Project detail - Valency International DMCC

Who is our customer?

Established in 2007 in Singapore, Valency International Pte Ltd is an integrated supply chain manager, commodity trader & processor with predominant operations in Africa and Asia. Historically a trader of Africa-sourced commodities to Asian markets, the company started to expand its downstream value chain in 2015 with cashew processing in Nigeria (the historical sourcing country of the Group) and now operates 18 subsidiaries across Africa, Asia, and Europe. While the majority of its revenues come from the cashew, soybean, sesame, and agri-input verticals, Valency is a diversified agri-core group with presence in agrochemicals, fertilizers, grains, pulses, cocoa, as well as other commodities.

What is our funding objective?

With a USD 20 million FMO participation in a 60 million Proparco-led Friendship Facility transaction, the financing is supporting Valency's expansion plan in Nigeria, namely (i) establishing new warehouses, (ii) setting up a multi-seed crushing plant, and (iii) setting up a food processing and packaging plant.

Why do we fund this investment?

The project supports economic growth in Nigeria through export diversification, value addition through local processing of raw materials, the development of quality employment, and indirect engagement with smallholder farmers in the poorest regions of Nigeria. Out of USD 20 million, FMO provides a USD 10 million first-loss buffer (via the Building Prospects Fund) that catalyzes investments from partners Proparco and DEG in the Nigerian agricultural value chain.

What is the Environmental and Social categorization rationale?

This concerns an E&S A-categorized investment for which Proparco is in the lead and responsible for leading on ESG and for conducting the E&S due diligence. The sourcing and processing of commodities (cashew nuts and sesame seeds) in Nigeria have potential adverse environmental and social (E&S) risks within the Valency operations and beyond the site boundaries, but can be minimized through relevant mitigation measures. Main E&S risks of this investment include labour and working conditions, climate change, supply chain labour and biodiversity, all exacerbated by the contextual risks of Nigeria. The E&S Action Plan (ESAP) is focused on mitigating these risks by improving policy and procedures on E&S and Food and Human Resources Management, improving working and labour conditions of female and casual workers and contractor management, and improving supply chain management practices to address child and forced labour and biodiversity risks. Applicable IFC Performance Standards (PSs) are PS1 (Assessment and Management of Risks and Impacts), PS2 (Labour and Working Conditions), PS3 (Resource Efficiency and Pollution Prevention), PS4 (Community Health, Safety and Security), and PS6 (Biodiversity Conservation and Sustainable Management of Living Natural Resources) for the supply chains only. PS5 (Land Acquisition and Involuntary Resettlement) is not applicable as no land acquisition is needed for the Project, PS6 (Biodiversity) is not applicable as the company's facilities do not have an impact on biodiversity, PS7 (Indigenous Peoples) is not applicable as there are no Indigenous People impacted by the project. Nigeria does not have any officially recognized indigenous communities by government authorities, the National Human Rights Commission of Nigeria, the African Court of Human and Peoples Rights, and NGO’s such as the International Work Group for Indigenous Affairs. The Constitution of the Federal Republic of Nigeria recognizes only minority groups in terms of population, such as the Ogoni People. The Ogoni People are located in River State in the Niger Delta region, which is outside the operational areas of Valency. PS8 (Cultural Heritage) is not applicable as no cultural heritage elements have been identified within the Valency facilities' footprint. Note that all investments will be managed in accordance with the IFC PSs, and an ESAP will be part of the agreement.

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