43760 - Shemu Oils

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Summary of Investment Information

Project Number

43760

Company Name

SHEMU PLC

Date SPI Disclosed

Mar 26, 2024

Country

Ethiopia

Region

Africa

Projected Board Date

Jul 31, 2024

Environmental Category

B - Limited

Status

Active

Last Updated Date

Mar 27, 2025

Department

Regional Industry - MAS Africa

Industry

Agribusiness and Forestry

Previous Events

Approved : Oct 1, 2024
Signed : Nov 8, 2024
Invested : Mar 20, 2025

Sector

Other Vegetable Oil Crops (Coconut, Rapeseed, Peanut, Sunflower, etc.)

Additional Project Attributes

Blended Finance

Project Description

The proposed investment is an A Loan of up to US$10 million equivalent in Ethiopian Birr (ETB) to Shemu PLC (“Shemu” or the “Company”), a leading manufacturer of edible oil and household goods (soap & detergent) based in Dire Dawa in eastern Ethiopia. IFC’s financing will support Shemu to expand its refinery capacity to 950 TPD (tons per day) and improve operational efficiency through investing in logistical assets (“Project”). The Project may be supported by the IDA20 Private Sector Window Local Currency Facility (IDA PSW LCF), subject to obtaining the necessary internal approvals, as described in the Blended Finance section.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	10.0
Equity

Development Impact

Project level impact: i) Economy-wide: The Project supports Ethiopia’s ambition to develop a competitive industry by improving the efficiencies of its refined oil operations and supporting marketing efficiency. Local refining will support domestic value addition and associated job creation; ii) Stakeholders: The Project is expected to increase the volume of fortified refined edible oil and therefore contribute to addressing Ethiopia’s challenges of food security and nutrition. With the proposed expanded production of the refinery, the Company will continue to produce refined oil fortified with vitamins A and D which are essential micronutrients to humans, which contributes to reducing the prevalence of micronutrient deficiencies among consumers. Market level impact: i) Competitiveness: The Project will contribute to addressing the challenges of CPO supply chain disruptions by establishing backward integration of local peanut supply chain to increasingly source peanuts from smallholder farmers and gradually replace CPO imports. This will demonstrate the possibility of import substitution if the companies remain competitive in terms of selling oil at prices below or at par with the import parity prices. Other market players are likely to follow suit by also sourcing edible oils locally to remain competitive. ii) With the support of IFC’s advisory, the adoption of improved peanut production practices will be demonstrated by the Company rolling out a farmer support program to help farmers achieve higher productivity through the introduction of improved production technologies (e.g., improved seed varieties), customized fertilizers, input financing system, and training on pre-and post-harvest management practices to improve peanut quality and reduce aflatoxin contamination.

Financial additionality – i) Financing structure: A facility with USD disbursement and local currency repayment is currently not available in Ethiopia; ii) IFC is proposing a 7-year loan, including 2.5 year grace period, and such long-tenor financing with a grace period is not readily available in Ethiopia. Non-financial additionality – i) Standard Setting: IFC will assist the Company in facilitating the development of a robust Integrated Environment, Social and Governance (ESG) system to close any existing gaps including the development of an E&S management system responsive to the requirements of PS1 and extend the scope of the E&S oversight of the Company to include its primary suppliers; ii) Corporate Governance: The Company, still fully owned by the founder family, will be supported to professionalize its organization structure; iii) Knowledge, Innovation, and Capacity Building: IFC will help build capacity through the provision of Advisory Services, focusing on food safety practices, financial management and resource use efficiency of the Company’s operations.

E&S Category Rationale / Risks and Mitigation

This is a Category B project based on IFC's 2012 Policy on Environment and Social Sustainability. Based on information reviewed by IFC, the proposed project will have limited adverse environmental and social (E&S) impacts that are few, site specific, largely reversible, and readily addressed through existing mitigation measures and Good International Industry Practice (GIIP). Shemu is committed to manage its oil refinery and logistical assets in compliance with applicable Ethiopia’s legal and regulatory requirements and IFC’s Performance Standards (PSs) and aligned with GIIP as per applicable and relevant parts of the WBG EHS Guidelines (General and Vegetable Oil Production and Processing) and its own corporate policies.

Key E&S risks and issues associated with the project includes (i) adequate E&S assessment of its operations in line with applicable Ethiopian legal requirements and IFC PSs and use of that assessment to develop an ESMS commensurate to the E&S risks and impacts of such operation; (ii) E&S systems and staffing to manage the construction and operations of new/existing infrastructure in line with IFC’s PSs; (iii) assurance of fair and safe working conditions in compliance with IFC PSs (including on GBV) and those requirements within Ethiopian labor regulations both during the construction and operation phase; (iv) management of air emissions, noise, effluents, solid/hazardous waste; (v) food safety, transport, and security risks and management practices; and (vi) gradual increase of CPO sourcing meeting PS2/PS6 supply chain requirements, including certified (RSPO) CPO.

Contacts

For Inquiries About the Project, Contact

Shemu PLC
Sitra Ali
Chief Operation Officer
+251 94 747 4547
Sitrut@shemugroup.net
Dire Dawa urban Kebele, 01
Websitewww.shemugroups.com

For Inquiries and Comments About IFC, Contact

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IFC Communications
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

Local Access of Project Documentation

Ms. Sitra Ali, Chief Operation Officer, Shemu PLC

Dire Dawa Sub City, Dire Dawa Woreda, Dire Dawa urban Kebele, 01

Tel: +251 94 747 4547; Email: Sitrut@shemugroup.net

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. Its purpose is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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