ACCESS TO FINANCE FOR CASHEW NUTS PROCESSORS: AFRICAN CASHEW ALLIANCE AND BENINCAJÙ PUT THEIR HAND TOGETHER!
On Tuesday, September 24, 2019, the Golden Tulip Hotel in Cotonou hosted around 100 participants from various countries at the forum about access to finance for cashew processors in Africa.
It is worth recalling here that the competitiveness of the local cashew processing industry is a major challenge and concern for both African Cashew Alliance (ACA) and BeninCajù project whose vision is to build in Benin, a sustainable and well-structured cashew sector. In addition, one of the main causes of the inability of local processors to compete with foreign buyers is the lack of access to adequate financing, particularly working capital financing. Indeed, obtaining working capital financing poses a triple challenge: local banks face a high cost of borrowing (between 5 and 6%), which contributes to high interest rates. (between 9 and 12%). Generic credit products and lending arrangements are unsuitable for the cashew processing sector (eg, the amortization schedule is not aligned with the cash cycle, funding comes later than needed) . Processors enter a cycle of unproductivity due to the first two factors, resulting in an inability to repay loans on time leading to a bad credit history.
It is in the light of all these parameters that TechnoServe Benin and ACA have given their violins to those of the Cashew Branch (IFA) with the support of the Ministry of Agriculture, Livestock and Fisheries (MAEC) to organize a joint reflection by cashew processors and financial institutions in Benin. Two big sequences have furnished this forum. The first, in plenary, was dedicated to various presentations focusing on global cashew production, country share, the cashew market, cashew processing plant management, an cashew industry overview with a typical operational cycle of processing, an overview of the current situation of supply and demand for financing based on the results of a survey conducted as such, and a panel of discussions between cashew processors on their experiences of local and international financing. It was moderated by Mr. Ernest MINTAH, General Manager of ACA, Mrs. Ankita RAO, Senior Manager Access to Financing BeninCajù, Mr. Valentin ATCHAOUE, Head of the Transformation Component BeninCajù, and Mr. Frédéric GNONLONFOUN, Manager Certification & Compliance BeninCajù. The second part of this workshop focused on group work between the Financial Institutions on one side (credit risk agents) and the cashew processors on the other side (processing plant managers).
«The issue of financing cashew processing is fundamental, and we will do our best to continue, through our BeninCajù project, to put our expertise at the service of cashew processing factories » recalls James OBAROWSKI, Country Director of TechnoServe Benin.
This workshop served as a springboard for defining ways and means to reduce the gap in understanding between demand and supply of financing for West African cashew processors on the one hand, improve knowledge on access to financial investment opportunities on the other hand and, in turn, increase financial support for cashew processors.
«The credible alternative for the cashew nut producing countries is to develop the local processing capacity of our production in order to take the best advantage of the added value in terms of increased incomes in rural areas and creating new jobs with a view to effectively reducing unemployment and poverty. What then are the most appropriate measures to boost the interest of local banks and financial institutions to support the installation and development of local processing infrastructures in our countries?» Gaston DOSSOUHOUI, Minister of Agriculture, Livestock and Fisheries.
In a nutshell, this framework provided a good opportunity for cashew processors to engage directly and frankly with banks and financial institutions on bottlenecks to access and finance, and establish a network. It has emerged from the various exchanges that the State has a leading role to play to better structure the cashew sector in Benin and promote access to financing.
«Once sufficient funds are available, other barriers to cashew processing in Africa can be overcomed by providing appropriate equipment and technical know-how through training on quality and safety, as well as a fruitful collaboration with governments and regulators in the cashew industry.» Ernest MINTAH, General Manager of ACA.
At the end of the workshop, the actors met for face-to-face discussions. In the medium and long term, the objective is, on the basis of this first meeting, to facilitate concrete B2B meetings between cashew processors and financial institutions for adequate financial services, a major point for the development of this cashew industry.