IFC Agribusiness Global Agriculture and Food Security Program and New Innovations in Financing Agriculture

1. IFC AgribusinessGlobal Agriculture and Food Security Program and New Innovations in Financing Agriculture 20th Brussels Development Briefing on Financing Agriculture in Africa and ACP Countries September 15, 2010

2. 1. IFC Agribusiness Portfolio Overview2. Global Agriculture and Food Security Program (GAFSP) Private Sector Window3. Recent Examples of Innovative Agri-Financing in Africa 2

3. IFC Agribusiness Portfolio Overview Agri-related Investments (including Syndications) The active portfolio of agri-related investments was $3.9 billion at FYE09 (excludes Trade Finance) IFC has significantly increased its agri-financing in recent years

4. Global Agriculture and Food Security Program (GAFSP) Private Sector Window (PSW) • In 2009, G8 announced at L’Aquila a program to address food security and improve incomes of poor in IDA countries. • Global Agriculture and Food Security Program created with separate Public and Private Sector windows to deliver on this objective. • IFC selected to set up and directly manage the Private Sector Window for the GAFSP; World Bank to be Trustee of Public Sector Window. • WBG Board approved GAFSP Framework January 2010 • GAFSP launched in April 2010 with $880 million from United States, Canada, South Korea, Spain and the Gates Foundation • Small Holders, SMEs • Improving Productivity • Improving Access to Finance • Fostering Innovation and Technology • Climate Change GAFSP Objectives Public Sector Window Private Sector Window Managed by IFC WB is Trustee 4

5. GAFSP Private Sector Window - Overview • Mandate: • Use limited resources to support and demonstrate new and innovative financing aimed at increasing the commercial potential of small and medium sized agri-businesses and farmers. • Help increase productivity, improve market access and reduce risks associated with financing agribusiness SME’s by using innovative financial structures and technical assistance support. • Initial Donors: • PSW will be operational with the CAD 50 m contributed by Canada. • US intends to participate in PSW by December 2010 as well. Target: Raise additional Funds to achieve a size of US$500 m PSW allowing initiative to extend reach, and deploy a wide range of innovative financial instruments, and provide technical assistance. 5

6. GAFSP: Products & Targets Target: PSW will target smallholders, farmers, MSMEs, directly or indirectly through banks, financial intermediaries, micro finance institutions, private firms and equity funds.

7. Target Size: US$500 million • In parallel with implementation of Phase I, fund raising for Phase 2 will be launched Q1,2011. • Larger fund pool allows for the use of more innovative instruments, such as: • Impact investing funds, • Agri marketplace development • Scaling up interventions with FIs • Additional Advisory Services programs Program Roll-out • Target Size: US$100 million • Due to limited funds, selective investment products to achieve quick results • Majority of initial deployment though local intermediaries • Investments complemented by Advisory Services 7

8. Recent Examples of IFC’s Innovative Agri-Financing in Africa 8

9. IFC Guarantee SBGGuarantees CocobodLoans IFC SBG Cocobod LBC A LBC B Portfolioof pre-approved LBCs (Off takers) LBC C LBC D LBC E LBC F Overdrafts Stanbic Ghana (SBG) – Short Term Funding (Cocoa) • The Project • “Hybrid” of Risk Sharing Facility (“RSF”) and Partial Credit Guarantee (“PCG”). • Increases Stanbic Ghana’s activity in the sector by enabling it to exceed Single Obligor Limit to Licensed Buying Companies (“LBCs”), and exceed sector limits. • Up to US$ 40m seasonal financing (< 1 year) to LBCs, from US$ 19m in 2007-08 (2 LBCs) • LBCs selected and appraised by IFC. • IFC provides up to 50% PCGs to LBCs on an individual basis. • Guarantees (can be) renewed on an annual basis. • IFC Role • Introduce a new, innovative agribusiness guarantee product • Contribute sector and E&S Expertise • Supplement SBG’s evaluation of LBCs – initial and on-going.

10. Export Trading Group (ETG) – Guarantee for Agri-Trade • The Project • Risk Participation up to 33% of US$120 million (collateral and overdraft). • Supports one of Southern and East Africa’s largest agricultural supply chain operators to expand its trading and processing businesses, including purchases from small farmers • In 2008/09, ETG traded over 1.2 million tons of products from 60,000 farmers. Expects to increase traded volume to 2.7 million tons by 2011/12. • Will create over 1,000 jobs, mostly in rural areas • IFC Role • Mobilize/supplement resources for agri-sector development from local financial institutions • Provide advice on commercial, technical, environmental and social issues • Support ETG’s corporate practices improvement Local Buyers Farmers ETG (ETC) Collateral Manager Key: Flow of funds Standard Chartered Bank Risk Participation IFC

11. IFC risk BANK NGO risk Ethiopian Coffee – Cooperative Financing (Pending) • The Project • 3 Year Renewable Guarantee facility (up to US$ 10 million p.a.) • Assists coffee cooperatives to i) acquire wet mills for coffee processing, and ii) working capital. Ethiopia portion of US$ 50 million East Africa Coffee Initiative managed by TechnoServe and funded by Gates Foundation. • Unique partnership - First-loss provided by local NGO; IFC takes Senior Loss; Banks share both First Loss and Senior Loss. • Collateral: coffee purchases from farmers • Assets: Facility uses 20% for equipment loans; 80% for working capital Loss Sharing [75%] • IFC Role • Financial structuring guidance for using stocks as collateral, rather than mortgages • Improve access to financing and markets for coffee farmers • Demonstration Effect: Attract further financing to sector • Contribute sector Expertise

12. Thank You Rajesh Behal Principal Investment Officer Washington, DC RBehal@ifc.org