US$4m loan to revive Burkina Faso’s cashew market
With support from the African Development Bank (AFDB), Burkina Faso has been awarded a US $4-million loan from the Climate Investment Funds’ Forest Investment Program (CIF FIP), to revive its cashew sector and mitigate climate change, working through an innovative public-private sector business model between the national union of farmers’ cooperatives and the government.
The “Climate change mitigation and poverty reduction through the development of the cashew sector in Burkina Faso” project is funded under FIP’s innovative Private Sector Set-Aside Program*, and will include three sets of activities:
Enhancing cashew production through the plantations with selected varieties and improved management practices; Improving cashew processing capacities; and Strengthening the capacities of the national-level Wouol Farmers’ Association and its members, especially in terms of agricultural product trade (higher quality, stronger networks) and Agroforestry.
Ultimately, the project is designed to: mitigate climate change by sequestering carbon in cashew tree plantations and reducing forest degradation and deforestation; restore degraded soils, the reason for which cashews were originally introduced into Burkina; increase rural incomes, especially for women; and showcase certified organic and fair trade agriculture’s economic profitability and environmental sustainability.
“The cashew market has a very important dual role in helping Burkina Faso mitigate climate change and reduce poverty,” said Laouali Garba, AfDB’s task manager for Burkina’s FIP program. “The cashew tree is an important reforestation tree for preserving the environment and improving soil fertility. This value, combined with the business model of engaging local farmers and helping them transition to organize farming and sustainable trade, makes this project unique, and at AfDB we are very pleased to partner with Burkina Faso and FIP to help it succeed.”
The project is particularly critical right now, Garba explained, because the country cannot fully benefit from the cashew market, since local processing companies have trouble accessing funding, and most of the cashews are exported as raw nuts. Addressing both of these concerns is an important part of this innovative private sector based project.
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The project is unique because of the business arrangement between the government and the Wouol Farmers’ Association, which will serve as the market producer for the cashew industry. In Burkina, the Wouol Farmers Association is a national level organization uniting 69 farmers cooperatives with more than 2,500 farmers, of whom more than 70% are women. Although it is a non-profit organization, it generates margins that are 100% reinvested in the business to support members’ economic development, and is recognized as a private sector entity by the government. To secure financial success of this unique arrangement, with the support of the AfDB, the Government has agreed to guarantee it to the communities by borrowing the loan and investing it for development of the cashew value chain in the form of micro-credits through a financial intermediary, Réseau des Caisses Populaires du Burkina (RCPB).
Significantly, the project will not fund plantations that involve clearing forests or cutting trees. Compliance with this measure must be evidenced by the production of a certificate provided by the competent authorities. Plantations will be done on degraded and abandoned land due to their low agricultural productivity or to reinforce existing plantations. The Agroforestry plantations will therefore aim to achieve a dual objective of restoring soil fertility for agricultural activities and increasing cashew production through improved yield plantations.
The cashew market has a very important dual role in helping Burkina Faso mitigate climate change and reduce poverty,” said Laouali Garba, AfDB’s task manager for Burkina’s FIP program.
In 2013, Burkina Faso was one of eight countries from around the world selected by FIP to participate as pilots in a special Private Sector Set-Aside Program (PSSA). Under FIP, more than US $50 million in concessional funds was set aside in 2012 for the PSSA to contribute to financing innovative programs and projects that engage the private sector in reducing emissions from deforestation and forest degradation and promote sustainable forest management.