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Export Trading Group Guarantee
Summary of Proposed Investment
This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
EXPORT TRADING CO.LIMITED
Eastern Africa Region
Grains and Beans
Date SPI disclosed
October 23, 2009
Projected board date
December 3, 2009
Signed: May 26, 2010
Approved: December 10, 2009
View Environmental & Social Review Summary (ESRS),
Export Trading Group (ETG) is a leading commodity supply chain operator based in East and Southern Africa. Its main businesses include (a) trading and distribution of agricultural products and fertilizers, (b) farming of maize, rice, soybean, wheat, etc., (c) processing of maize, pigeon peas, rice, etc. and (d) investments in information technology, mining, leisure, forestry and logistics. ETG is composed of about 75 entities (some of them dormant) and employs about 3,000 permanent staff.
ETG achieved strong growth in its trading operation due to the increase in the global demand for commodities and the group’s competitive positioning (strong origination, storage and transportation capabilities and diversification into new products and markets). To take advantage of its leading position, ETG plans to expand its trading operation by obtaining additional trade finance facilities (the “Project”). The proposed IFC investment is to provide guarantees for the trade finance facilities under the Project.
Project sponsor and major shareholders of project company
ETG companies are primarily owned by three majority-shareholders: Messrs. Mahesh Patel and Ketan Patel, both based in Dar es Salaam, and Pradip Patel, based in Nairobi. Mr. Mahesh Patel and Ketan Patel are the key sponsors of the Project, with about 40%:40% ownership in the Project related companies.
Total project cost and amount and nature of IFC's investment
ETG is in discussion with Standard Chartered Bank for the extension of trade finance facilities of up to $120 million to ETG’s trading affiliates, Agro Commodity & Finance FZE and Export Trading Company Tanzania Limited. The proposed IFC financing is to provide 50% guarantee for each of the trade finance facilities, with total IFC guarantee of up to US$60 million.
IFC investment as approved by Board
60 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
ETG is headquartered in Dar es Salaam and has regional offices in 12 countries including South Africa, Zimbabwe, Zambia, Malawi, Mozambique, Tanzania, Kenya, Uganda, Ethiopia, Sudan, United Arab Emirates, and India. The facilities under the Project will be used purchase of soft commodities for the import into or export from and from Tanzania, Nigeria, Zambia, Kenya, Malawi, Mozambique, Ethiopia, Uganda, Ghana, Ivory Coast, Guinea Bissau, Benin, South Africa and India.
Anticipated development impact of the project
• Support to and, access to markets by, small farmers: By increasing its purchase capacities, ETG would (a) offer outlets for small-farmers’ production which typically faces significant post-harvest losses and (b) contribute to reduce the price volatility of domestic crops in East and Southern Africa.
• Employment: New jobs will be created as part of the contemplated Project.
• Demonstration effect: IFC’s proposed investment will send a positive signal to the market at a time when many financial institutions are reducing their commitments to Africa and the agribusiness sector.
IFC's expected development contribution
provide or contribute to mobilize additional financing;
ultimately help ETG prioritize its investments, structure its selected projects, review its shareholding and reach high standards of operations and corporate governance;
the group will benefit from IFC’s global expertise and its past experience in this sector;
IFC's participation will provide confidence for potential investors to participate and support agricultural production in Africa; and,
the inclusion of IFC’s environmental and social sustainability standards and the monitoring of compliance by IFC will reinforce the group’s practices and have a positive impact on the sector.
Environmental and social issues - Category B
The Environmental, Health, Safety and Social (EHSS) impacts of the project’s operations are relatively limited. IFC’s review did not identify any significant adverse impacts. Issues to address, as captured in the attached Environmental & Social Action Plan, include:
· improvements in social and environmental management systems (including supply chain management, human resources, occupational health & safety monitoring and reporting, and fleet management),
· development of a pesticide management plan,
· improvement of life & fire safety arrangements at key storage facilities, and
· resolution of a resettlement-related issue at one of the Sponsor’s subsidiaries, i.e. ETC – Bio-Energy Limited’s Mpongwe Farm.
These matters can all be addressed using standard mitigation methods. Based on these considerations, this is a Category B project according to IFC’s Environmental & Social Review Procedure.
For inquiries about the project, contact:
9th floor, Harbour View Towers
P.O. Box 10295,
Tel : +255 767445520
Fax :+255 22 2112341
Email : email@example.com
For inquiries and comments about IFC, contact:
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Local access of project documentation
The project documentation for public viewing as agreed to between the Export Trading Group and the IFC can be accessed from the Export Trading Group via the Dar es Salaam Office (contact Vasudev Barkur) or via the Johannesburg office (contact Jean Craven). The full contact details are provided below.
9th Floor, Habour View Tower, Samora Avenue
P.O.Box 10295, Dar es Salaam, Tanzania
Tel: 255 22 211 6094 / 2117212
Fax: 255 22 211 2341 / 2112493
Export Trading Group
6th Floor, South Wing, Sandton City Office Towers
Cnr Rivonia & 5th Street, Sandhurst, 2196
P.O. Box 78637, Sandton, 2146
Tel: 27 11 783 5238
Fax: 27 11 783 5341