MAXIMIZING FINANCE FOR DEVELOPMENT AFGHANISTAN Improving Yields and Incomes for Raisin Farmers Through Markets Highlights of World The World Bank Group is supporting a transformation in Afghan- Bank Group Support istan’s underdeveloped raisins sector to recapture its former sta- tus as a world-class producer and exporter. Collaborative inter- The World Bank is providing $190 ventions range from the farm level, to facilitating private sector million through IDA support to investments, to developing modern processing, to strengthening enhance farmers’ agricultural practices and introduce new technologies such global competitiveness. as raisin drying and handling through an existing project. They also allocated Development Challenge $3.1 million through the IDA18 IFC- Less than 40 percent of Afghan raisins produced are exported because of MIGA Private Sector Window to sup- shortfalls in technical expertise, quality, and food safety standards. About port MIGA guarantees. 70 percent of exported raisins are traded with little or no processing, and at deep discounts relative to those from neighboring countries. The country also IFC will provide a working capital faces a highly volatile business environment, absence of efficient regulatory facility of up to $2.5 million and a long-term loan up to $500,000 as an frameworks, and the unavailability of funding sources and de-risking tools for advisory for investment product. investors in the private financial market. MIGA will provide guarantees against The MFD Approach the risk of war and civil disturbance The World Bank Group’s efforts began with support to hundreds of grape to cover the investors’ equity and qua- farmers by establishing modern raisin drying houses and technical assistance si-equity investments of up to $7.8 under an existing IDA-funded project. IFC and MIGA are collaborating million. to catalyze private sector investments in Rikweda Fruit Process Company (Rikweda) to support a greenfield, modern, local, raisin processing project using the private sector window of the Global Agriculture and Food Security Program (GAFSP) and the IDA 18 Private Sector Window MIGA Guarantee Facility (MGF) respectively. The private sector solution Creating markets Agriculture is key to the Afghan economy, contributing The investment, advisory interventions, and guarantees 25 percent of the country’s GDP and providing liveli- will lead to doubling the country’s raisin processing hoods for more than 80 percent of the population. The capacity and improving quality by implementing modern country has the ideal climate to produce raisins—giving processing technology and food safety practices. Local them a distinctive taste—and in the 1970s supplied about raisin farmers will gain access to global export markets, 20 percent to the global market. Since, the sector has which will support sustainable livelihoods for close to suffered due to recurring political instability and security 3,000 rural smallholder farmers. The introduction of a concerns. To encourage further growth, Afghanistan is crop that offers sustainable access to global markets will seeking to maximize the potential of raisins to resurge as create spillover effects for the Afghan rural population, an export commodity through private sector participa- including women, who have long relied on opportunistic tion. farming. Rikweda is being developed with the support of IFC’s working capital financing and advisory services for a total Making a difference investment of up to $3 million and MIGA’s guarantees IFC’s advisory program will help Rikweda improve to cover up to $7.8 million to cover equity investments financial management capacity, food safety standards, and and loan guarantees. IFC and MIGA’s interventions are linkages with smallholder farmers. made commercially viable despite the high risks involved The Rikweda project is expected to have a long-term in the investment by innovatively using blended finance impact beyond the scope of just one raisin processor. solutions. The most significant expected impact is derived from The Rikweda project will be linked to IDA’s existing improved yields and incomes for about 3,000 small-scale National Horticultural and Livestock Project (NHLP) local farmers due to a relationship with a reliable pro- with their support of $190 million. The objective of cessor. The project is expected to raise selling prices for NHLP is to introduce new agricultural practices and help raisin farmers in the region by 15-20 percent compared to farmers enhance their productivity levels and comply current market prices by ensuring uninterrupted sales and with international standards. A large number of raisin eliminating intermediaries in the procurement. drying houses are being constructed—owned by farmers who will eventually be integrated into the supply chain of Rikweda. Without the collaborative efforts of IFC and MIGA, sup- ported by $3.1 million from the IDA 18 IFC-MIGA Pri- vate Sector Window, the Rikweda project would not get off the ground. IFC’s involvement went beyond providing affordable financing by sharing industry comprehensive guidance to the client ranging from advising on plant and storage capacity designs, recruiting a financial and operational management team, to brokering negotiations with potential buyers in potential export markets. MIGA’s involvement in the project provides Rikweda with strong and long-term reassurance of business continuity in such a fragile business environment and helps them reach financial closing. MFD BRIEFS 03/2018 WHAT IS MFD? Achieving the Sustainable Development Goals to end extreme poverty by 2030 will require about $4.5 trillion annually, far more than multilateral development banks or donors can provide by themselves. To face this challenge, the WBG adopted the MFD approach, which entails working with governments to crowd in the private sector while optimizing the use of scarce public resources. This ap- proach is guided by the Hamburg Principles adopted by the G20 in 2017 and builds on the substantial experience across the institution. www.ifc.org www.worldbank.org www.miga.org