MAXIMIZING FINANCE FOR DEVELOPMENT CÔTE D’IVOIRE Improving Opportunities through Cashew Value Chains Côte d’Ivoire’s cashew subsector has strong potential for growth Highlights of World if the value chain, and especially local processing, can improve. A new World Bank project, the largest to date in the subsector, Bank Group Support is cutting regulatory costs; developing industry associations; providing farmers with quality stock, inputs, and better extension services; improving cashew storage and upgrading processing The World Bank is providing $200 technology; expanding access to markets with better roads; million for a cashew project for small- raising environmental and social standards; and encouraging holder farmers and the industry as local banks to lend to smallholders and processors. a whole, in a country where the al- ready-vibrant private sector is growing rapidly and creating jobs Development Challenge Cashews are Côte d’Ivoire’s third-ranking export after cacao and refined petroleum products, and a crucial source of cash for smallholders and processors in the poorer north IFC is promoting cashew industry op- of the country. Although Côte d’Ivoire produces 23 percent of the world’s cashew supply, portunities to local banks, including worth $800 million, fewer than 7 percent of raw cashew nuts are processed domestically. with a risk-sharing facility. It is scaling This reflects from lack of finance to upgrade or build modern processing facilities, and lack up both a mechanism to improve ac- of access to working capital. Low yields and quality result from poorly maintained plan- cess to finance for producers and pro- tations, a lack of quality stock and inputs, weak extension services, losses in post-harvest cessors, and an information technol- handling and storage, and lack of finance to make improvements. ogy (IT) platform for environmental permit applications The MFD Approach Building on lessons learned in the cocoa, rubber, cotton, and cashew value chains, the new cashew project aligns with the IFC-World Bank agribusiness strategy of reforming sector governance and improving access to markets, technology, and training. The World Bank’s investments will help the government concentrate scarce public funds on sector policy, institutional, and infrastructure development, while IFC provides innovative financing to Photo © Virginia Yunes/iStockl catalyze local private credit across the value chain. Setting up the regulatory and institutional In 2016, following IFC support, the government legalized a Ware- framework house Receipt System (WRS) that enables processors to use unpro- cessed nuts as collateral for working capital loans. By 2017, IFC’s The World Bank-financed Cashew Value Chain Competitiveness risk-sharing facility was encouraging local banks to make the first Project will: step toward WRS loans of $16 million to processors. Under the • Support national organizations overseeing the value chain in new project, the World Bank Group will continue promoting the managing stakeholder relations, providing training in quality cashew industry to local banks, offering a risk sharing guarantee, control and marketing, promoting membership in professional and establishing an online registry of WRS borrowers for banks organizations, and facilitating the legal registration and devel- to check before making new loans. Based on IFC’s 2014−18 pilot opment of cooperatives of an IT platform for environmental permit applications, which cut processors’ costs from $22,000 to $10,000, IFC will scale up • Assess the regulatory costs for selling, buying, and trading ca- the platform nationwide. IFC will also continue seeking private shew products in comparison with competing countries, and investors to finance cashew storage and processing facilities, either recommend improvements on their own or in public-private partnerships with the cashew • Scale up cashew industry-wide deployment of IFC’s IT plat- processing platforms. form for environment permit applications, ensure that proces- sors meet environmental and social standards, and conduct an Expected results environmental awareness campaign for processors About 225,000 cashew farmers are expected to benefit from these • Build a specialized lab as well as improve researchers’ knowl- interventions, and through improving quality, raise their annual edge and skills for propagating high-performing cashew variet- raw cashew yields by 20 percent, which by the end of the project is ies, combatting pests and disease, and supporting local nurser- expected to result in a substantial increase in income per hectare. ies in growing seedlings for smallholders Through projected processing investments, an estimated 12,000 • Improve extension services by developing materials, providing direct jobs will be created—half of them done by women— which e-extension, and hiring, training, and equipping more govern- will contribute to achieving the government’s 2020 goal of cutting ment and private providers of services poverty in the country’s north from 70 to 35 percent. • Rehabilitate about 1,600 kilometers of feeder roads to improve Other important beneficiaries will be cashew processors, storage smallholders’ access to markets, and organize and equip com- facility owners, and traders who will access new technology, train- munity associations to maintain the roads ing to improve quality and environmental and social standards, • Advise government, processors, and traders on marketing pro- investment and working capital, and links to new markets. These cessed cashew nuts and by-products (shells and cashew nut processors’ size will range from medium to large, with a processing liquid) capacity of 3,000 to 10,000 tons per year. Public institutions should benefit too from better managing and Strengthening the value chain regulating the cashew industry, and banks should gain from un- In partnership with the private sector, the World Bank-financed derstanding the opportunities and needs across the whole cashew project will build and equip four cashew platforms and train their value chain. staff. These platforms will demonstrate processing innovations and best practices, efficient collection of by-products, and good man- agement, as well as value addition. Eight satellite hubs will enable farmers in outlying districts to link with processors more easily, as well as access training, market information, and quality inputs. MFD BRIEFS 06/2018 “The project focuses on increasing integration of the cashew value chain in Côte d’Ivoire for two reasons: (a) poverty is more prevalent in the Northern part of the country where cashew production is primarily located; and (b) the cashew value chain is clearly a key source of growth that can generate inclusive rural employment through both farming and rural industrialization.” —Simeon Ehui, World Bank Agriculture Global Practice Director WHAT IS MFD? Achieving the Sustainable Development Goals to end extreme poverty by 2030 will require about $4.5 trillion annually, far more than multilat- eral development banks or donors can provide by themselves. To face this challenge, the World Bank Group adopted the MFD approach, which entails working with governments to crowd in the private sector while optimizing the use of scarce public resources. This approach 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