African Guarantee Fund and TechoServe Establish Partnership to Boost Investment in West Africa’s Cashew Nut Sector
The partnership will support the work of the Prosper Cashew program in the Ivory Coast, Ghana, and Nigeria
Abidjan, 31st October 2023 – African Guarantee Fund (AGF) and international nonprofit TechnoServe have signed a new partnership to facilitate critically needed access to finance for processors and other businesses in the West African cashew-nut value chain. The partnership is part of the Prosper Cashew project, a five-year, $27 million program funded by the U.S. Department of Agriculture along with its Food for Progress program and implemented by TechnoServe.
AGF and TechnoServe have structured a guarantee facility that will be targeted to supporting SMEs operating in and along the value chain of cashew production.
Prosper Cashew is improving productivity in the cashew sector, enhancing regional processing volumes, improving the environmental impact of the cashew value chain, generating income, and creating jobs particularly for women and youth in the Ivory Coast, Ghana, and Nigeria. The project is also developed in partnership with ISF Advisors, a financial advisory group offering strategic investment advice.
Cashew nuts are a significant product in the West African food sector, with 44% of the global crop being produced in the region. The global trade of cashew nuts has more than doubled in the last ten years, with the Ivory Coast accounting for more than two thirds of that growth. However, despite the size of the market and growth of the sector, only 7% of raw cashew nuts are processed in West Africa, which limits the profitability that African producers can gain from the crop. One of the most significant challenges facing the sector is the lack of available financing, with many investors viewing the sector as too risky.
“Access to affordable investment finance is an essential ingredient in transforming West Africa’s cashew-nut value chain,” said William Warshauer, CEO of TechnoServe. “We are excited to sign this agreement with AGF because it will enable processors and other businesses to create jobs and economic opportunity for women and men across the value chain.”
AGF Group CEO, Jules Ngankam, said, “Cashew nut processing in Ivory Coast, Ghana and Nigeria is hindered by high cost of processing, limited technical and managerial experience, limited knowledge of the cashew market and a high cost of financing—especially in Ghana and Nigeria. Our partnership with TechnoServe aims to address these challenges and improve the competitiveness of the West African cashew processing industry.
“Supporting cashew processing and manufacturing in Africa will significantly contribute to food production and increase economic growth and job creation for youth and women. For AGF, the agricultural sector remains a priority and this opportunity with TechnoServe is critical in creating economic and social impact in the region” added Mr. Ngankam.
Over the past year, the Prosper Cashew investment team—which includes AGF, TechnoServe and ISF Advisors—has carried out in-depth studies of the financing needs in the cashew sector and the needs and challenges of existing financial service providers. These learnings culminate in an investment strategy comprising:
- Matchmaking to improve the flow of capital by connecting viable cashew processors to a list of banks and impact funds, in line with their investment strategies;
- Establishing a strategic partnership with an existing guarantee fund to develop a joint guarantee instrument to help de-risk investments.
Other activities in the investment strategy will include identifying a pipeline of viable processors, assisting banks during due-diligence processes, and building a large network of financial service providers to connect processors with the relevant investors that can service the cashew sector.
About the African Guarantee Fund
African Guarantee Fund (AGF) is a specialized guarantee provider whose mission is to facilitate economic development and poverty reduction in Africa. To achieve this, AGF increases access to finance for Small and Medium-sized Enterprises (SMEs) across key economic sectors through an array of guarantee products and capacity development assistance. Since inception, AGF has unlocked more than USD 3.5 billion in SME financing, through partnerships with 200 partner financial institutions across 40 African countries.
AGF is backed by the following shareholders and sponsors: The Government of Denmark through the Danish International Development Agency (DANIDA), the Government of Spain through the Spanish Agency for International Cooperation (AECID), the African Development Bank (AfDB), French Development Agency (AFD), Nordic Development Fund (NDF), Investment Fund for Developing Countries (IFU), German Development Bank (KfW), French Agency for Private Sector (PROPARCO), West African Development Bank (BOAD), Global Affairs Canada (GAC) and USAID’s West Africa Trade & Investment Hub (WATIH).
African Guarantee Fund is rated AA- by Fitch Ratings.
For more information, please visit: www.agf.africa
Founded in 1968, TechnoServe is a leader in harnessing the power of the private sector to help people lift themselves out of poverty for good. A non-profit organization working in 30 countries, we work with people to build a better future through regenerative farms, businesses, and markets that increase incomes. Our vision is a sustainable world where all people in low-income communities have the opportunity to prosper.
Group Communications & PR Office, African Guarantee Fund
Communication Manager, Prosper Cashew