Source: Overcoming Lending Risks

The IFC International Finance Cooperation – a member of the world bank – has partnered with Ethiopia Nib International Bank S.C. to help it increase lending to 70 coffee farmer cooperatives.

IFC has extended a risk-sharing facility worth up to $10 million to NIB, which, through loans to the cooperatives, should help them increase the volume of coffee they process from about 460 to 4,000 metric tons, generating about $17 million in export revenues and creating 2,000 jobs, more than half of which will likely be filled by women.

Although Ethiopia boasts Africa’s largest coffee industry and is the source of some of the world’s finest coffee, the country’s smallholder farmers often cannot access financing to grow their businesses and increase production.

Banks are often unwilling to lend to coffee farmers because they lack collateral; the complexity of the loan appraising process and weather-related risks also limits the appetite of banks to lend.

The risk-sharing facility is designed to overcome these obstacles and encourage lending to Ethiopia’s coffee producers because IFC and NIB will share these risks, meaning more farmers will qualify for loans. … more