Project General Description
The Project is a corporate loan of up to EUR 30 million to participate in the strategic investment plan of “Société Internationale de Plantations d'Hévéas (SIPH)” whose main activity is the production, processing and marketing of natural rubber. Natural rubber production has traditionally been concentrated in Asia, but rubber growing is now developing in West Africa, and the Paris-based SIPH Group, founded in 1905, has been the main player in this development. As part of its development strategy on the West African market, SIPH has launched an investment programme of nearly EUR 210 million. This programme involves (i) increasing industrial processing capacity for natural rubber, and (ii) renewing and expanding existing rubber plantations. The programme aims to contribute to the industrial development of Côte d'Ivoire, Nigeria, Ghana and Liberia where the Group owns several production units. The senior loan comprises two tranches: (i) a EUR 15 million tranche with a 6-year maturity (including a one-year grace period) and a EUR 15 million tranche over 10 years (including a four-year grace period). The Bank's contribution will primarily be used to finance the SIPH investment programme in Côte d'Ivoire and Ghana as described in the table below. However, part of the funds may be mobilised for certain investments (CAPEX) in Nigeria and Liberia. The goal is to increase local processing capacity to reduce SIPH's dependence on external processing capacity, generally located in Asia. The project, which aims to transform rubber trees into natural rubber for export to international markets, will help to industrialise the West African rural areas concerned and to create zones of sustainable prosperity that actively foster the creation of wealth and employment for local communities, thereby limiting rural exodus.
SIPH's objective is to develop natural rubber processing capacity on the continent by processing the raw material locally to reduce the Group's dependency on external milling capacity generally located in Asia (i.e. more than 40% of African production is now exported for processing in Asia). The key investment components entail (i) increasing the capacity of processing natural rubber latex through construction of two plants in Côte d’Ivoire and Ghana; and (ii) renewing ageing rubber trees and expanding plantations in Côte d’Ivoire, Ghana, Nigeria and Liberia.
The Project aims to increase SIPH’s processing capacity from 260,000 tons in 2019 to about 448,000 tons by 2025, and expand the output of its own plantations from 72,000 tons in 2019 to 100,000 tons by 2027. SIPH is a major employer in West Africa, with over 12,000 workers in 4 countries. Approximately 1,200 direct full-time jobs are expected to be created in the course of the investment programme, in addition to a large number of indirect jobs throughout the value chain in remote areas. Furthermore, the project will enable the development of a local natural resource and generate foreign exchange earnings for Côte d'Ivoire, Ghana, Nigeria and Liberia. The Group is also a major social player at the local level with actions in favour of communities: more than 120 pre-primary and primary schools, 25,000 children enrolled, more than 15,000 housing units, 78 social/medical centres, dispensaries, maternity wards and infirmaries accessible to staff and all village communities. The rubber tree being a forest species and therefore less vulnerable to climate variability, the project will strengthen the resilience of farms to climate change, while contributing to the intended nationally determined contributions (INDC) of the four countries to emission reduction.