IVORY COAST – Norfund, the Norwegian Investment Fund for developing countries, has issued a US$10 million financing out of US$20m to Valency International Trading SARL (Valency CIV) to build an integrated local cashew processing hub in Ivory Coast.
Valency CIV is a subsidiary of Singapore-based Valency International Pte Ltd (Valency Group), a diversified, integrated supply chain manager in agri commodities and agri inputs with subsidiaries in 15 countries.
The agri-commodities sourced from African farmers through Valency’s value chain are marketed internationally in 38 countries.
The recent financing comes of the back of US$10m support by Finnish development financier and impact investor, Finnfund.
With the new investments, Valency CIV seeks to construct a cashew processing plant with a capacity of 45,000 tonnes per year on the outskirts of Abidjan,
This is in line with its plans for being a key participant in the cashew value chain in Ivory Coast, reaching up to 5% of the cashew farmers in the country.
The West African country produces about 1 million tonnes of cashews a year and is third largest export commodity, generating an estimated US$ 800m in revenues in 2020 from the export of 660,000 tonnes.
Currently, only about 100,000 tonnes of cashews are processed within the country annually, with the number feared to be dwindling as the processors face stiff competition from exporters of the raw commodity.
Though the share of nuts being processed locally in Cote d’Ivoire has increased in the last few years, in 2020 it stood at only 12%, significantly lower than countries like Mozambique and Ghana. However, the country aims to process half of its cashew output locally by 2025.
“By enabling Valency to develop a vertically integrated cashew value chain through the establishment of local processing, Norfund invests in the creation of sustainable local jobs and promotes local content via ‘value retention’ in the country.
“The investment fits into Cote d’Ivoire’s national cashew processing policy and represents an opportunity to support a competent management team with deep sector expertise and a commitment to build sustainable and responsible sector practice,” Fabrice Mpollo, Investment Manager at Norfund.
Norfund expects to see the employment of a workforce of over 2000, with 25% in permanent contracts at the factory and 75% in shorter term contracts as skilled labor required annually for processing.
Women are expected to fill approximately 80% of the jobs. The investment will also contribute to increased local tax contribution.
“We are very grateful to have a partner like Norfund who shares in our vision and has joined us in our endeavor to establish a strong cashew value chain in Cote d’Ivoire.
“Through this project, Valency will support cashew growers/farmers in the region, enhance sustainability and improve livelihood through addition of skilled jobs.
“The cashew processing plant is in line with our shared vision outlined as part of Valency’s Food Ingredients strategy, and commitment to develop a long-term sustainable business model in Africa,” says Sumit Jain, Chief Executive Officer at Valency International Group.
The Valency Group has already established profitable trading across West Africa and cashew processing business in Nigeria, and the planned investment will be its second on the continent.
This follows similar cashew processing projects successfully executed by the group in India and Vietnam.
Norfund will follow up on this work through taking up a position as Board Observer, in collaboration with Finnfund, its Finnish sister fund, who is providing a loan of the same size under the same terms.
Naana Winful Fynn, Regional Director for West Africa for Norfund said, “We are excited to support the leadership team at Valency International, and this investment marks an important milestone for Norfund, as our first direct investment in Cote d’Ivoire.
“We look forward to continuing to deliver on our mandate to drive development and create additional jobs by investing in and supporting companies in the Agribusiness and Manufacturing, Renewable Energy, Financial Institutions and Green Infrastructure sectors in Cote d’Ivoire.”