The project sponsor is Mr. Petrus Karsten Sr., who established Karsten as a 13ha raisin farm 30 years ago. The Shareholding structure now comprises: Karsten Family Trust (51.4%); Industrial Development Corporation (36.6%); Yarona Farms Limited and Yarona Company Property Trust, two entities formed by the employees of Karsten (11.3%). The remaining shares are owned by Land Merit Trust, investment vehicle of South Africa’s state owned Land Bank and BAASA (a Black Empowerment Group).

The total project cost is estimated at $15 million. The proposed IFC investment is a $ 7.5 million A loan for IFC’s own account.

7.50 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	7.50
Equity

* These investment figures are indicative

The project will be implemented in 3 geographical locations: South Africa: Karsten will expand farming operations located in the Northern Cape and Western Cape Provinces. Egypt: Karsten will enter into contracts to manage and provide packhouse and cold storage facilities in the Cairo Alexandria region. Karsten will also establish a Greenfield grape farm in Aswan. United Kingdom: Karsten will set up complementary marketing company close to London

Development Impact: - Market intelligence and technology transfer: In addition to establishing its own farm in Egypt, Karsten will manage and provide packing and cold storage facilities to local farmers. The Company will make available that infrastructure and experience to its Egyptian partners, thus promoting the production of export quality grapes and training Egyptian nationals to international standards in fruit handling and quality control. - Employment generation: The proposed project will also increase the Company’s demand for labor in South Africa and Egypt, creating both permanent and temporary employment opportunities. Direct employment creation in the RSA is estimated at 4,570 (permanent employee numbers will increase from 1,000 to 1,120), and in Egypt at 520. - Black Economic Empowerment: Karsten’s workers’ share transfer scheme was initiated in 1994 with thirty three managers under the government Black Economic Empowerment initiative. A second pilot scheme was started in 1997 with government funds for 330 employees. A third scheme was launched in 2005 and attracted 380 applicants who became shareholders. Continued growth of the company will allow a further extension of this program. - Social services: The Company’s outreach includes adult literacy classes, crèche facilities, skill-based training courses and clinics on all of its South African farms. It has also established a HIV/Aids program since 1999 for its entire permanent and temporary staff. Karsten will implement similar social best practices, in Egypt. IFC Role: - Political Risk Mitigation: Karsten’s expansion in Egypt is perceived as risky and they value IFC’s participation as providing some informal coverage against a range of political risk factors. They also take comfort in IFC’s presence due to ongoing political and land reforms in South Africa. - Long term funding: Medium to long term credit is limited for Karsten’s investment outside South Africa. Funding from South Africa, while an option, is limited in terms of amount and available only with export credit guarantees which require the importation of South African goods and services. In response to Karsten’s need for flexibility, IFC will provide a corporate loan enabling it to carrying its ongoing investment program. - Technical Assistance: Karsten’s staff comprising 1,000 full time and 4,000 contract employees, will benefit from the existing IFC against AIDS program. The program assists companies to develop specifically tailored tools and strategies to address workforce and community-related concerns stemming from the disease. IFC is also considering TA support to assist the company improve its management information systems.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. Review of this project consisted of appraising technical and environmental and social information submitted by the project sponsor and an onsite visit to selected company operations. The following potential environmental, health and safety and social impacts of the projects were analyzed: Farming practices and certification schemes, including environmental and quality control systems; Water extraction and sustainability; International waterways policy; Pesticide use; Use of CFC /Refrigerants and other hazardous material; Waste management; Workers welfare and labor policies; HIV/AIDS policy; Black economic empowerment actions; Social and community development policies; Karsten Group expansion in Egypt; and Land acquisition in Egypt. The Sponsor’s plans to address these potential impacts is summarized in the Environmental Review Summary and Karsten Farms Environmental Action Plan (EAP).
Location of environmental documents in locally affected community
The ERS is located at the gates of the project sites and on the Upington town council bulletin board.