Trade Credit Guarantee Project in Côte d’Ivoire and Ghana
Project Title: Trade Credit Guarantee Project in Côte d’Ivoire and Ghana
Project amount: $4 million: AFFM ($2 million) and OCP Africa ($2 million)
Approval date: September 2020
Closing date: End of 2023
African agriculture is at a turning point. The continent is currently exploiting its agricultural potential by taking advantage of its vast resources to help feed its growing population. However, smallholder farmers, who account for more than 80% of agriculture production, face major difficulties, such as lack of skills, inputs, finance, and market access. All these obstacles prevent smallholder farmers from improving the productivity of their farms, and hence keep them at a subsistence level.
Despite the significant contribution agriculture makes to the economy of Côte d’Ivoire and Ghana (20% of GDP for Côte d’Ivoire and 17% for Ghana), only 2% of commercial loans go to agriculture in both countries. These challenges can be explained by two factors: lack of reliable collateral, especially land tenure, and lack of affordable financing in the sector.
Through the Agribooster initiative, the Africa Fertilizer Financing Mechanism (AFFM) and OCP Africa use an inclusive approach to provide farmers access to quality inputs, training, finance and market linkages in order to increase their yields, incomes and livelihoods.
OCP Africa will implement the project in Côte d’Ivoire and Ghana. OCP Africa will work with other stakeholders along the fertilizer value chain to achieve the objectives of the project.
In Côte d’Ivoire, OCP Africa will work closely with aggregators like O’riane Industries and Agricultural and Management Company Food and Commerce – two companies involved in rice processing and development in Côte d’Ivoire.
OCP Côte d’Ivoire and Syngenta CI will supply fertilizer and crop protection products to aggregators. Agence pour le Développement de la filière Riz en Côte d’Ivoire (ADERIZ) will supply rice seeds and mechanization to aggregators. For technical assistance, the Bureau de Formation et de Conseil en Développement (BFCD) will train farmers in good agricultural practices and monitor field activities.
In Ghana, OCP Africa will collaborate with input importers like Omnifert to supply aggregators with fertilizers and other inputs. AGS More, a technical assistance provider, will help increase productivity by providing the best agricultural practices to smallholder farmers in the maize and rice value chains.
The goal of the Agribooster trade credit guarantee project is to improve agricultural productivity and smallholder farmers’ incomes by providing them with timely access to high-quality inputs. The specific objective of the project is to support an efficient increase in fertilizer application.
Trade Credit Guarantee Implementation
The trade credit guarantee will enable fertilizer suppliers and aggregators to access fertilizer on credit from OCP Africa. Under this program, farmers in both countries are to provide at least 20% of the cost of fertilizer upfront, with the remaining 80% to be paid after harvest via the importers in Ghana and aggregators in Côte d’Ivoire.
In Ghana, OCP Africa will sign a commercial contract with the importers, who will have a similar agreement with the aggregators. OCP Africa will then deliver the fertilizers at cost and freight (CFR) to the importers, who receive a subsidized quota. Finally, the importers will supply the fertilizers to the aggregators, who in turn deliver the input to the farmers. Where importers are unable to provide the minimum guarantee, products are delivered to importer warehouses and collateral management is put in place to supervise the delivery. In Côte d’Ivoire, OCP Africa will deliver the fertilizer directly to aggregator/off-taker warehouses. After that, the aggregators will distribute the input to the farmers.
Training for farmers
The project will facilitate technical assistance for smallholder farmers to increase their yield and income through capacity building. Producers will receive theoretical training on the following topics: good agricultural practices (technical itinerary and reasoned fertilization); governance; financial management; sales techniques; and managing external relations. Practical training will be provided during agricultural campaigns to ensure the theoretical part of the training is appropriately implemented. The technical support provider (TSP) will supervise the step-down training of the farmers. The extension officers, in turn, will train the farmers in their communities. The training involves pre-season, in-season and post-harvest sessions.
In Côte d’Ivoire, the implementation will cover the following regions: Agneby-Tiassa, Nawa, Tonkpi, Cavally, Guemon.
In Ghana, the project will cover the following regions: Bono East, Eastern, Northern, North East, Oti, Upper East and Upper West.
In Côte d’Ivoire, the three-year project will benefit 180,000 smallholder farmers, including 54,000 women, who will have access to inputs and be linked to input suppliers and aggregators. The project is expected to boost rice yields by 30%.
In Ghana, the project will benefit 250,000 smallholder farmers, including 50,000 women, who will have access to inputs and be linked to input suppliers and aggregators. Activities are expected to boost productivity and help increase rice and maize yields by 35%.