Velocity

pending

The proposed IFC investment in Velocity Dairy, Plc. (“VD” or the “Company”), a company registered in Ethiopia, is to support the construction and operational phase of an approximate €45 million greenfield dairy and juice processing plant located in Sululta woreda in Oromia region (25 km northwest of Addis Ababa, Ethiopia). The Project is sponsored by Velocity Capital Group (or the “Sponsor”), an investment vehicle of Mr. Willemstein, a Dutch investor. This is a co-investment with FMO, Financierings-Maatschappij voor Ontwikkelingslanden N.V., also known as the Netherlands Development Finance Company. The scope of the investment will encompass the construction of a state-of-the art dairy and juice processing plant (midstream) with a daily capacity of 70,000 liters of milk and 10,700 liters of juice (at full capacity, expected to be reached within four years after plant commissioning), related infrastructure work and the procurement of factory machinery and equipment (the “Project”). The plant will also include management offices, business administration offices, residential building, a quality control laboratory, training rooms for cooperatives from which VD will source its raw milk, wastewater treatment plant, diesel tank and 2 milk chilling centers. VD intends to produce pasteurized milk, Ultra Heated Treatment (“UHT”) milk with a long shelf life, butter, flavored milk, drinking yogurt and fruit juices to be marketed primarily in the local market. Velocity will adopt a value chain approach (from grass to glass) through the establishment of milk collection scheme (upstream) in order to secure sustainable sourcing of raw milk, from 7,000 farmers located in three milk shed areas in Ethiopia, namely Sellale, Assele and Debre Birhan. In addition, VD will establish a distribution and sales network for its finished products nationwide and to neighboring countries (downstream). Identified applicable performance standardsWhile 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 ResettlementPS6: 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 dairy processing plant will be located on an existing agricultural area presently used for livestock rearing and cereals production (wheat, barley and teff) and, as such, there is no conversion of natural/critical habitats. In addition, VD will be sourcing raw milk from cooperatives and family farms where cows and fodder are sourced from long established pasture/consolidated agricultural areas. Materials inputs for the production of juices will be sourced from Ethiopia (sugar, concentrate) and from imports (concentrate); there is no presence of Indigenous Peoples or known cultural artifacts in project’s footprint. In the event that issues anticipated by these PSs arise, VD will promptly inform IFC. Screening and assessment of these issues against PSs requirements will be done through the proposed dairy processing plant’s E&S management system (ESMS).