The project seeks to improve access for smallholder farmers and their cooperatives to commercial loans to purchase and install improved coffee processing equipment and to purchase and export the resulting high quality coffee produced. CABI coordinates grant based activities while Rabobank coordinates the loan operations and also provides co-financing. ILLY Cafe is also expected to provide co-financing to the project. The local participating banks (Cooperative Bank of Oromia and the Banque Populaire du Rwanda) benefit from capacity building in credit assessment and management. The CFC provided USD 2,000,000 as a collateral to support a risk sharing solution between local lending banks, Rabo Rural Fund and CFC.
The project addresses five components: (i) Access to commercial loans by smallholder coffee farmers, (ii) Scaling up and out improved coffee production and processing practices, (iii) Strengthening of primary cooperatives and Unions in order to make them bankable, (iv) Enhanced access to production and market information, and (v) Project coordination, supervision and monitoring.
The project has improved the productivity and quality of the coffee produced by the farmers in Rwanda and Ethiopia. Farmer cooperatives that have remained active through the project have increased the volume of cherry produce ranging between 2% and 114% between 2011/12 and 2013/14, with the exception of one cooperative (Turengerekawa) which has shown a decline of 10%.
The project has highlighted that a well organised and functioning market plays an important role in determining the financial performance of the farmers. While access to participating banks has been limited, there has been a significant increase in access to finance through the Cooperative Unions in Ethiopia. 35% of the participating cooperatives accessed their finance through these Unions. In total 56% of the cooperatives gained access to finance through a commercial bank or a union. In Rwanda, the role of service providers in providing finance and access to markets remains dominant. These service providers play a risk mitigation role for the smallholder farmers but at an exorbitant cost to the smallholder farmer. The challenge for the Rwanda coffee farmers is how to make best use of these service providers, make the market activities transparent and lower the cost of their services.
The institutional environment in which the farmers are supported is managed to ensure that leaders of farmer cooperatives are able to share with other members and farmers what they have learnt to increase sustainability. In addition to this, the financial education provided increases in sophistication commensurate with the leaders’ increasing responsibilities, instead of repeating the basic training at all levels of leadership.
The results of the project were shared and discussed with farmers and relevant stakeholders at a final workshop in November 2016. The end-of-project report will be available by mid-2017.
|Submitting ICB:||International Coffee Organization (ICO)||Project:||CFC/ICO/48|
|Project Executing Agency:||CABI and Rabobank International Advisory Services (RIAS)||Country:||Rwanda and Ethiopia|
|Total Cost:||USD 8,013,240||Commodity:||Coffee|
|CFC Financing:||USD 1,240,210 (Grant) (USD 600,000 financed by OFID)
USD 2,000,000 (Loan Guarantee)
|Project Type:||Ongoing Regular Projects|