VENTURES AFRICA – The West African Development Bank (BOAD) is raising a facility of XOF115 billion ($199 million) to support the cotton season in Benin, where the commodity accounts for 40 percent of GDP and roughly 80 percent of official export receipts.
BOAD has been involved in raising funds as lead Arranger for the West African country’s cotton season for the three years now. “This financial support provided by BOAD, complementary to that of the local banking system, is in line with the Bank’s strategic directions as well as Policy Statement,” said Christian Adovelande, President of BOAD.
The deal for the funding was signed between Adovelande and the Managing Director of the Office national de soutien des revenus agricoles (National office for farm income support) and the Managers of local banks involved in the transaction.
This was done as part of the mandate on technical and financial assistance entrusted to BOAD by the Government of Benin in February 2014 with the aim of mobilizing funds for the 2014-2015 cotton season. The regional lender raised XOF115 billion, of which the local banking system contributed 79 percent.
Banks involved in the deal include pan-African lender, ECOBANK (Agent Bank), BOA, Banque Atlantique, BGFI, Diamond Bank, BSIC and UBA. In addition to its role as an arranger, BOAD provides financing in an amount of XOF25 billion ($43.2 million) to this operation.
Funds mobilized will be used to cover financial needs during the 2014-2015 cotton season, including cotton purchase from producers, ginning as well as storage, evacuation and marketing of cotton fiber and by-products. Projections for the cotton season show a cottonseed production of 360,000 tons over an area sown of nearly 400,000 hectares.
This third Agreement is attributable to the success of the two previous ones. When the Government of Benin requested the support of BOAD for the 2012-2013 cotton season, the sub-regional institution rallied around itself a pool of local banks and raised XOF82 billion ($141.6 million), with Beninese banks contributing XOF62 billion, or 76 percent of the facility. Those resources made it possible to sow 351,000 hectares for a production of 240,000 tons of cottonseed. The facility was fully repaid at maturity.
The positive result encouraged the Government of Benin to entrust to the Bank a second mandate for supporting and assisting in structuring and raising a facility of XOF115 billion to cover all needs associated with the 2013-2014 cotton season. For this second facility, local banks contributed to the tune of 79 percent. 347,000 hectares were sown for a production of 307,355 tons of cottonseed.
