Plantations et Huileries du Congo S.A (PHC) is a palm oil business operating in the Democratic Republic of the Congo and owned by Feronia Inc, a Canadian agribusiness.
PHC was founded by Lever Brothers in 1911 and leases a concession area of approximately 107k Ha of which c20k Ha is currently under cultivation to palm oil production. The rest of the concession area consists of degraded forest, unplantable areas, agricultural land and some sites with high biodiversity forests and high carbon stock value.
|Importance of palm oil for the DRC
Palm oil is one of the main staple foods throughout the Democratic Republic of Congo and hence plays a key role in the daily diet of each Congolese citizen. It is used both as an ingredient and to cook food in. It is also used in the manufacturing of foods, soaps, and cosmetics.
By the 1970s, the country was the world’s second largest palm oil exporter. But today, the DRC has become an importer of palm oil and the production deficit is growing because of increasing industrial demand (soap-making, refining, margarine production, etc.) and growing demographic pressure.
Investing in palm oil increases the availability of high-quality edible oil and palm oil products for people in the DRC and thereby contributes to local food security. All production of PHC is sold locally in DRC which helps decrease reliance on import and improves access to staple foods and basic hygiene products.
|Feronia PHC | workers at the Yaligimba plantation|
The plantations fell into disrepair during the Congolese wars (1996-1997, 1998-2003). These had direct negative impacts on the surrounding communities and the company’s assets. Social infrastructure and palm oil trees were severely neglected; jobs were at risk, people were working barefooted, wage and benefit payments were systematically delayed; houses were in bad shape and medical facilities derelict. Also, due to the combination of conflict and Unilever’s withdrawal because of the war, local commercial enterprises closed and the provision of social infrastructure to local communities collapsed at a time of surging demographic growth.
|About the Democratic Republic of Congo
DRC is the largest francophone country in Africa. It has nearly 80 million inhabitants, with less than 40% living in urban areas. The country is still recovering from years of war and political instability. The last three decades have seen multiple violent outbreaks and outbreaks of serious communicable diseases, such as ebola and cholera.
DRC has one of the world’s lowest gross national incomes per capita, and UN Human Development Index 2018 ranked the DRC 176 out of 189 countries. The DRC has an unemployment rate of 82% and a poverty rate of 63%.
With 80 million hectares of arable land, and availability of minerals and precious metals, the DRC has the potential to become a driver of African economic growth. The country’s economic growth was above average in the African region, growing at a rate of 4.1% in 2018, up from 3.7% in 2017 and 2.4% in 2016. After a pandemic-induced slowdown to 1.7% in 2020, economic growth is expected to moderately rebound.
In 2009 PHC was bought by Feronia Inc, a Canadian agribusiness, listed on the Toronto stock exchange. The primary objective was to save the plantations and restart operations again. Feronia thus initiated the rehabilitation and restoration of the existing plantations, palm oil mills and the social infrastructure. The company also honored all the existing labor obligations including retirement benefits. In November 2013, the British development bank CDC invested US$14.5 million in Feronia and became a shareholder. A further sum of US$3.6 million was ring-fenced for an environmental and social governance loan. In 2015 FMO and other European Development Finance Institutions (DFIs) provided Feronia with a long-term loan facility to further support investment into equipment, replanting of trees, fertilizer, and the continuation of the Environmental and Social Action Plan for the PHC concession areas. Over the last six years DFIs (CDC as an equity investor and BIO, DEG and FMO as debt-lenders) have invested over US$100 million into the business.
The palm oil plantations are situated across 107,000 hectares of land, remotely located at 1150 km (average) from capital Kinshasa. The nearest large towns or cities to the plantations are between 60 and 200 kilometers away. The area relies mainly on the river Congo for the transportation of people, materials, and equipment’s to and from the plantations.