The project involves a $21.5 million loan and $4.5 million equity investment by IFC, with support from the Global Agriculture Food Security Program (GAFSP), for construction and operation of a 45,000 tons per year processing plant in Rwanda for fortified cereals to treat child malnutrition (the “Project”). The investment will be channeled into a holding company, Africa Improved Foods (Holding) B.V. (AIFH) which will have a shareholding structure of 47% owned by a Royal DSM NV (DSM), 20% by IFC and the remaining equity held by other DFI’s. Via AIFH, an operating company, Excellent African Foods Limited (EAFL), will be established in Rwanda with AIFH having an approximate 90% equity stake in the EAFL, and approximately 10% owned by the Government of Rwanda.

DSM which has a significant shareholding has extensive experience in similar projects as that proposed in Rwanda, amongst other areas of manufacturing. GAFSP is a multilateral mechanism funded via the G20 with the objective of improving incomes and food nutrition security in low-income countries by boosting agricultural productivity. GAFSP funding plays a catalytic role to create opportunity to support innovative private sector investments and deliver a level of additionally and impact beyond what is possible through IFC’s regular operations.

The manufacturing process is fairly simple and involves sorting of maize and de-hulled soya bean with the latter then being cleaned, mixing and milling of these two raw materials, injection of soya oil into the mixed material, extrusion of the material, together with skimmed milk powder, drying, milling and thereafter the product is mixed with vitamins and minerals prior to packaging. All the equipment for the facility is to be provided by Buhler, an experienced milling equipment supplier. A storage buffer capacity will allow the Project to take advantage of attractive prices at the harvest period.

The intention is to source raw materials for the Project via existing farmer cooperatives in Rwanda and through the Government. In the event there is a shortfall in supply, this will be imported. A significant portion of the final product will be sold to the World Food Program (WFP) who will distribute the product in the broader region (Southern Sudan, Uganda, Burundi etc.), and to the Government of Rwanda; agreements in respect of the latter have been finalized. The remaining product will be sold on the open market.

The construction of the Project is expected to commence in 1 October 2015, though still to be confirmed, and on this basis the Project would be operational within 12-18 months depending on various factors. No contractors have yet been appointed for the construction phase.

The Environmental and Social Review Summary (ESRS) document for this project was originally disclosed on 10 June 2014 as a delayed disclosure as per IFC’s Access to Information Policy. This ESRS is now being disclosed for purposes of full disclosure i.e., with all the relevant and up to date shareholding information. In addition, since the project was disclosed in 2014 the site for the plant has also changed. Originally it was proposed that the Project be located in Nyagatare, some 120 km north-east of Kigali, the capital city of Kigali. This site was on undeveloped land owned by the Government of Rwanda and adjacent to an existing maize drying and storage facility equally owned by the Government. However, subsequently a site has been identified in the Kigali Industrial Zone located on the outskirts of Kigali. This site is also owned by the Government of Rwanda and already developed to include three existing warehouses, 10 silos for grain storage and associated loading and offloading facilities, administrative buildings and sufficient vacant land on which the processing facility can be located. Further, since the initial disclosure it has also been determined that the establishment of similar operations in Ethiopia will be processed subsequently as a separate project.

Thus given the site location is now within an industrial park, and that operations in Ethiopia are no longer included within this Project, the risks associated with this Project have been reduced from that originally defined. As such, in accordance with IFC’s Environmental and Social Review Procedure there is no need to compile a new ESRS; rather the original ESRS as disclosed for purposes of delayed disclosure may simply be updated to include full details of the shareholding associated with the Project, and the information related to the new site in Kigali allied to the fact that this Project does not include operations. This document constitutes the updated ESRS.

IFC’s environmental and social (E&S) appraisal for this investment included the following:

A site visit to the facility in the Kigali Industrial Zone
Responses by DSM to IFC’s E&S questionnaire
Documentation provided by DSM including its Environmental Policy, Safety Health and Environment Requirements for operations, documents defining the approach to quality in the food production chain, a document detailing the approach to inclusion and diversity, generic emergency response plan, Supplier Code of Conduct, and example of a contractor safety manual applied at a specific project
Supply chain risk of commodity production in Rwanda based on GMAP (given GMAP does not have this specific combination, consultation of the US Department of Labor’s List of Goods produced by child labor or forced labor was assessed)
Review of IFC’s Industry Specialist’s report on the Project
A visit to a farmer cooperative
A meeting with the Rwandan Minister of Health and Minister of Agriculture

IFC’s appraisal considered environmental and social management plans for the proposed activities and gaps if any between these plans and IFC requirements. Where necessary, corrective measures intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and in the agreed Environmental and Social Action Plan (ESAP) disclosed in this review summary. Through implementation of these management plans and the ESAP, activities associated with the Project are expected to be designed and operated in accordance with the Performance Standards objectives.