Whether natural resources are a blessing or a curse depends on how a country uses and manages them. The Common Fund for Commodities (CFC) is mandated to make use of a country’s commodities in ways that will bring income and prosperity for its people and the planet. CFC works to bring more income and productivity for the smallholders through a nexus between smallholders and the SMEs (small and medium enterprises) to localise the development through alleviation of poverty. In doing so, we try to provide priority to countries where poverty is widespread as are in LDCs (Least Developed Countries) and Landlocked Developing Countries (LLDCs).
CFC implements projects in partnership with governments, international organisations, and other development partners from both private and public sectors. These partnerships support commodity development measures and actions that promote and accelerate the development, expansion, and modernisation of commodity sectors so that elements of commodity dependence can be addressed.
A country is considered to be commodity export dependent when more than 60 per cent of its total merchandise exports are composed of commodities. Given that commodity dependence can have a negative impact on a country’s economic development, it is important to monitor the evolution of such dependence in countries throughout the world.
The CFC supports innovative commodity development financial interventions aimed at improving the structural conditions in markets and at enhancing the long-term competitiveness and prospects of particular commodities inter alia including:
- increasing earnings to sustain real incomes;
- enhancing sustainability in commodity value chain activities;
- promoting value addition and enhance the competitive position of marginalised participants in the value chain;
- contributing to enhancing food security; and
- promoting production, productivity, trade, quality, transfer and use of technology and diversification in the commodity sector.
The CFC exercises due attention to the fact that agriculture is a place-based activity and the strategies that reflects the local innovations clusters need to be acknowledge and factored in. As price takers, smallholders remain vulnerable to the fluctuation of the market and thereby making our job even harder.
Commitments, financing and disbursements
The operational guidelines of the Common Fund were originally adopted under the Agreement Establishing the Common Fund for Commodities and entered into force in 1989. They remained in force until 31st December 2012. Under these operational guidelines, the Fund approved financing for 217 Regular projects, plus a further 150 Fast Track projects, totaling 367 projects, with an overall cost of USD 606.5 million. The Fund financed USD 247.5 million of this total (excluding cancelled projects)1. CFC financing accounts for about 40% of the overall project cost. The balance of the project costs was co-financed by other institutions and by counterpart contributions, either in cash and/or in kind (USD 359 million or about 60%), provided by the Project Executing Agencies, collaborating institutions, governments, or International Commodity Bodies (ICBs). Financing of projects by the Common Fund under the original operational guidelines comprises USD 233.5 million in grants (96%) and USD 13.9 million (4%) in loans1.
Recognising the new challenges and opportunities facing the CFC Member Countries, led to adoption of the reform package of the CFC, including updated operational guidelines which became effective on 1 January 2013. Under the new operational guidelines, the Fund currently has 63 Regular projects plus a further 25 Fast Track projects, (a total of 88 projects) at various stages of preparation and implementation, with an overall cost of USD 367.6 million. In addition, the Fund is participating in 8 Investment Funds with Equity and partnership financing, which together have the total assets under management of USD 523.0 million. Of the total project cost of USD 367.6 million, CFC contribution totals USD 81.8 million or about 22%1. The balance account was paid as co-financing and/or counterpart contribution by the proponents under the new operational guidelines. The Fund financing comprises of USD 77.8 million in loans/equity etc. (95%) and USD 4 million in grants (5%)1.
According to the Fund’s audited statements, the direct project related disbursements in 2022 (unaudited) stood at USD 0.03 million as grant and USD 12.78 million as loan/equity etc. (for both Capital Account and Operations Account)2. Special efforts are in place to streamline the components of the Agreements between the Fund and the Recipient of resources to reduce the delays between the approval of project and commencement of actual implementation on the ground and more of these efforts will be in place in 2023.
The CFC has funded projects addressing over 70 different commodity products, in partnership with investment funds and equity investors. The commodities funded include abaca, arachis, bamboo and rattan, bananas, cashews, cassava, castor seeds, citrus, cocoa, coconuts, coffee, coir, copper, cotton, fish, fonio, groundnuts, gum arabic, hides and skins, jute, lead, maize, meat and livestock, medicinal herbs and plants, olives, palm oil, paprika, potatoes, rice, natural rubber, shea nuts, sisal, sorghum and millet, soybean, cane sugar, tea, timber, tropical fruits, spices, and zinc. Most of these are produced almost entirely in developing countries and in partnership with investment funds, among which are the Africa Agriculture & Trade Investment Fund (AATIF), African Agriculture SME Fund, Eco Enterprises Fund, Moringa Agro-forestry Fund, SME Impact Fund, and agRIF Cooperatief U.A.
