Project detail - AGRI COMMODITIES AND FINANCE FZ-LLC

AGRI COMMODITIES AND FINANCE FZ-LLC

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Who is our client

Agri Commodities and Finance (“ACF”) is the main trading company of ETC Group (“ETG”), a large and diversified agricultural commodity trader and supply chain manager with most of its footprint in Africa. ETC Group became an FMO client in 2019. Since its establishment in 1967 in Kenya, ETG has emerged to become the largest independent agricultural commodity supply chain manager in Africa. The Group owns and manages a vertically integrated agricultural supply chain with operations spanning procurement, processing, warehousing, distribution and merchandising. Globally, ETG operates ~120 processing plants and ~460 warehouses.

Funding objective

The syndicated facility of USD 90mln 2.5-year working capital loan will allow ETG to have sufficient liquidity to continue its operations, maintain employment and continue its support to farmers across Africa. A considerable share of ACF’s sourcing is from Least-Developed Countries.

Why we fund this project

ETG plays a key role in various agricultural value chains (cashew nuts, sesame seeds, pulses etc.). In Africa, it uses its own supply chain infrastructure to source over 80% of its agricultural commodities at farm-gate and operates processing plants that create value for the local economies. ETG is also one of the largest importers and distributors of fertilizer in Africa, playing an important role in enhancing incomes of African farmers.

Environmental and social rationale

Based on Environmental and Social (E&S) risks/impacts and country/regional context, the E&S risk category is B+. Main risks are linked to the processing and warehousing and are OHS and labour risks largely limited to the sites and readily mitigatable by good practice. Though ETG is aware of the risks and has basic mitigation in place, management of supply chain risks such as child labor, deforestation, etc. still needs further enhancement. The relevant IFC Performance Standards are PS1 to 4 (Management, Labour, Resource Efficiency and Community). PS 5, 6, 7 and 8 (Resettlement, Biodiversity, Indigenous People and Cultural Heritage) are not applicable as ETG’s activities are currently not associated with risks and impacts addressed by these PSs. The implementation of the actions necessary to meet the requirements of the relevant Performance Standards are managed through ETG’s Management System. Where ETG is expanding its activities in new areas, the systems and verification practices will ensure these subjects will be addressed. The following guidelines are applicable: General IFC EHS Guidelines and sector-specific EHS guideline(s) for Vegetable Oil Production and Processing, Nitrogenous Fertilizer Manufacturing and Phosphate Fertilizer Manufacturing. The client is committed to international practices and standards. The group has an integrated management system aligned with international standards, addressing risks at group, country and plant level. E&S risks will be mitigated by the implementation of an Environmental and Social Action Plan.

Country
Global
Sector
Agribusiness, Food & Water
Signing date
12/4/2020
Total FMO financing
USD 70.00 MLN
Fund
FMO
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk Environmental & Social Category
(A, B+, B or C)
B+