow their revenues and produce quality crops for export.
Specifically, the facility will be used to finance the procurement of identified agricultural commodities from over 600,000 farmers. Upon purchase of the soft commodities, the SCFF will provide working capital to ETC thus enabling the company engage in value addition/processing of the soft commodities such as cashew nuts prior to export, and provide funding to procure farm inputs (mainly fertilizer components for blending) to be supplied to farmers so as to ensure consistency and quality of the commodities being supplied to ETC.
This Trade Finance intervention along the agricultural value chain will enable the Bank to reach many small-scale farmers indirectly through ETC, a pan African aggregator that has deep knowledge of the market in which it has accumulated a 50-year track record; understands the agricultural sector operational risks and is able to mitigate and manage them.
