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World Bank's IFC Provides a Loan Guarantee for Coffee Farmers in Ethiopia

By William Davison
Bloomberg

September 17, 2010

International Finance Corp., the World Bank’s private-investment arm, started a loan-guarantee facility worth as much as $30 million for Nib International Bank SC to support Ethiopia’s coffee industry.

The guarantee is expected to result in lending to an additional 70 coffee cooperatives in the first year and the production of an extra 3,542 metric tons of beans and 2,000 jobs over three years, IFC said today in a statement handed to reporters in Addis Ababa, Ethiopia’s capital.

The guarantee will enable NIB to provide loans worth as much as $12.5 million for the 2010 coffee season, increasing to $25-30 million by 2013, according to the statement.

“This facility reduces NIB’s financial risk of lending to coffee-farmer cooperatives and will go a long way to strengthen NIB’s commitment to expand support to small farmers in the coffee sector in Ethiopia,” the bank’s president, Amerga Kassa, said in the statement.

Ethiopia, Africa’s largest coffee producer, earned $528 million from shipments of coffee in the year to July 7, according to Ministry of Trade and Industry figures.

The agreement should boost the cooperatives’ incomes by as much as 30 percent by providing working capital and allowing them to purchase equipment such as wet mills for processing high-quality coffee, IFC Resident Representative Aliou Maiga told reporters.

The deal will support the Ethiopia Coffee Initiative that is targeting 160 cooperatives representing 90,000 farmers. The program is run by Washington-based TechnoServe and funded by the The Bill & Melinda Gates Foundation.

The not-for-profit organization initiated the loan- guarantee facility and will help the cooperatives access credit from NIB and provide technical assistance, Michelle Buckles, TechnoServe’s East Africa Regional Credit Manager, said today in an interview.
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To contact the reporter on this story: William Davison in Addis Ababa via Johannesburg at 1999 or pmrichardson@bloomberg.net. 

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