Dakar, Senegal, September 17, 2010—IFC,
a member of the World Bank Group, announced today its participation in
a risk sharing facility to support Ethiopian coffee farmers. Over
the next three years it is expected to assist one of Ethiopia’s large
private banks increase the scale of its lending to an additional 70 Ethiopian
farmer cooperatives which is expected to generate approximately $17 million
of export revenues.
Ethiopian banks are often reluctant
to lend to agricultural cooperatives due to the risk involved in weather-dependent
agriculture, lack of small farmer collateral, and the complexities of the
loan appraising process. To help address this problem, IFC and Ethiopia’s
Nib International Bank S.C (NIB) took initiative to pioneer this venture
and have entered into an agreement to share these risks associated with
lending to the cooperative, with technical assistance provided by TechnoServe.
The facility can be renewed twice to a maximum of $10 million.
“This facility reduces NIB’s financial
risk of lending to coffee farmer cooperatives, and will go a long way to
strengthen NIB’s commitment to expand support to small farmers in the
coffee sector in Ethiopia,” said Amerga Kassa, President of NIB. One of
the fastest growing banks in Ethiopia, NIB operates an extended network
of 45 branches across the country employing 1,600 people and serving more
than 165,000 customers.
The risk sharing facility will support
the East Africa Coffee Initiative, managed by TechnoServe and funded by
The Bill & Melinda Gates Foundation. The Initiative covers four countries
– Ethiopia, Kenya, Rwanda and Tanzania—and is working with cooperatives
to improve coffee quality; increase production yields and obtain access
to credit. “Structuring this facility required a lot of hard work by IFC
and NIB and will provide much sought after financing for small holder farmers,”
said David Browning, Senior Vice President of TechnoServe.
Over the life of the facility, the volume
of coffee processed by the cooperatives is projected to jump from 458 to
4,000 metric tons and produce employment for 2,000 people, more than half
of which will likely be women. TechnoServe will also promote the use of
the eco-pulper “wet mill” technology that reduces water consumption and
resulting wastewater effluents by 90 percent compared with traditional
“This facility provides an innovative
way for IFC to help NIB increase its lending to coffee farmer cooperatives
in Ethiopia that can in turn acquire wet mills for processing high quality
coffee and meet working capital needs. We expect this project to increase
incomes and improve the lives of farmers in Ethiopia,” said Jean Philippe
Prosper, IFC Director for Eastern and Southern Africa. “
In Ethiopia, IFC is focusing on pro-active
development of projects in key sectors of the economy such as agribusiness
and industrial sectors that benefit micro, small and medium size enterprises
in terms of increased access to finance and other services critical to
their sustainable development. Partnering with banks and non-bank institutions
is an important way to achieve that goal. The Ethiopian economy is highly
dependent on agriculture which employs 80 percent of the country’s 80
million people. Coffee is Ethiopia’s main agricultural crop and accounts
for about 35 percent of total export earnings.
IFC, a member of the World Bank Group, is the largest development institution
focused on the private sector in developing countries. We create opportunity
for people to escape poverty and improve their lives—by providing financing
to help businesses employ more people and provide essential services, mobilizing
capital from others, and delivering advisory and risk-management services
to ensure sustainable development. In a time of global economic uncertainty,
our new investments climbed to a record $18 billion in fiscal 2010. For
more information, visit www.ifc.org.
About Nib International Bank S.C.
Nib International Bank S.C. (NIB) is
one of the fastest growing banks in Ethiopia with total assets of $417
million and equity of $63 million as of June 30, 2009. While headquartered
in Addis Ababa, NIB currently operates an extended network of 45 branches
with an extensive coverage across the country. It employs a workforce of
1,600 people and serves more than 165,000 customers. NIB has received international
recognition and won several prestigious awards including “Bank of the
Year in Ethiopia” award winner for 2005 and 2008 by The Banker magazine
as well as “Best Bank Award” winner in Ethiopia for 2006, 2007, 2008,
2009 and 2010 by Global Finance magazine.
TechnoServe is a non-profit organization
that provides technical assistance to help entrepreneurial men and women
in the developing world to build businesses that create income, opportunity
and economic growth for their families, their communities and their countries.