Solidaridad schools financial sector on prospects in oil palm

A two-day financial institutions training workshop on investing in the oil palm sector was held at Cape-Coast by the Sustainable West Africa Oil Palm Programme (SWAPP) of Solidaridad West Africa.

The seminar was aimed at improving income and livelihoods from oil-palm through increasing farm productivity and the efficiency of processing mills. It was part of efforts to improve the knowledge of finance suppliers as to dynamics in the oil palm sector, and also enhance more investments to the sector.

Participants were drawn from the country’s financial sector including the commercial banks, rural banks, microfinance institutions and savings and loans institutions, as well as international agricultural funding institutions.

Mr. Raymond Denteh, Agri-Business Investment Specialist, Solidaridad West Africa, explained that to achieve the objectives of SWAPP, access to finance and incubator component is working to encourage and enable more risk capital to flow into the oil palm sector by de-risking capital investments, improving expected returns and raising awareness -- and also building on and sustaining the knowledge and experience created by the broader SWAPP programme through transferring and embedding the expertise within self-sustainable commercial entities. 

“At the level of financial institutions, we are also interested in further deepening their understanding of the sector so in the end we will form a kind of platform: ourselves, the financial institutions and the smallholders, so that on a more regular basis there is always a conversation among  players in the value chain.”

He indicated that SWAPP is targetted at ensuring that oil palm growers have access to finance adding that financial institutions stand to benefit hugely as investors.

He explained that banks can take advantage of opportunities in the area of financing development for smallholder schemes in collaboration with plantations, and also financing the establishment of farm services companies. 

“The financial institutions can help make available credit for artisanal mills to purchase efficient processing machines, providing credit to women groups to purchase processing machines, creating financial products to support farm rehabilitation, and yield intensification activities.

“Solidaridad will be supporting farmers and other players in the value chain to develop good business ideas that can attract banking and financial institutions to invest in the sector.”

Mr. Denteh said because of prospects for the oil palm sector, Solidaridad -- which has invested over US$100,000 -- has initiated and supported many programmes to engender plantation expansion and increased palm oil production for accelerated industrial growth.

He said the anticipated benefits of the SWAPP programme have not been fully achieved, owing principally to inefficient coordination of actors like the financial institutions within the palm oil value chain.

According to the Food and Agriculture Organisation (FAO), world production of palm oil is expected to increase from 45 million tonnes to about 60 million tonnes by 2020.

In the West Africa sub-region, the total crude palm oil market demand stands at approximately 1.6 million m/t.

Africa, which holds 30 percent of all oil palm agricultural lands, regrettably produces less than 10 percent of the total world production of palm oil -- with Ghana contributing a distant below-1 percent (0.8 percent).