ETHIOPIA – Ethiopia’s leading producer of day-old-chicks and poultry feed, EthioChicken Group is set to acquire a US$10 million loan from IFC to enable it implement its 5-year program.
Under the company’s growth plan, it seeks to construct two new breeding farms with a capacity of 60K bird each and one new hatchery facility, expected to cost US$16.2 million.
The two new breeding farms will be built in SNNPR region and Amhara region, while the new hatchery will be built in SNNPR region.
In addition, the group will utilize the financing to boost its working capital for purchase of parent stock birds; and refinance an existing long-term loan.
As of FY20, the group had eight breeding farms, four hatcheries, and two feed mill facilities.
EthioChicken Group consists of three operating companies in Ethiopia i.e., AGP Poultry PLC, Mekelle Farms PLC and Andasa Poultry PLC; and two holding companies in Mauritius i.e., Agflow Ventures and Agflow Poultry.
The latter are majority owned by founders of investment vehicle company Flow Equity having 60.4%, and Arabica Investment 39.6%, a private equity fund.
For IFC loan, the three operating companies will be co-borrowers and the two holding companies will be guarantors.
The financier is offering a competitive package proposing an 8-year loan, including a 3-year grace period to allow sufficient time for to ramp up.
Other than the financing, IFC will undertake standard setting assisting the group to develop Environmental Health and Safety (EHS), and social practices in line with international standards.
In addition, the group is working with IFC Advisory team for professionalizing its distribution system and enhancing participation of women in this line of work.
Other than support from IFC, the project is expected to be backed by the International Development Association’s Private Sector Window Local Currency Facility (IDA-PSW LCF), subject to Central Bank approval of the ETB Loan.
Depending on the approval, the project may be also supported by the private sector window of the Global Agriculture & Food Security Program (GAFSP).
With a focus on serving rural farmers, the investment is set to provide better access to affordable poultry products in a market; expansion in income opportunities for the poultry agents; and improvement in skills and capacity building for female farmers to improve their sales and profitability.
The announcement of the proposed funding comes weeks after United Exports, leading producer and exporter of blueberries in South Africa has clinched a €3 million (US$3.6m) loan financing from IFC and the Dutch entrepreneurial development bank (FMO) to support its ongoing capital expenditure projects and help maintain local farmers’ access to markets and employment.
The €3 million (US$3.6m) loan includes €1.5 million (US$1.8m) from IFC and a €1.5 million (US$1.8m) loan from FMO.
United Exports sells its blueberries under its proprietary OZblu brand within South Africa and exports roughly 90 percent of its output to markets outside Africa.
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