ACA organizes with success another Access to Finance (A2F) forum for cashew nut processing

On September 24, the African Cashew Alliance (ACA) organized another edition of the access to finance (A2F) forum for cashew processors in Cotonou, Benin in collaboration with BeninCaju (implemented by Technoserve Benin and CSR) and with the support of the Interprofession of the Cashew Value Chain (IFA), the forum welcomed 60 participants from among others Togo, Nigeria, Ghana and India. The forum was held in the presence of the Minister of Agriculture, Livestock and Fisheries, the Managing Director of ACA, the Country Director of Technoserve Benin, the Head of Mission for the BeninCajú project, banks and financial institutions as well as cashew nut processors from Benin and the sub-region. 

The purpose of this workshop is to define ways and means of reducing the gap in understanding between the demand for and supply of financing for cashew nut processors in West Africa on the one hand, and on the other hand improve knowledge on access to financial investment opportunities. In an effort to help understand why this gap exists from the perspective of the actors involved, a brief pre-workshop survey was conducted with both financial institutions and cashew processors operating in Benin.

After a successful opening, honored by the Minister, the day continued with the following program:

    • Presentation by ACA: Management of a cashew nut processing company
    • Presentation by BeninCajù: The results of the survey of financial institutions and processors
    • A round table discussion discussing experiences of investors and processors and respective visions for future access to finance solutions

The second part of the day was devoted to parallel sessions in small groups with financial institutions on the one hand (SME financing officers) and cashew nut processors on the other hand (processing plant management). The reason why the two groups of actors met in separate rooms was to create an intimate setting where candid discussions could take place. The idea is that we need to learn about the main challenges that make access to funding for cashew nut processing so difficult. Only in this way sound strategies can be developed to address the experienced bottlenecks. The format of the breakout session proved to be an opportunity for actors to highlight their main challenges and how they would like them to be addressed.

The end of the forum was marked by a plenary presentation of the breakout session results sharing the key messages received from each stakeholder group.

The recommendations made by financial institutions to cashew nut processors were as follows:

  1. Understand that banks are a profit-driven business and have negative experience working with the sector
  2. Have a robust business plan you can defend; respect the terms of the financing contract
  3. Create a sustainable organization with good governance

In return, the cashew nut processors' recommendations to financial institutions were:

  1. Have a better understanding of the sector and its cash cycle
  2. Cost of credit (including any applicable fees) should not exceed 10%
  3. Diligently apply BCEAO regulations on receipt of foreign funds to encourage fair competition for buying RCN

[PDF icon workshop output document]

Finally, based on discussions throughout the day, we heard two consistent messages:

  1. Cashew processors are looking for financing partners willing to share in the risk, which implies they should focus on a strategic shift away from traditional credit instruments, and towards working with institutions willing to provide equity investment
  2. Financial Institutions are looking for even more support in terms of technical assistance if they decide to lend to cashew processors. Structures like ACA and BeninCajù can provide some of this technical assistance [i.e. PDF icon BeninCajù infosheet; ACA services]

Continuing along this path, the ACA and BeninCajù are discussing plans to facilitate better access to funding through targeted one-on-one meetings between the two parties.

Following the success of this forum, the ACA and its partners would like to thank all those who took part! We look forward to welcoming you to our next workshop on access to finance for cashew processing. Stay tuned to our website for updates or subscribe to our mailing list by sending an email to aca@africancashewalliance.com

 

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