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Kenya to tap planned Sh27bn farm produce support project
Banks regularly issue trade facilities to facilitate domestic and international trade by managing risks such as non-payment, currency fluctuations, and political instability while bridging cash flow gaps.
The International Finance Corporation (IFC) proposes to invest up to Sh5.16 billion ($40 million) in planned two risk-sharing facilities with Standard Chartered to support the purchase, storage, and sales of agricultural commodities and fertilisers in Kenya and several other sub-Saharan African countries.
The proposed project involves two risk-sharing facilities with Standard Chartered Bank for two trade finance facilities of up to Sh26.99billion ($230 million) to support the sub-Saharan Africa (SSA) operations of ETC Group, a diversified agricultural commodity trader and supply chain manager.
“The project will support the purchase, storage, and sales of agri-commodities and fertilisers in SSA countries such as Malawi, Benin, Kenya, Tanzania, etc,” the World Bank’s private sector lending arm said in a disclosure.
“Commodities financed by the project are bought from mostly smallholder farmers in SSA and sold to wholesalers, cooperatives, NGOs, and governments in various IDA (International Development Association) countries and into the international market”.
ETG and the IFC have worked together before to support smallholder farmers by increasing access to agricultural inputs, last-mile distribution, and market linkages across several African countries, reaching tens of thousands of farmers through training and advisory services.
Banks regularly issue trade facilities to facilitate domestic and international trade by managing risks such as non-payment, currency fluctuations, and political instability while bridging cash flow gaps.
The facilities enable importers to pay for goods later and exporters to receive funds sooner, often involving letters of credit, trade loans, and invoice financing.
ETG is majorly owned by Mahesh Patel (chairman), Ketan Patel (joint group CEO), and Birju Patel (joint group CEO) with a controlling stake of 52.15 percent.
Other key stakeholders are Mitsui & Co Ltd via its African arm, MIT African Management Limited (31.9 percent), and Public Investment Corporation (13.9 percent), with the balance held by Executive Directors (1.69 percent).
