Food & Climate
The International Finance Corporation (IFC) supports sustainable agriculture in North Africa, as well as the region’s food production chain, not only by financing but also through technical assistance that ensures food safety. It is currently in talks with several Egyptian companies producing onions, tomatoes, strawberries, citrus fruits, and blueberries to invest in them, according to an IFC official who spoke exclusively to “Food & Climate”.
Nasser Kadiri, North & Home of Africa Agribusiness Hub lead in IFC, said: “We are not only investing in agriculture in North Africa, but also providing assistance to farmers in the countries of the region. We are not targeting traditional production, but rather sustainable production.” The IFC, the investment arm of the World Bank, participates in projects through investments rather than loans.
“Food & Climate” met with Kadiri during his participation in the recent American Chamber of Commerce conference in Cairo.
Kadiri considered investing in agriculture in North Africa, and in food production in general, to be beneficial for several factors related to low costs, especially in water and labor, in addition to the climate suitable for diverse agricultural products.
The IFC has numerous investments in Tunisia, Egypt, and Morocco, focusing on projects that produce for export. The following are the interview details:
How does the IFC support agriculture in North Africa?
We have ambitions to invest more in food and production. We don’t just invest, but also provide subsidies to farmers in North Africa. We don’t just target production, but sustainable production.
We have projects in almost all North African countries, such as Morocco and Tunisia, and in several sectors within the food industry.
The IFC’s investments vary between direct investment, through banks, and also through investment funds.
We have direct investments in Tunisia in olive and date production.
Can you shed more light on Tunisia’s olive projects?
The IFC finances investors who own at least 400 olive oil mills in Tunisia.
We finance the entire production chain, from agriculture to industry to export. The IFC not only provides financing but also technical assistance, such as how to ensure food safety and high-quality oil production, ensuring it is chemical-free.
These elements contribute to better exporting produce, making it acceptable in the American, European, and Canadian markets.
Agriculture in North Africa and all countries around the world faces problems related to climate change. How are you addressing this issue?
In the field of climate change in North Africa, we are working on two elements: water shortages and infrastructure. All North African countries suffer from water shortages, so we provide technical assistance to farmers to conserve water.
“What I mean is that technical assistance enhances the farmer’s ability to achieve better crops with less water and at a lower cost.”
IFC also assists in the infrastructure department in developing desalination projects.
In Tunisia, we implemented a tomato production project in partnership with the Netherlands. Due to the high cost of tomato production in Amsterdam due to energy and labor costs, they are seeking to produce them in Tunisia to reduce costs. This project benefits Tunisia in the form of job creation and the transfer of Dutch technology to the country.
However, Tunisia faces the problem of unsafe water, “but the water is being desalinated for the project, resulting in ultimately exportable produce.” The project is being implemented by a Dutch company, and the IFC is funding it with approximately $70 million.
It is also contributing to a second project in Tunisia, which is processing and exporting dates. Tunisia is an exporting country and employs 1,000 farmers.
There is a similar project in the potato sector with Egypt. Do you intend to participate in similar projects in Cairo?
Yes, and we are looking forward to working in Egypt with some of the crops it excels at producing, such as tomatoes, onions, and citrus fruits.
We did not have financing in the agricultural sector in Egypt, but we have funded industrial projects, such as Edita. The company obtained two financings: the first for a project in Morocco, established in partnership with a local company to produce Egyptian products there, in 2019. We executed a second financing for working capital for a project in Egypt.
We also executed another financing with Wadi Foods, a poultry company, in equity. This was some time ago, and we have since exited.
We are currently in talks with foreign and Egyptian companies, but we stipulate working across the entire production chain, providing technical assistance to farmers.
We cannot disclose the names of the companies. “When we sign an agreement with any company, we list its name on the website, and we cannot disclose it before that. We are making great efforts to assist these companies.”
We are in talks with companies in the fields of food processing, packaging, and agricultural production, including tomatoes, potatoes, citrus fruits, onions, strawberries, and blueberries.
We enter through companies that have relationships with farmers, and then we provide financing to the companies and technical assistance to the farmers.
Do the forms of investment financing differ between direct financing, bank financing, and investment funds?
We stipulate that bank financing be for specific companies, such as small companies, and we also require investment fund financing. They are all similar, and investment funds operate in general and are not specialized in the food industry. In most of the funds in North Africa, you will find the Foundation contributing to them, as it is difficult to do anything alone. Investment funds have specialized teams, and we invest with them, and then they invest directly.
What is the size of the Foundation’s investments in agriculture in North Africa, and in projects in the region in general?
Egypt’s investments this year amount to $1 billion. Tunisia’s investments are less than $800 million, and Morocco’s are between $800 million and $1 billion.
What are Morocco’s projects?
Morocco has a higher export competitiveness due to its proximity to Europe and its climate, which is suitable for many products such as citrus fruits, tomatoes, and strawberries. We are in talks with companies and also have investments there.
Climate change is affecting all countries in the world. How do you deal with it outside the region?
Yes, climate change is affecting the world. For example, in the United States, the southern regions are no longer suitable for agriculture.
In Spain, they also have labor problems.
But we invest in developing countries, so we do not invest in any location in Europe or the United States. Before any investment, we have industry specialists who study the location and determine whether it is promising for the next five or ten years. Our goal is for the farmer to continue this agriculture for a long time.
“In other words, I will not help a farmer in an area that lacks water, because that means there is no sustainability in the water supply.”
Profitability depends on the crop. Agriculture in North Africa for export is good because some elements, such as water, are inexpensive. In a country like Egypt, which has the Nile River, the only thing that is expensive in Morocco is electricity. “I mean, the cost is low in terms of water and labor.”