The International Finance Corporation (IFC) and Absa have partnered to provide a commodity trade finance facility to Singapore-based Valency International for the purchase of African agricultural commodities.
South Africa-headquartered Absa CIB and the IFC will each provide US$25mn to the facility, which will provide Valency with working capital to purchase commodities, including cashew nuts, sesame seeds, shea nuts, ginger and soy beans.
These products are sourced from Valency’s network of around 150,000 smallholder farmers and local traders in Côte d’Ivoire, Nigeria, Ghana and Tanzania.
The IFC’s portion of the facility is part of its US$1bn Africa Trade and Supply Chain Recovery Initiative that aims to support small businesses on the continent with trade financing needs.
The loan will provide “much-needed working capital financing to cooperatives and local buying agents to support sourcing from smallholder farmers, which in turn provides the farmers better access to the market”, according to an IFC press release.
“Valency is excited to work with partners like the IFC and Absa as we continue to develop the West and East Africa agricultural sectors,” says Sumit Jain, Valency’s group CEO. “This facility will enable us to engage more directly with thousands of farmers, further integrating them into the value chain and bringing their produce to more markets.”
The IFC notes that an estimated 80% of the continent’s farmland is managed by smallholder farmers, yet access to trade credit is a long-standing challenge for African small businesses, driven in part by a lack of credit information and low levels of digitalisation.
The IFC has inked numerous facilities to support the continent’s commodities trade in the past year, including a May deal with Absa to provide a US$60mn facility for coffee exports from East Africa.
