28296 - AEF Esoko

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Summary of Proposed Investment

Project Number

28296

Company Name

Esoko Limited

Date SPI Disclosed

May 27, 2009

Country

Ghana

Industry

Telecommunications and Technology

Projected Board Date

Jun 27, 2009

Status

Completed

Sector

Other Services (Including IT Enabled Services)

Department

WBG Digital and AI

Environmental Category

C - No Impact

Previous Events

Approved : Jun 18, 2010
Signed : Jun 25, 2010
Invested : Oct 19, 2010

Project Description

Esoko Networks Ltd. (“Esoko” or the “company”) began as TradeNet in 2004 as a software application undertaken by a Ghanaian software incubator BusyLab. Esoko’s product is a market information platform - an SMS and web-based platform that enables real time data gathering and dissemination to end-users (any internet or mobile phone user). The platform can be applied to any application or industry that would benefit from direct access to a mobile phone based-population, specifically one that requires low-cost usage. Esoko has developed a strategy to expand its operation in Africa and Asia through franchising. Esoko operates its own franchise in Ghana (Esoko Ghana – 100% owned) in order to showcase the product and provide feedback for product development. Esoko Networks has licensed its platform in 8 African countries and Afghanistan. Most licensees are public projects, government initiatives or NGOs seeking to establish commercial market information systems.

The first and most developed application on the platform is “Esoko Market Live”, a market information system for the agri-business sector. This product provides agriculture commodity prices (input and output) and trading capability to rural farmers, buyers, traders, associations and agri-businesses mostly via SMS. Customer feedback indicates a reduction in market inefficiencies through improvement in supply chains, more equitable pricing and better access to markets for farmers and buyers.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	1.25

Development Impact

Market information systems have a high development impact in industries where they are implemented as dissemination of pricing information empowers producers, particularly in low income economies. Markets in Ghana and elsewhere in Sub-Saharan Africa are inefficient. These markets are characterized by the following constraints: long transaction cycles between producers and consumers; poor access to appropriate and timely market information; low product volumes of varied quality offered by small scale and individual producers; and poorly structured and inefficient markets. The lack of market information represents a significant impediment to market access especially for small producers: it substantially increases transaction costs and reduces market efficiency. The marketing chain consists of multiple middlemen, each taking a margin at every stage of the chain, and price variations in space and time are often large and erratic.

In case of ‘Esoko Market Live’, Esoko is helping farmers to increase their incomes by giving them better access to markets and by empowering them to negotiate better transaction terms. In addition, Esoko’s platform will promote cross border trade through more transparent facilitation of supply and demand information. The Esoko platform has the potential to stabilize supplies (by avoiding over production) as well as prices. It is expected that awareness created by Esoko platform will improve farm-gate prices, reduce spatial arbitrage between markets, enable the introduction of new products such as weather insurance in Africa and may lead to the foundation of a formal commodities exchange.

IFC will provide equity capital as well as act as an international long term strategic partner as the company scales its operations. IFC’s regional presence should help Esoko attract high quality franchise partners and ensure good governance and transparency. IFC’s presence as a shareholder would contribute to Esoko being seen as a trusted market information provider. Lastly, the project will have a significant demonstration effect given that investments in the Ghanaian IT sector are limited.

Under IFC''s investment, Esoko would commit to working with its franchisees to ensure that its technology would not be substantially used for production or trade in items on IFC''s Exclusion List, and to explore with IFC opportunities for applications to provide environmental or social benefits. Environmental and social risks and impacts in this project are otherwise expected to be minimal, and it has therefore been classified as Category C according to IFC''s environmental and social review procedure.

Contacts

For Inquiries About the Project, Contact

Mark Davies
42 Ring Road,
Accra, Ghana
corp@esoko.com
(+233) 021 258803

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This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

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