Access to Finance
The African cashew processing sector faces challenges to ensure a stable and sustainable industry due to access to finance limitations. Working capital, trade finance and expansion capital needs are unmet as most financial institutions are still unfamiliar with the cashew processing industry and many processors lack the capacity to develop bankable loan requests. Local and regional financial institutions are mostly working with the short term raw nut trade and export financing. Mid and long term financing for cashew processing is still an untouched area for most of them. To overcome these challenges ACA has provided technical assistance to the industry with grant support from the USAID West Africa Trade Hub since 2009. Currently ACA is providing A2F services in Nigeria, Togo, Guinea Bissau, Senegal, and Gambia.
- A2F for crop financing, working capital, capital investment and expansions
- Finance projections and bankable business planning
- Loan application, finance procurement and financing lobby with potential financial institutes and guarantee providers (commercial and development banks)
- Market guarantees through international buyers and facilitation in export sales contracts
- Hands on follow-up technical assistance after loan disbursements and active contribution to collateral management by third party
Under the 2010 grant program, the ACA had trained bankers on the commercial potential of cashew processing financing and identified key targets among the cashew processors for technical assistance. It resulted in the signing of a Memorandum of Understanding (MoU) with ECOWAS Bank for Investment and Development (EBID) in December 2010 to make available more than US$14 million for investments in cashew processing in West Africa. Under the 2011 Trade Hub grant program, the ACA in cooperation with the USAID West Africa Trade Hub supported cashew processors to improve the efficiency and bankability of their operations and prepare bankable loan applications.
In 2011 three cashew processors in Nigeria secured a total of $1.3 million in loans for working capital and trade finance thanks to the joint collaboration of West Africa Trade Hub finance experts with the ACA business team.
For 2012 ACA clients are targeting $2.0 million in working capital and crop financing and $1.5 in new investments and expansions financing through ACA technical support. As a result of these successes, ACA has received requests for technical assistance from several new investors aiming to set up cashew processing in Africa.