The FINANCIAL — IFC, a member of the World Bank Group, and Société Générale announced the launch of a €70 million facility to help Burkina Faso’s biggest cotton company, SOFITEX, support local farmers and finance the 2014/15 cotton campaign.
Signed under IFC’s Global Warehouse Finance Program, the facility will allow SOFITEX to purchase raw cotton from over 160,000 farmers in Burkina Faso to process and export to international markets. Cotton is the main cash crop in Burkina Faso, which is currently under a transitional government. Shifts in global demand and commodity prices make it difficult for cotton companies to secure finance. Through the facility, IFC, GAFSP and Société Générale will lend to SOFITEX against warehoused commodities, providing the company with liquidity to finance its crop purchases, according to IFC.
Mr. Bernard Gnessa Zougouri, the Chief Executive Officer of SOFITEX, said, “Financing to support our cotton purchases during the harvest is important to our ability to maintain operations and to buy from the many farmers that supply our business.”
Saran Kebet-Koulibaly, IFC Director for West and Central Africa said, “IFC, GAFSP and Société Générale’s partnership with SOFITEX demonstrates our confidence in Burkina Faso’s cotton sector and commitment to supporting business that will revitalize economic activity during a political transition.”
Working with local farmers, suppliers and distributors, SOFITEX is playing a significant role in job-creation, accounting for nearly 80 percent of Burkina Faso’s cotton production. The cotton sector is also the country’s largest employer and the second foreign currency earner, providing a livelihood to over 3 million people. This financing is vital for Burkina Faso’s agricultural and rural population, in the face of significant economic, political and ecological challenges.
Donor partners to the Private Sector Window of GAFSP are the governments of Canada, Japan, the Netherlands, the U.K. and the U.S. This funding makes it possible for IFC to invest in unusual and/or riskier projects with strong potential to promote food security and reduce poverty.
Agribusiness plays a vital role in Sub Saharan Africa’s economic development, contributing to economic growth, employment and foreign exchange earnings in many countries. In fiscal year 2014, IFC invested $723 million in agribusiness in Sub Saharan Africa.