africaJUICE

completed

The proposed investment consists of a preferred equity investment of US$6million to africaJUICE B.V. (“aJ BV”). aJ BV was established in 2007 as a holding company which owns an 81% stake in africaJUICE Tibila Share Company (“aJ TSC” or the “Company”), the first FairTrade certified tropical fruit juice producer (mainly passion fruit, mango and papaya) in sub-Saharan Africa (SSA) and based in the Upper Awash region of Ethiopia. The proposed financing package will be supported by the Private Sector Window of the Global Agriculture and Food Security Program (“GAFSP”). GAFSP funding plays a catalytic role to create opportunity to support innovative private sector investments and deliver a level of additionality and impact beyond what is possible through IFC’s regular operations. aJ TSC began its operations on April 9th, 2009 when it took over operational/management control of the state-owned Tibila Farm, formerly part of the Government of Ethiopia (GoE) owned Upper Awash Agro-Industry Enterprise (UAAIE), which was acquired through a privatization process from the Ethiopian Privatization and Public Enterprises Supervising Agency (“PPESA”). The Tibila Farm consists of 1,600 ha of agricultural lands that were established more than 50 years ago. The farm consists of three geographically separate units, namely Membere Hiwot (215ha), Tifshete Genet (855ha) and Degaga (267ha). Out of the total land holding, there are presently 1,200 ha under direct production. Of these, 117 ha are presently under drip irrigation at Degaga Farm (in addition to 10ha from out growers) while the remaining are under furrow irrigation. The farm produces passion fruit, papaya, oranges, mangos and seed maize. In addition, the Company built at Membere Hiwot site a European Union compliant multi-fruit processing facility which was commissioned in November 2010. The production capacity of the plant is 6 tons/hr for passion fruit and 3 tons/hr for mango. Over 1,400 tons of juice products have been exported to date, mostly to Europe. The Company is seeking to transition into its next stage of growth by adding production volumes and product diversity. The plan is focused on fully realizing the passion fruit potential of the Company’s existing farm and its out growers and on diversifying its product base with the development of three new strategic crops (pomegranate, acerola and lemon) as well as expanding its processing capacity. The out grower program will be expanded to incorporate 1,000-2,000ha of smallholder passion fruit farmers. As such, the specific scope of the investment will encompass the following: i) expansion of existing Tibila farm land for primary production to develop three new crops (pomegranate, acerola and lemon); (ii) further installation of drip irrigation systems into passion fruit plantations at all farm units; (iii) expansion of the out grower program to reach an incremental 1,000 small scale passion fruit farmers over the next seven years (equivalent to 1,000ha), from existing 60.5ha of smallholder passion fruits producers; and, addition and upgrading of the processing lines for increasing processing capacity (the “Project”). The Project will allow the Company to enhance its own and third-party production volume and diversify product lineups as well as to reinforce its balance sheet. While all IFC’s Performance Standards (PSs) are applicable to this investment, IFC’s environmental and social due diligence indicates that this investment will have impacts which must be managed in a manner consistent with the following Performance Standards:- PS1: Assessment and Management of Environmental and Social Risks and Impacts- PS2: Labor and Working Conditions- PS3: Resource Efficiency and Pollution Prevention- PS4: Community Health, Safety and Security- PS5: Land Acquisition and Involuntary ResettlementIssues related to PS6: Biodiversity Conservation and Sustainable Natural Resources Management, PS7: Indigenous Peoples and PS8: Cultural Heritage are not expected with this investment for the following reasons: the proposed primary production expansion of aJ TSC will be located within Tibila farm existing footprint and on agricultural area presently used for commercial agriculture activities. As such, there will be no conversion of natural/critical habitats leading to biodiversity loss. In addition, aJ TSC’s outgrowers program will be supporting existing subsistence farmers to diversify their production for passion fruit production, to a maximum of 40% of their existing agriculture plots (on average, less than 1ha) in order to increase their revenue, mitigate weather risks through improved water availability and ensure sustainable food security, through inter-cropping practices; there is no presence of Indigenous Peoples or known cultural artifacts within the Company’s operational footprint. In the event that issues anticipated by these PSs arise, aJ TSC will promptly inform IFC. Screening and assessment of these issues against PSs requirements will be done through the Company’s E&S management system (ESMS).