Cocoa Post
Voice of Cocoa

Nigeria’s Agro Traders Company Secures $5.5million Financing to Process Cocoa

The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) says it has provided Agro Traders Ltd., a Cocoa processing company in Ondo State 50 per cent credit risk guarantee for N2billion (equivalent of over $5.5million) for working capital facility.

Anne Ihugba Head, Corporate Communications, said made this known in a statement on Thursday in Abuja.

Ihugba said as part of the plan, the Nigerian Export-Import Bank (NEXIM) and United Bank for Africa (UBA) would be financing the purchase, storage, processing and export of the 22,000 metric tonnes of cocoa beans.

She said that the business would also supports thousands of smallholder cocoa farmers who supply agro traders with a guaranteed off take market for their produce each year.

She recalled that in 2018, NIRSAL signed a master agreement with NEXIM Bank for such opportunities in the Agricultural Value Chain.

She said that NIRSAL would continue to facilitate the flow of finance and investments into fixed agricultural value chains, empowerment of smallholder farmers and building long term capacities amongst value chain actors.

“While proposing similar collaborations with specific development finance institutions that have mutual objectives, NIRSAL is wooing all commercial banks to open up their balance sheets to agriculture.

“The call is made with the assurance that the NIRSAL CRG will secure substantial parts of bank loans to agriculture and that its comprehensive risk management framework will forestall defaults.

“It is a call that banks like UBA are heeding,’’ she said.

Ihugba said during a tour to Agro Traders factory in Akure, NIRSAL’s Managing Director and Chief Executive Officer, Mr Aliyu Abdulhameed recalled that NIRSAL covered Agro Traders’ N1billion facility granted by UBA in 2017 for a period of 12 months.

Ihugba said Abdulhameed noted that because of the company’s diligence in loan repayment, it was issued an interest drawback of N8.9million, which went a long way in reducing the cost of funding.

She quoted him as saying that NEXIM’s nine per cent interest rate, with NIRSAL’s 50 per cent CRG cover, presented an attractive financing proposition for the cocoa beans processing company.

“We are happy to use Agro Traders Ltd. as an example to other Agro-allied companies on how they can grow their agribusinesses with NIRSAL’s support,” she further quoted him as saying.

“NIRSAL adopts a value chain fixing approach in facilitating finance and investments for agribusiness.’’

“The seamless flow of value through the four segments of the agricultural value chain, occasioned by “pull and push” signals from the upstream segment, is a priority for the risk management company.

“Through its Mapping-to-Market (M2M) strategy launched recently, NIRSAL is crowding actors from various value chains around the primary production of commodities.

“The upstream segment pulls input materials and mechanisation from the pre-upstream segment and pushes out produce to the midstream segment and onwards to the downstream.

“Accordingly, Agro Traders’ business in the midstream segment of the cocoa value chain provides opportunities for the preceding value chain segments.

“Agro Traders’ business, therefore, takes on heightened importance because of the 17,000 smallholder farmers that have been supported by the off take market that the midstream company provides.’’

According to her, 2,000 farmers have been scheduled to supply cocoa beans for this year’s export.

“Over the last two years, Agro Traders’ activities in the Cocoa value chain with NIRSAL’s support have resulted in, amongst many other outcomes to 10 per cent increase in output.

“New direct and indirect jobs have been created; we have 20 per cent increase in capacity utilisation, and 40 per cent increase in financial performance,’’ she added.

Agro Traders Limited was established in 1991 and is into off-taking of cocoa beans for onward export to Europe.

“The company is one of the largest exporters of cocoa beans in Nigeria, shipping up to 22,000 metric tonnes of cocoa beans annually to reputable international players,’’ Ihugba said.

Leave a comment

Subscribe To Our Newsletter

Your subscription is successfully!

There was an error while trying to send your request. Please try again.

Cocoa Post will use the information you provide on this form to be in touch with you and to provide updates and marketing.