The IDA PSW LCF is expected to support the loan provided by IFC, by hedging up to US$6.3 million of IFC’s financing package. IFC as implementing entity of GAFSP is expected to provide a loan subordinated in liquidation to IFC of up to US$8.5 million (“blended concessional finance co-investment”). By supporting the project, GAFSP and IDA PSW are enabling the Company to expand local production capacity and meet its permanent working capital needs to enable local value addition in the cocoa value chain in Nigeria. Without the blended finance support, the Company may not be able to proceed with the project as it does not have access to appropriately structured long term, flexible financing required to execute Project. The combined level of concessionality (i e., “subsidy“) provided by the blended concessional finance co investment and the IDA PSW LCF support is estimated to be approx. 5.2% of the total project cost. The total cost of the project is approximately US$33 million. This estimate is based in the case of the IDA PSW LCF support on the difference between (i) a “reference swap rate” and (ii) the “concessional swap rate” being received by the IDA PSW LCF. For the loan provided by GAFSP, subsidy estimate is based on the difference between (i) a “reference price” (either a market price if available; the price calculated using IFC’s pricing model, which comprises three main elements: risk, cost, and profit; or a negotiated price) and (ii) the “concessional price” being charged by the GAFSP loan. As is the case with all of IFC’s blended concessional finance co-investments, this project has been assessed against the Enhanced Blended Concessional Finance Principles for DFI Private Sector Operations adopted by IFC and more than 20 other DFIs in 2017. Further information on these Enhanced Principles, IFC’s blended finance approach and governance and the average levels of concessionality can be found at www ifc.org/blendedfinance.”

14.80 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	14.80
Equity

* These investment figures are indicative

The Project outcomes assessment is based on the predicted growth in demand for cocoa and cocoa-related products globally, the Company's leading position in the local market, and the favorable outlook of the regulatory environment. Project outcomes are composed of the following: Stakeholder – farmer suppliers: IFC expects that the Project will improve farmers' livelihoods through increased cocoa sourcing and technical and financial assistance. Economy-wide effects: IFC expects that the project will lead to an annual increase in GDP. The project is also expected to create direct, indirect, and induced jobs along the value chain, with more permanent jobs being created directly through the expansion of processing capacity, and additional jobs in input provision, technical assistance, and supplies and services for the cocoa processing plants. The market creation rating is Moderate with Medium likelihood of achievement. The likelihood is supported by the large untapped potential of cocoa processing capacity in the country, and the favorable projection of global demand for sustainably and transparently sourced cocoa products, which together provide comfort on the potential growth of Nigeria’s cocoa industry. The likelihood is tempered by the intensive investments required to establish and operate cocoa processing plants and for other market players to adapt a similar business model in the country. The Project’s contribution to market creation is as follows: Competitiveness - IFC expects the Project will have a positive impact on Nigeria’s cocoa industry competitiveness through the support to the Company’s processing capacity expansion and increase the volume of sustainable and traceable cocoa production.

Summary : IFC is providing both financial and non-financial additionality. Financial additionality comes from the provision of long-term financing with a structure not readily available in the market. Non-financial additionality comes from standard setting in terms of supporting the Company to implement best practice E&S standards and providing knowledge, innovation and capacity building. Financial additionality : Financing structure - The proposed investment is a patient senior loan of up to US$20 million with a tenor of 8 years (with 2 years grace) to implement a capex program and meet working capital needs. This kind of financing is not readily available for agribusinesses in Nigeria. According to IFC’s analysis, over the past 12 months in Nigeria, there were two USD-denominated syndicated loans provided to corporates, with a combined face value of 0.365 billion USD and tenors of one year each; there was one USD-denominated corporate bond issued at a corresponding rating by companies, with a face value of 0.05 billion USD and maturity at issuance at five years. None of the loans provided or bonds issued over the past 12 months was in the Agribusiness sector. Non-financial Additionality : Standard setting - IFC will provide expertise in food safety, environment, and social standards to align the Company’s operations with industry best standards. Knowledge, Innovation, and Capacity Building - IFC Advisory Services will support the Company about their engagement scope (e.g., deploying the agribusiness leadership program (ALP) to train farmer organizations/groups to strengthen their capabilities; organize the Last Mile Retailer (LMR) training of their distributors emphasizing on food safety and providing agronomic support including good agricultural practices (GAP) to add value to the Company’s farmer engagement initiatives, etc.).

This is a Category A project according to IFC’s Policy on Environmental and Social Sustainability (2012) due to significant E&S risks and/or impacts inherently associated with primary production of cocoa in Nigeria, specifically the high risk of child labor, forced labor, unsafe working conditions associated with the cocoa supply chain, in addition to the use of agrochemicals including application of pesticides, and significant conversion risk of natural and/or critical habitats.

Key E&S risks and issues for this proposed investment are: (i) cocoa sourcing practices to avoid-minimize-mitigate supply chain risks on child labor, forced labor, conversion of natural/critical habitats including traceability, verification, and application of good agricultural practices; (ii) availability and effective implementation of Environmental and Social Management System (ESMS) for the cocoa processing and storage operations, including resource efficiency, management of air emissions and generated wastes; (iii) assurance of fair and safe working conditions for direct, contracted and third party employees; (iv) emergency preparedness and response at the processing plant and warehouses; (iv) road traffic safety, community safety, and use of security forces. 

Please refer to the related Environmental and Social Review Summary (ESRS) document for this project.

Please refer to the Environmental and Social Action Plan (ESAP) tab in the related Environmental and Social Review Summary (ESRS) document for this project.