Project detail - GREENLAND FEDHA LIMITED

Who is our customer

Greenland Fedha Limited (“GFL”) is a non-deposit taking microfinance institution in Kenya. GFL is fully owned by the Kenya Tea Development Agency Holdings (“KTDA”) who established GFL to provide credit to its tea smallholder farmers. KTDA is the leading management agency for small scale tea farmers in Kenya, Africa. In Kenya, the vast majority of tea is grown on small farms where the average farm size for KTDA members is from half an acre to one acre. The mission of KTDA is to provide effective management services to the tea sector for efficient production, processing and marketing of high quality teas and investing in related profitable ventures along the value chain for the benefit of shareholders and other stakeholders. KTDA, as a company, fits very well within the FMO agribusiness strategy. With support from IDH and Unilever, the KTDA field staff trains farmers to improve the productivity and quality of tea yields through techniques such as planting, pruning, weeding, and fine-plucking. KTDA also trains farmers in sustainable agriculture practices which led to Rainforest Alliance (RA) certification of all farmers. Also, the 68 KTDA managed tea factories obtained RA certification.

What is our funding objective?

FMO is providing a US$7.5mln top-up loan to the existing MASSIF facility to Greenland Fedha Limited (GFL) to support the increase in the loan portfolio, to reach more farmers and to invest in a mobile platform to reduce the loan turnaround time. The top-up is financed from FMO's own balance sheet. FMO's financing will enable GFL to realize its potential of reaching 600,000 smallholder tea farmers, who cultivate over 100,000 hectares in prime tea-growing areas. Availability of reasonably priced funds in rural areas will allow for investment in higher and more sustainable production, increased revenues and increased spending on education.

Why do we fund this investment?

GFL will use the loan to further expand on-lending to the low-income households (i.e. small holders) in the tea sector in Kenya to provide a variety of affordable financial services. Since 2009, 105,000 farmers have received loans in order to to pay school fees, buy farm inputs, tools, improve tea farming, and support micro businesses. GFL expects to grow the customer base to 300,000 by the end of 2023.

What is the Environmental and Social categorization rationale?

E&S category is B. IFC PS 1 – assessment and management of E&S risks and Impacts, is triggered. E&S risks/issues are related to the Client Protection Principles, which risks are considered to be low since GFL’s Credit policy is conservative, with a focus to provide suitable credit at minimum cost to the farmer as well as raising financial literacy. FMO’s E&S due diligence indicated that the investment will not trigger IFC PS 2-7 because no risks are foreseen on labor and working conditions (IFCPS2), Resource Efficiency and Pollution Prevention (IFCPS3), Community Health, Safety and Security (IFCPS4), Land Acquisition and Involuntary Resettlement (IFCPS5), Biodiversity Conservation (IFCPS6), IPs (IFCPS7), and Cultural Heritage (IFCPS8). FMO will periodically review the project’s ongoing compliance with the Performance Standards.

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12/2/2014	USD 10.00 MLN