New tool boosts SME financing in West African cashew sector
Finding reliable financing is a major challenge for cashew processors in West Africa. To solve this problem, CBI and Oikocredit piloted a new tool called "Cash-flow Let Cashew Flow". This tool helps cashew processors improve their financial management and efficiency. It has already shown great potential to transform the cashew industry. The promising outcomes of this pilot project could benefit other agricultural smallholders within and beyond the cashew sector.
Addressing the financing problem
Building stronger and more sustainable sectors requires small and medium-sized enterprises (SMEs) to have access to finance. Cashew processors in countries like Côte d'Ivoire often struggle to get the funds they need, such as working capital. Problems like informal trading, lack of financial knowledge, and poor record-keeping make them less eligible for loans.
In November 2022, Côte d'Ivoire's cashew sector association (GIC-CI) shared these concerns with CBI. In early 2023, CBI asked Oikocredit to help solve these issues. As a worldwide cooperative and social investor, Oikocredit provides loans for capital expenditure and working capital to the cashew sector. Together, the partners created a tool to help small- and medium-sized cashew processors improve their financial management.
How the "Cash-flow Let Cashew Flow" tool works
The "Cash-flow Let Cashew Flow" tool was designed to help cashew processors manage their cash flow and business planning. It includes:
- Monthly revenue forecasts to help with planning and decision-making;
- Key performance indicators (KPIs) to monitor financial health;
- Comparisons of planned versus actual results to measure progress;
These features give processors and investors clear information about a business's finances, which is key for getting loans and investments.
Collaboration for success
Oikocredit focuses on working with local processors that supply to recognised international buyers. Using their experience in funding cashew processors, Oikocredit partnered with CBI for technical support. The 2 partners helped these SMEs meet their capital needs and improve financial business practices.
Two large cashew processors, EcoCajou SA and Cilagri SA, tested the tool in Côte d'Ivoire for a year. Both companies work with about 5,000 small farmers, buying raw cashew nuts and improving their financial practices.
CBI played an essential role by:
- finding and bringing together partners to test the new business monitoring tool;
- offering the factories technical advice, complementing Oikocredit's financial knowledge; and
- partnering with local groups like sector association GIC-CI to promote the tool for future use.
Positive results and challenges
The pilot phase brought some insightful lessons. For EcoCajou, it was hard to connect production and financial data initially because of outdated accounting systems. Over time, however, the tool provided more precise insights into their cash flow and business performance. These insights allowed the company to make better financial decisions.
Other pilot results include strengthened partnerships between processors, local groups, and international financiers. During the pilot phase, GIC-CI hosted an event to showcase the tool's benefits.
A path to sustainable growth
The success of this pilot shows that the "Cash-flow Let Cashew Flow" tool can improve financial inclusion and efficiency in the cashew industry. The tool could also be adapted for other agricultural sectors.
Jules van Son, programme manager at CBI: "By developing this business monitoring tool, we made a useful first step towards financial inclusivity. With this practical tool, agro-processors can actually start working on getting a better overview of their cash flow. This insight is a crucial condition to demonstrate eligibility for financing. We see great potential in further developing it with partners in a different country-sector combination."
The next steps include GIC-CI creating training materials for processors. Also, Oikocredit may explore how the tool can be used in other areas. Oikocredit: "We believe developing the tool further promises to unlock new opportunities and drive sustainable growth in the cashew sector and beyond."
Expanding the impact
This tool could drive innovation and growth across agricultural industries by helping processors secure financing and improve operations. In that regard, the "Cash-flow Let Cashew Flow" tool is an important step towards a more sustainable and inclusive agricultural sector. This initiative supports long-term economic growth in Côte d'Ivoire and beyond by giving processors the tools they need to succeed.
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