|Approval Date||20 Jan 2017|
|Signature Date||19 Dec 2018|
|Sovereign / Non-Sovereign||Non Sovereign|
|Sector||Agriculture and Rural Development|
|DAC Sector Code||31110|
The proposed Soft Commodity Finance Facility (SCFF) of USD 20 million to Meridian group is to finance Meridian’s commodity exports such as maize, groundnuts, pigeon peas, soya, sesame and beans. Established in 1970 to assist the small scale farmer, Meridian group is one of the largest commodity aggregators in Southern Africa. The group plays a significant role in the promotion of agribusiness in five Southern Africa countries and its operations are in line with almost all of the Bank’s “high fives”. The proposed SCFF represents an opportunity to support a well-established and professionally run commodities company in Southern Africa. This will provide Meridian with affordable short/medium term financing required to unlock growth. Meridian will use the funds to purchase the soft commodities directly from small scale farmers in Malawi, Mozambique and Zimbabwe. This SCFF will not only provide inexpensive funding to Meridian but also provide FX liquidity support to the same markets. The SCFF also provides the Bank with an opportunity to indirectly intervene in two low income countries and a fragile state, Malawi, Mozambique and Zimbabwe respectively. Furthermore, it provides the Bank with an opportunity to intervene in a sector characterized by extremely low investments due to perceived risk.
The objective of this Soft Commodity Finance Facility is to provide pre & postshipment finance along various stages of Meridian’s soft commodity value chain operations in Malawi, Mozambique and Zimbabwe. Specifically, the facility will be used for the following purposes: i) Provide funding to purchase farming inputs (mainly fertilizer) to be supplied to farmers so as to ensure consistency and quality of the commodities being supplied to Meridian; ii) Purchase of soft commodities from over 10,000 farmers in Malawi, Zimbabwe and Mozambique; and iii) Upon purchase of the soft commodities, provide working capital to Meridian to enable the company engage in basic processing of the soft commodities prior to export.
The SCFF will provide broad empowerment benefits directly impacting at least 10,000 small scale farmers in the respective 3 RMCs. This expected to increase the number of small scale farmers from 10,000 farmers to 12,000 by 2019.
African Development Bank
|Last Update||16 Jan 2020|