IFC to offer $20 million guarantee facility for Ethiopian coffee producers

The International Finance Corporation (www.ifc.org) is investing $21 million to guarantee coffee crops. The facility would be to support the Ethiopian Coffee Initiative run by Technoserve (www.technoserve.org), part of a Coffee Initiative across 4 African countries.
According to a report on www.afrik-news.com, one tranche of $10 million is to be set up with local NIB International Bank. The IFC, which approved the project in July, says in a press release that Technoserve will work with coffee farmer cooperatives to improve their business management skills; train them to improve quality of the coffee; facilitate access to credit by developing a business plan for each washing station (“wet mill”) for processing cherry coffee and present it to the partner banks; facilitate their access to markets by linking them to key buyers; provide working capital; and provide farmers with agronomy and extension services to improve their yields.
The revolving IFC guarantee facility will be for up to $10 million, and is accessible to national banks to participate.
The total size of the financing programme over the 3-year period is expected to be US$21 million. Up to 20% of the program will be for equipment loans of a 3-year maturity while the remaining 80% will be harvest working capital loans of up to one year.
The targeted region is situated in semi-forest areas in South-western Ethiopia. Most specialty coffee production in Ethiopia only uses organic fertilization and, as such, does not rely on inorganic fertilizers and/or pesticides.
In terms of process, the selective picking (only the ripe coffee cherries are harvested) is done by hand, a labor-intensive process. This kind of harvest is used primarily to harvest the finer Arabica beans. Cherry is then transported from the fields to the collection points and subsequently to the wet mills. Under this project, the processing promoted used a newer procedure called “machine-assisted wet processing” or “mechanical demucilaging”, with the wet mills able to process 1.0 or 2.4 tons/hour. After overnight fermentation, the resulting coffee beans (“parchment”) are dried in the sun on large raised drying tables for a period of 7-10 days in order to achieve the desired moisture content of 11%.
Afrik-news.com reports that Technoserve is working with Ethiopian farmer cooperatives to train them and improve their business skills and the quality of their coffee production. The project targets up to 160 farmers cooperatives which represent some 90,000 local farmers.
Technoserve, which has more than 40 years’ experience in providing business solutions to development problems, including through agricultural production, says its Coffee Initiative is funded by the Bill and Melinda Gates Foundation and it has also been supported by leading Wall Street philanthropists.
The IFC says it is stepping up its projects in Ethiopia. It has a programme with the Ethiopian Commodity Exchange (ECX) to design financial instruments and advocate for any regulatory changes needed so that banks can accept warehouse receipts as collateral for loans.
It opened a new representative office in Ethiopia in November 2008, and recent projects include a $11 million investment to support gold exploration at the Tulu Kapi Gold Project in Western Ethiopia, and a $55 million investment in Derba Midroc Cement Company to help address the country’s cement shortage.
IFC says its strategy in Ethiopia focuses on proactively developing new investment projects, supporting public-private partnerships that promote economic growth, and mobilizing direct investments to key sectors of the economy, including agribusiness, financial services, health and education, infrastructure, manufacturing, and tourism.
When IFC Vice President for Business Advisory Services Rachel Kyte visited in July she said: “Ethiopia is a country of high potential, including in agriculture, manufacturing, renewable energy and services. IFC is committed to assist Ethiopia’s government in creating an enabling environment for business and to support private sector investment in key sectors of the country.” (from press release).
IFC is also conducting several advisory services programs provide support to improve the investment climate, and promote better access to finance through measures such as the warehouse receipt finance program, to name a few.

From the web: www.technoserve.org
TechnoServe was founded in 1968 by Connecticut businessman Ed Bullard. While volunteering at a hospital in rural Ghana, he was struck by how difficult it was for hardworking people in the area to lift themselves out of poverty. So he created an organization to transform lives by providing poor people access to productivity-enhancing tools— hence the name TechnoServe: Technology in the Service of Mankind.
Bullard’s work was guided by two core principles, revolutionary at the time: the power of private enterprise to transform people’s lives, and the lasting value of providing a hand up rather than a handout. These principles have remained at the heart of TechnoServe’s efforts, even as our work has evolved to focus on improving living standards on a larger scale, to transform entire communities and countries.
Today, TechnoServe focuses on developing entrepreneurs, building businesses and industries, and improving the business environment. All our work revolves around helping people identify and capitalize on good business opportunities that help to transform the lives of the rural poor, by generating jobs and markets for their products and services.
We work with a range of public- and private-sector partners, such as the U.S. Agency for International Development, the Rockefeller and W.K. Kellogg Foundations, Bill & Melinda Gates Foundation, Google.org, Lenovo, Cargill and numerous individuals.
In keeping with our private-enterprise approach, we track and evaluate our impact using business metrics, including wages paid and supplies bought from the rural poor. We also track and evaluate the social impact of our work.
The results are evident in villages and towns throughout Africa and Latin America, where thanks to TechnoServe, businesses are thriving, economic activity is robust, and hardworking families have jobs and steady incomes. These changes have sustained improvements in infrastructure, health, education and other vital community social services.


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