DEG & STANCHART launch Euro100 million AgroAfrica partnership
Wednesday, 6 May 2009
DEG FORMS PIONEERING PARTNERSHIP TO LAUNCH EUR100 MILLION 'AGROAFRICA' INITIATIVE.
- Loan programme will provide broad-based financial support to African agriculture.
- Initiative delivered through Standard Chartered, DEG's first strategic financing partnership with a Commercial Bank.
- First beneficiary project provides structured guarantee for up to ZAR 200 million (EUR 17 million), financing over 300 South African farmers.
Agriculture contributes over 30% of Africa's GDP. Considering the growth potential, Africa stands to hugely benefit by increasing the efficiency of resourcing and improving cultivation methods. As a result, the German development finance institution DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH, has launched their 'AgroAfrica' loan programme, which aims at delivering EUR 100 million of financial support to agriculture in sub-Saharan Africa over the next 3 years.
To deliver the programme, DEG has for the first time chosen to form a strategic partnership with a commercial bank. Standard Chartered Bank has been selected in this role, being one of the leading banks for structured agricultural financing in Africa. With DEG acting as guarantor, Standard Chartered will extend its reach within the agricultural sector across African markets, providing valuable financial support through structured agricultural and input financing products.
The first project to benefit from the DEG's AgroAfrica initiative is Standard Chartered's existing input financing programme with 'Farmsecure Capital' in South Africa. The programme, currently to the total value of ZAR 1 billion, will be guaranteed by DEG for ZAR 200 million (approximately EUR 17 million). DEG's additional support will increase the current number of commercial farmers benefiting from 200 to over 300, with the cultivation area expanding from 140,000 hectares to over 300,000 hectares over the next 3 years. With a total output expected to be around 1.1 million tonnes of wheat, soya beans and maize, this project will make a significant contribution to meeting South Africa's consumption demand as well as increasing export potential.
"The AgroAfrica initiative aims to support sustainable and economic growth via the agricultural sector. Developing the African agricultural sector not only benefits Africa's population through the provision of valuable staple foods, but will also increase export potential by increasing yields with the introduction of improved efficiencies and encouraging the adoption of effective commercial farming practices. We are pleased to be partnering with Standard Chartered Bank, considering their African expertise", commented Michael Fischer, Director of the DEG Office in Johannesburg.
On signing the Cooperation Agreement, Standard Chartered's Director of Agriculture, Zhann Meyer, said, "Standard Chartered is proud to partner DEG in this innovative and far-reaching initiative. This partnership allows us to extend the positive benefits our agricultural products deliver to the agricultural sector across sub-Saharan Africa. With our experience on the continent spanning over 150 years, and our strong on-the ground presence in 13 African markets, we continue to deliver sustainable and tangible benefits to Africa's agricultural sector."
Farmsecure Holdings (Pty) Ltd, the first project to benefit in the AgroAfrica programme, is responsible for the selection of participating farmers and providing ongoing support and expertise in the way of soil and inputs management, as well as transferring valuable precision farming methods to maximise farmers' productivity, efficiencies and outputs. "Our primary focus is to empower farmers with precision farming skills, agricultural knowledge and hands- on support to assist them in fulfilling their maximum potential. With our specialised agricultural expertise, and DEG's and Standard Chartered's financial support, we look forward to extending our unique approach for the benefit of other commercial African farmers north of our borders," commented Schalk Lubbe, Group Managing Director, Farmsecure.
In addition to supporting structured input financing products, the AgroAfrica initiative plans to extend its support to include agricultural equipment and processing plants, benefiting the agribusiness in Sub-Saharan Africa.
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DEG, member of KfW Bankengruppe (KfW banking group), is one of the largest European development finance institutions. For more than 45 years, DEG has been financing and structuring the investments of private companies in developing and emerging market countries.
DEG invests in profitable projects that contribute to sustainable development in all sectors of the economy, from agribusiness to infrastructure and manufacturing to services. The financial sector is a further focus in order to facilitate reliable access to investment capital locally.
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