Kopakama Coffee Cooperative workers

Over 75,000 farmers to benefit from $60m coffee deal between IFC, Absa and Volcafe

Thousands of coffee farmers in East Africa are set to benefit from a US$60 million commodity trade finance facility from the International Finance Corporation (IFC) and Absa.

The funds will be channeled through Volcafe, a global green coffee merchant.

Absa Group is based in South Africa while IFC is a member of the World Bank Group.

The commodity trade initiative will strengthen Volcafe’s operations in East Africa, supporting tens of thousands of coffee farmers. It will also provide working capital for purchase of coffee cherries – the fruit from which coffee beans are extracted – from smallholder farmers and local traders.

Also, the initiative will assist in processing, storage, and transport of coffee to export ports.

East Africa is a major coffee-growing hub, accounting for over 80 percent of the continent’s production and 10 percent of the global total. An estimated five million smallholder farmers rely on the coffee industry for jobs and livelihoods in East Africa.

But most of these farmers lack access to financial support, while crop production is hampered by climate change.

Better access to the market

The one-year facility, comprising up to $30 million each from Absa and IFC, will allow Volcafe to assist over 75,000 farmers with access to export markets. The funds will also support training programmes on sustainable production techniques and good agronomy to improve crop resilience and profitability, through the long-running Volcafe Way programme.

“Volcafe is truly excited by this chance to work with partners like IFC and Absa as we continue to develop the tremendous potential of East Africa’s coffee sector,” said Melvin Wenger Weber, Volcafe’s chief financial officer.

“With this initiative, we will be able to engage more directly with tens of thousands of coffee farmers while bringing their produce to even more markets,” added Melvin.

In addition to purchase of coffee cherries, the facility will also assist Volcafe to buy green coffee beans from established auction systems.

“Agriculture is a major source of jobs in East Africa, and coffee is a huge contributor to those livelihoods,” said Sérgio Pimenta, IFC’s Vice-President for Africa. “We are pleased to work with Absa and Volcafe to ensure that farmers across the region have opportunities to realise the potential of their industry.”

“We are delighted to announce our partnership with Volcafe and IFC in this significant US$60 million structured working capital coffee transaction,” said Tshimbi Ntuli, the Director of Structured Trade and Commodity Finance, Absa Regional Operations, at Absa’s Corporate and Investment Banking.

“This collaboration showcases our capabilities as a pan-African bank to work closely with development finance institutions that share our strategic vision of supporting Africa’s growth and development. We are committed to being customer-centric and constantly evolving to meet the needs of our clients.”

Biodiversity management

As part of the agreement, Volcafe is aligning its operations with IFC’s Performance Standards on biodiversity and natural resource management.

To meet these standards, Volcafe has partnered with The Biodiversity Consultancy, a global provider of strategic, technical and policy services for biodiversity management. It has also performed a biodiversity risk assessment on its arabica and robusta coffee supply chains.

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