AfDB boosts Africa’s agribusiness through local currency financing
Harare ‑ The African Development Bank (AfDB) has approved a US$80 million senior loan in local currencies for OLAM Africa Investment Program (OAIP) to deepen the integration of OLAM Group’s agricultural value chain by investments in processing of wheat and palm oil in Africa.
Local currency financing basically entails that companies with revenues in local currency should generally borrow in the same currency. It helps to avoid risks from exchange-rate volatility.
The programme includes five sub-projects in Cameroon, Ghana, Mozambique and Senegal. It is expected to enhance the regional food supply chain and act as a catalyst to support job creation and improve sustainability of agribusiness sector, thereby enhancing food security on the continent.
African food and agricultural markets are extremely fragmented along regional, national and even local lines due to the predominance of small-scale farming in the region.
Harnessing the opportunities in the sector and successfully competing in the global market, therefore, demands efficiency in the deployment of labour and logistics infrastructure to link suppliers and buyers in the region.
The OLAM Group’s scale and existing distribution strength will positively impact the linkages.
OLAM Aviv Investment Holdings Mauritius, a fully owned subsidiary of OLAM Group, will be the programme’s borrowing entity.
The group is a leading global integrated supply chain manager with a direct presence in 65 countries, that has built a leadership position in many of its businesses – including cocoa, coffee, cashew, sesame, rice, cotton and wood products.
In Africa, OLAM Group is present in 26 countries and conducts business in 28 countries.
Its Africa business includes an integrated supply chain of 16 products, employing 6 800 employees, 1 700 of which are women.
It works with 3.4 million small-scale farmers in Africa and has 110 initiatives, covering 1.4 million farmers across the continent, to help address many of the issues faced by these smallholders such as poverty and lack of education, food security and basic social amenities.
The OAIP programme, as part of value chain, will create 600 000 tonnes per annum of additional processing capacity, one million ton of palm oil supply chain with matching infrastructure, regional food supply chain as well as 8 500 direct and indirect employment opportunities – 25 percent for women ‑ in upstream, sourcing, direct employment and distribution.
The transaction will also contribute to private sector development by building partnership with an international agribusiness group to strengthen supply chain linkages for the sector as well as by deepening local financial markets through bond issuance.