The International Finance Corporation (IFC) has partnered with Absa Group to extend a US$60mn commodity finance facility to support coffee merchant Volcafe’s operations in East Africa. 

The one-year facility comprises up to US$30mn each from IFC, the World Bank’s financing arm, and South Africa-headquartered Absa. 

The financing provides Volcafe with working capital to purchase coffee cherries from smallholder farmers and local traders in East Africa, as well as beans from auction systems, and to facilitate the processing, storage and transport of coffee for export. 

East Africa accounts for more than 80% of the continent’s coffee production, yet millions of smallholder farmers “lack access to relevant financial support, and crop production is impacted by the unpredictable effects of climate change”, IFC says. 

As well as boosting market access to more than 75,000 farmers, the facility also covers training on sustainable production techniques in order to increase crop resilience and profitability, it adds. 

Volcafe, which is headquartered in Switzerland, has agreed to align its operations with biodiversity and natural resource management standards set by IFC. 

“Agriculture is a major source of jobs in East Africa, and coffee is a major contributor to those livelihoods,” says Sérgio Pimenta, IFC vice-president for Africa.  

“We are pleased to work with Absa and Volcafe to ensure that farmers across the region have opportunities to realise the potential of their industry.” 

Tshimbi Ntuli, director of structured trade and commodity finance for Absa’s regional operations unit, says the collaboration “showcases our capabilities as a pan-African bank to work closely with development finance institutions that share our strategic vision of supporting Africa’s growth and development”. 

Melvin Wenger Weber, Volcafe’s chief financial officer, adds: “With this new facility, we will be able to engage more directly with tens of thousands of coffee farmers while bringing their produce to even more markets.” 

IFC previously partnered with Absa on a US$150mn facility in May 2021, providing the bank with Africa’s first ever certified green loan to fund renewable energy projects in South Africa.