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IFC, a member of the World Bank Group, and South African bank Absa Group Limited, will provide a commodity trade finance facility of up to $60 million to Volcafe, a leading global green coffee merchant. This initiative aims to enhance Volcafe’s operations in East Africa, benefiting tens of thousands of coffee farmers in the region.
The financing will provide working capital to support the purchase of coffee cherries from smallholder farmers and local traders, and the processing, storage, and transportation of coffee to export ports.
East Africa is a major coffee-growing hub, responsible for over 80% of Africa’s coffee production and 10% of the global total.
The industry supports an estimated five million smallholder farmers, who often face challenges such as limited access to financial support and the effects of climate change on crop production.
The one-year facility, with contributions of up to $30 million each from Absa and IFC, will enable Volcafe to connect more than 75,000 farmers to the market. The facility will also fund training on sustainable production techniques and good agronomy practices to improve crop resilience and profitability through the Volcafe Way program.
“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 Chief Financial Officer. “With this new facility, we will be able to engage more directly with tens of thousands of coffee farmers while bringing their produce to even more markets.”
Additionally, the facility will allow Volcafe to purchase green coffee beans from established auction systems.
Sérgio Pimenta, IFC Vice President for Africa said, “Agriculture is a major source of jobs in East Africa, and coffee is a major contributor to those livelihoods. 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.”
Tshimbi Ntuli, Director of Structured Trade and Commodity Finance, Absa Regional Operations at Absa Corporate and Investment Banking said, “We are delighted to announce our partnership with Volcafe and the International Finance Corporation in this East African US$60 million structured working capital coffee transaction.
“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 evolving needs of our clients.”
As part of the agreement, Volcafe is aligning its operations with IFC’s Performance Standards. To meet standards on biodiversity and natural resource management, Volcafe has partnered with The Biodiversity Consultancy, a global provider of strategic, technical, and policy services for biodiversity management, and performed a biodiversity risk assessment in its arabica and robusta supply chains.
