The African Development Bank (AfDB) has approved a $100-million facility to finance agricultural supply chain Export Trading Group’s (ETG’s) soft commodity value chain operations in sub-Saharan Africa.
This soft commodity finance facility (SCFF) is one of the core trade finance instruments used by the bank and innovatively structured to provide pre- and post-shipment finance along various stages of ETG’s commodity value chain operations in the 17 countries expected to benefit from the initiative.
This intervention will help local farmers and soft commodity suppliers grow their revenues and produce quality crops for export.
Specifically, the facility will be used to finance the procurement of identified agricultural commodities from over 600 000 farmers.
Upon purchase of the soft commodities, the SCFF will provide working capital to ETG, enabling the company to engage in value addition and processing of the soft commodities prior to export, and provide funding to procure farm inputs to be supplied to farmers.
“This trade finance intervention along the agricultural value chain will enable the bank to reach many small-scale farmers indirectly through ETG,” the AfDB said in a statement on Thursday.
As one of the largest commodity aggregators on the continent, ETG plays a significant role in the promotion of agribusiness in countries where agriculture is, on average, the biggest employer, providing in excess of 70% of total employment.
“Through the implementation of innovative programmes such as the SCFF, the AfDB seeks to promote private sector development in line with its ten-year strategy,” the bank said.
By channelling financial resources into agricultural value chains, the bank is scaling up its interventions aimed at making Africa a net food exporter, with self-sufficiency in key commodities as well as commercially viable agribusinesses.