Ivory Coast and Senegal cocoa and cashew farmers gain €26 million EIB and Cofina investment
Cocoa in Ivory Coast, Cacao, La Cote D'Ivoire. Pic: ofi
Sustainable agriculture, including cocoa and cashew production, in Ivory Coast and Sengal has been given a €26 million boost, as the European Investment Bank and Cofina Group confirm an agreement to support core farming operations within the region, reports Neill Barston.
The region has been especially hit by a combination of factors, including the linger impact of the Covid-19 pandemic, cost of living crisis of the past year, and ongoing war in Ukraine, that has destabilised supply chain activity and increased input costs including for essential fertilisers.
In an attempt to offer support to the region, Compagnie Financière Africaine (Cofina), and the EIB, with support from the EU, which also targets a wider range of food crops which are a central part of West Africa’s economy.
EU Ambassador to Ivory Coast Francesca Di Mauro, added that obtaining bank financing ‘remains a great challenge for SME’s’ with many institutions facing constraints in supporting the, yet the guarantees put in place by the European Union would enable the EIB to unlock much-needed support for the region, particularly in cocoa and cashew production, creating resilience within food chains.
As Confectionery Production has previously reported, a recent study from Oxfam highlighted the ongoing challenges faced by cocoa farmers in Ghana and Ivory Coast, where below UN defined wages of $1 a day are typical for many within the country. According to a study from the charity, the Covid-19 pandemic had left agricultural workers a total of 16% worse off in Ghana – placing even further pressure on agricultural value chains, with fears of a worsening situation on levels of child labour – with at least 1.5 million under 16’s exposed to hazardous labour.
The funding will be split by a formula of €16 million for Ivory Coast and €10 million for Senegal, which will provide security for a projected 6,000 jobs within the SME sector, and includes targeted action on climate action, environmental sustainability and financial inclusion. It forms among the first operations under the new 2023-2027 agreement between the European Commission and the EIB for financing the private sector in Africa, the Caribbean and the Pacific.
As the EIB noted, technical assistance to better take into account the specific characteristics of female customers will be combined with this financing provided by the EIB with EU support. This cooperation will enable the Cofina Group to step up its financing to companies empowering women as entrepreneurs, managers, employees and consumers of products and services, thus increasing their participation in the economy, in line with the 2X Challenge initiative, whose criteria are aligned with the OECD’s gender objectives.
Financial backing for the region
Financing of the economy in the West African Economic and Monetary Union (WAEMU) is now essentially based on the mobilisation of short-term deposits, which limits the financial sector’s ability to support the long-term development of businesses. Moreover, in the agricultural sector, improving business productivity and resilience to climate challenges requires the development of infrastructure that can only be amortised over time, such as in the areas of irrigation, mechanisation and storage. Agriculture has a seasonal production cycle, which means that investments take time to generate returns.
As the EIB asserted, by strengthening the agricultural sector, these funds contribute to the food sovereignty, reduced dependency on imports and economic stability of Côte d’Ivoire and Senegal, while promoting environmentally-friendly agricultural practices, adoption of modern technologies, and job creation in rural areas.
This first cooperation between the EIB and the COFINA Group is part of the European Union’s external action and comes under the Neighbourhood, Development and International Cooperation Instrument (NDICI). It contributes to the achievement of the African Union Agenda 2063 and the EU Multiannual Indicative Programme for Sub-Saharan Africa 2021-2027, which supports stronger regional and continental economic integration through inclusive, job-creating economic growth.
“Following the COVID-19 pandemic, the agricultural and agri-food sector must be supported to face the challenge of food sovereignty. It is in this perspective that the EIB’s partnership with the pan-African COFINA Group will have a real impact on the lives of entrepreneurs and SMEs in this strategic sector, both in Senegal and Ivory Coast,” said Managing Director of COFINA Senegal Alassane Dia, who believed the funding could make a notable positive contribution.
Managing Director of Cofina Ivory Coast, Amed Sié Touré also felt that the country would benefit significantly from such targeted investment, providing key building blocks for enhancing the nation’s agricultural resources.
He said: “As a mesofinance institution, this partnership will enable us in Ivory Coast to expand our support to the agricultural sector, which has long been the driver of development for our country. In this way, we will be able to reach rural populations through cooperatives and associations. We aim to provide solutions that will enable them to automate their production chain all the way up to the crop processing stage and make them local champions.
“I welcome the European Investment Bank’s support for this infrastructure project to strengthen food security through the development of sustainable, proficient value chains such as cocoa, cashews and food crops in Ivory Coast, and cereals and horticulture in Senegal. With this new financial and technical support, the EIB reaffirms its commitment to supporting its partners in Africa in their work for local people, especially women, and for the environment and climate.
“With EIB Global, our new branch dedicated to development and partnerships, we are strongly committed to supporting the European Union’s Global Gateway initiative to act as closely as possible to the people and in key areas for the African continent such as support to the private sector and innovation, the digital economy, renewable energy, water, agriculture and transport,” said EIB Vice-President Ambroise Fayolle