US$50m warehousing and finance scheme launched for agri exports/imports

Nedbank, through its Capital Division and together with the International Finance Corporation (IFC), has launched a $50-million facility to help commodity traders and processors in sub-Saharan Africa (SSA) to import agricultural commodities and export cash crops.

The scheme, which is part of the IFC's Global Warehouse Finance Programme (GWFP), is focused on providing funding for farmers and traders in emerging and non-developed countries in Africa who are often unable to procure finance due to a lack of sufficient conventional loan collateral.

Sekete Mokgehle, head of global commodity finance at Nedbank Capital, said that the deals were structured on a warehouse concept, with the physical commodity or collateral being stored in warehouses or other acceptable storage and in transit methods, in order to mitigate potential risks. As the product is sold, the trader pays the lender, enhancing cash flow for the farmer but still protecting the commodity on behalf of the financier.

Mokgehle added that in terms of exports, additional funding would result in an increase in foreign exchange earnings for local countries which would stimulate job creation.  The first deal has already been signed with rice importers in Liberia, a country heavily affected by the outbreak of Ebola.