PHC/Feronia Overview


PHC/Feronia: An Overview of FMO's Involvement

In 2015, FMO provided a long-term loan facility to Plantations et Huileries du Congo S.A (PHC), a palm oil business operating in the Democratic Republic of the Congo. Alongside other European Development Finance Institutions (DFIs) we supported PHC to invest in equipment, replanting of trees, fertilizer, and the continuation of the Environmental and Social Action Plan.

With our investment in PHC/Feronia we saw an opportunity and the necessity to better the lives of the people working and living on and around the plantations, a fragile and complex environment. Now, after ending our involvement to PHC in February 2022, we look back on our investment with mixed feelings. We knew the investment was not without risk and these risks have materialised. 

This page aims to give an overview of the key events and themes of FMO’s involvement in PHC, formerly also known as Feronia.  

A short history of PHC

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 plantations fell into disrepair during the Congolese wars (1996-1997, 1998-2003) and in 2009 Unilever sold PHC to Feronia Inc, a Canadian agribusiness, listed on the Toronto stock exchange.

In November 2013, the British development bank CDC – now BII – invested US$14.5 million in Feronia and became a shareholder. In 2015 FMO and other European 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. Over the years DFIs (CDC as an equity investor and BIO, DEG and FMO as debt-lenders) invested over US$100 million into the business (FMO: US$16.50m).


In July 2020 the DFIs announced that Feronia was facing bankruptcy and was to undergo a financial restructuring to secure the long-term future of PHC. In further support of the company’s long-term and ongoing rehabilitation, the DFIs sold their respective debt interests in February 2022 to an affiliate of PHC’s principal shareholder KKM. Lenders set aside the proceeds from the transaction, to be possibly used for the benefit of communities near the plantations. This could include supplementing the implementation of the mediation outcomes, facilitated by the Independent Complaints Mechanism (ICM, see below).

Why we invested

PHC produces crude palm oil and palm kernel oil for domestic consumption on three palm oil plantations, in Boteka (circa 4,000 Ha), Yaligimba (circa 8,000 Ha) and Lokutu (circa 8,000 Ha). Palm oil is one of the main staple foods in the DRC. 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.

Furthermore, the business supports the livelihoods of over 100,000 people through direct and indirect jobs. Measured in November 2021 PHC’s workforce consisted of 6462 people, of which 10% was female and 56% was under 40 years old. PHC is the largest private sector agribusiness employer in the country.

With our investment in PHC/Feronia we saw an opportunity and the necessity to better the lives of the people working and living on and around the plantations. Impact at such a scale is reached only in fragile and complex environments.

Operating environment and challenges

The support of DFIs in companies such as PHC, comes with mutual obligations. We want businesses to do financially well and implement criteria aimed at improving environmental and social standards. The company needs to comply with these standards and is responsible for the execution of their day-to-day operations. It is the DFI’s responsibility to provide guidance in this process.

However, we know that there are no simple quick fixes: social and environmental improvements take a great deal of investment, expertise and – most importantly – time.

The reality is that PHC has not been able to realize most social, environmental and economic changes the DFIs pushed for. Despite the sum of money that was invested, PHC was not financially sustainable. Since 2009, revenues have not been sufficient to cover the costs due to low production, palm oil prices and high investment cost. At the same time, communities where the public services are largely absent and where people rely on daily business for their livelihoods, the company is expected to deliver on the social infrastructure and services that are not being provided for by other institutions, from boreholes to schools and roads. The Human Rights Watch (HRW) report on the 25th of November 2019 also highlighted the need for further investment to improve environmental and working conditions at the plantations.

A complaint filed

In 2018 the Independent Complaints Mechanism (ICM) in which FMO takes part, received a complaint stating that local communities have been negatively impacted by the investment. The complaint raises concerns about the legitimacy of the land titles of the plantation and alleged deprivation of the use of customary land, physical and human rights abuses by PHC security guards and police, and the lack of information and legal support of communities in negotiations with PHC.

As requested in the complaint, a dispute resolution including external mediation between local communities and PHC has been carried out by the panel of the ICM. The mediation rounds were concluded in in the first half of 2023. Next phase is the implementation of the agreed measures.     

Feronia PHC Workers at its Yaligimba plantation.JPG

Lessons learned

PHC has confronted us with the limitations we face as a lender to a company that operates under financial distress in a post-conflict and fragile area. In this context we did not have enough influence to make stride on our impact agenda. With the benefit of hindsight, we should have given more weight to the local context in our due diligence phase - including the colonial history and the tension this still brings along in the area. In addition, we should have taken the financial risks a company like PHC faces, being largely depended on the global palm oil price, more into account. A company that is not profitable, does not have the capacity to make the impact we are looking for.  

With a majority of the world’s extreme poor live in fragile and conflicted states, FMO cannot shy away from investing in these areas, even if they come with high risk.

Together with other DFIs we continuously refine our approach to invest in fragile states, and this is also an important topic in our Strategy 2030. Learning from our investment in Feronia/PHC - deeper and broader context analysis,​ working together with local partners with local context knowledge and extended investment-specific due diligence - are elements that we take along while implementing this new strategy.    ​