IFC Sharply Increases Support for Agribusiness in Africa in FY08, Helping Address Soaring Food Prices
Johannesburg, July 2008—IFC, a member of the World Bank Group, today announced a new financing transaction that takes its annual investments in Africa’s agribusiness sector in fiscal 2008 to more than $70 million, a five-fold increase over its average for the last three years. To support private sector–led development of the sector in Africa and alleviate the burden of soaring food prices for poor people, IFC aims to sharply increase its investments to $400 million in the next two to three years.
IFC’s $5 million loan to Bakhresa Grain Milling Malawi brings total investments in Africa’s agribusiness sector this fiscal year to $72.5 million. BGM Malawi will use the loan to refinance part of its short-term debt, incremental working capital needs, and recurrent capital expenditures. IFC’s loan will also help the company produce more food and create additional employment.
In addition to BGM Malawi, IFC invested in the agribusiness sectors of Ghana, Kenya, Tanzania, and Uganda in fiscal 2008, which ended June 30.
“Agriculture is a vital engine for economic development in Africa and contributes a major portion of GDP, employment, and foreign exchange earnings,” said Thierry Tanoh, IFC Vice President for Sub-Saharan Africa. “Increasing our activities in the sector is a vital part of IFC’s strategy to support private sector development and address challenges facing African businesses.”
IFC supports projects across the food supply chain, including processing, logistics, and distribution. IFC integrates advisory services with investments to provide comprehensive support to those who need it most. It is also developing new products, including local currency financing, risk-sharing facilities, and comprehensive support to farmers through intermediaries to serve clients’ needs. The goal is to help develop an efficient and competitive private agribusiness sector.
IFC works with private sector development partners and governments to create the necessary conditions for increasing investments in agribusiness. This includes efforts to improve infrastructure, including water reservoirs and storage facilities, and administrative reforms to strengthen the business environment.
Through these measures, IFC hopes to address the numerous challenges that constrain the role of agribusiness in Africa’s economic development. These include poor crop yields due to limited mechanization of farms, fragmented markets, price controls, limited infrastructure, and unsustainable pressure on land, water, and other natural resources.
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