Guidelines for Operations of the CFC

Vision and Mission of the CFC:

The CFC will contribute to

1. Social and economic development,
2. Access to food, and
3. Integration of Developing Countries with international and regional markets through sustainable value addition to commodities and related value chains in a transparent manner.

CFC’s Approach:

The CFC’s aim is to realize the potential of commodity production, processing, manufacturing, and trade for the benefit of the commodity producers. The CFC will fund practical measures that are commercially viable, financially sustainable, and scalable and have a broad developmental impact on stakeholders in the commodity value chains.

Operating Principles:

The CFC in active consultations with governments, investors, and NGO’s, will formulate and implement programs in the commodity sector. It will finance commodity development interventions in conjunction with governments, international organization and new partners through risk taking loans which will generate return on investment. It will involve private sector representatives as well as NGO’s and knowledge institutes as advisors on strategy, operational capacity, and dissemination of results. It will also operate as a paid service provider for the private sector, NGO’s, etc.

The CFC will seek applications from all interested parties including the International Commodity Bodies (ICBs) for financing of measures and actions for commodity development through an open call for proposals. All proposals received including those from ICBs will be subjected to a common approval process.

Objectives of CFC’s projects:

The objectives of the CFC supported interventions are to create employment particularly for youth and women, increase household incomes, reduce poverty, and enhance food security. The CFC will support measures and actions targeted at improving competitiveness of commodities and building of effective and cost efficient collaboration of producers, industry, governments, civil society organisations and other stakeholders for commodity based development.

Type of Projects:

The CFC will target its support at each commodity value chain link, i.e. increasing production and productivity, enhancing value addition, increasing access to markets and reducing risks by financing innovative measures and actions. All interventions must have a positive social impact on the stakeholders in the commodity value chains. Through financial support, the CFC seeks to promote innovation to encourage established organisations, institutions, and enterprises to extend their core activities in ways that create additional economic and livelihood opportunities in the commodity sector.

Partner Institutions:

The CFC partner organisations can be bilateral and multi-lateral development institutions, cooperatives, producer organisations, small and medium enterprises and trading companies; and local financial institutions or other intermediaries which on-lend to the commodity sector Institution. The CFC will also actively participate and collaborate with selected investment Funds which target at providing finance for strengthening small-holder based commodity supply chains, agribusinesses, food and beverage production and processing, and supporting infrastructure.

Financing Instruments:

The CFC finance will mainly be in form of loans, “returnable grants”, equity, quasi equity, lines of credit and guarantees. A grant funding window is being maintained to support specific new activities or support the loan based projects.

Size of interventions:

1. Grant funding: CFC contribution ranging from USD 60,000 to USD 500,000 per project,
2. Projects targeting specific commodity issues: Financing with outlay per project in the range of USD 60,000 to 1,500,000 mainly targeted to for-profit organisations and social enterprises operating in commodity sector, and
3. Development Partnerships: The CFC will leverage and pool its resources to collaborate with other bi-lateral and multi-lateral agencies and social investors for supporting private sector development in commodities.

Expected Outcomes:

Direct positive impact on incomes of low income commodity chain participants and on social enterprises or for profit organizations engaged in commodity production, processing, trade and manufacturing. Mobilization of resources from development partners for commodity development. Establishment of development partnerships for supporting private sector development in commodities. Enhancing international cooperation and scaling up of successful interventions after conclusion of direct CFC involvement.

Selection Criteria:

Each intervention shall be assessed with respect to innovation, commercial viability, financial sustainability, development impact, scalability and potential for growth, including replication to other areas and markets and environmental and social sustainability.

Contribution by the Applicant Organisation:

The applicant organization is expected to provide matching funds at least equal to, or greater than, 50% of the total cost of the project and at least half of their contribution must be in cash.

Selection Procedure:

The initial application will be assessed internally by the CFC Secretariat. Proposals meeting the eligibility criteria will be submitted for assessment by the Consultative Committee (CC). The proposals that are considered to have the greatest positive impact on the stakeholders in the commodity value chains by the CC will be invited to prepare a detailed proposal. The final selection of proposals will be made by the Executive Board.

Evaluation:

A suitable monitoring and evaluation system to assess the impact of CFC supported intervention is an integral part of CFC operations. Baseline data for each intervention will be collected. At the completion of the intervention an assessment of the outputs and development impact shall be made. Lessons learnt will be incorporated in the design of future interventions.