Proparco backs Kenya Nut

07 Aug 2020

PROPARCO is supporting Kenya Nut Company with a USD 18.7m loan. This family-run business has diversified its activity and has been operating in the nut sector (macadamia and cashew nuts) in Kenya for over 40 years. This thriving business sources from over 30,000 small-scale nut producers.

With a macadamia nut production of some 32,000 tons in 2019, Kenya is the third largest producer of macadamia nuts in the world, accounting for 14% of global production. The nut sector (macadamia nuts, cashew nuts and coconuts) is a key sector for Kenya and the Government considers it as a priority agricultural and industrial sector. Starting in the 1970s, the sector benefited from strong Government support to develop production, based on the fact that the coffee sector, which was going through a difficult period at the time, weighed too heavily in Kenyan exports. Along with the private sector, the Government is continuing to promote the diversification of cash crops, with a strong focus on the macadamia and cashew nut sectors. This support has allowed Kenya to structure a macadamia nut industry that today employs over 200,000 people and accounts for 14% of global primary production.

Kenya Nut Company was set up by coffee growers in the 1970s, under a Government program to diversify Kenya’s sources of export revenues by promoting crop diversification, especially towards macadamia nuts.

Following a growth phase focused on the development of the production and export of raw nuts, in the early 2000s, Kenya Nut entered into a diversification phase with the construction of two processing plants. This allowed it to integrate the downstream sector, while securing its supply via its own plantations and external producers, which Kenya Nut disseminates agricultural best practices to.

In 2018, Kenya Nut, the leader in Kenya, processed 25% of the national harvest and marketed 2.5% of the global production of macadamia kernels.

The long-term financing from PROPARCO, which is providing an amount, grace period and maturity that are currently unavailable on the local banking market, will mainly finance the company’s 2019-2021 development plan. To help Kenya Nut cope with the health crisis, part of PROPARCO’s financing will also be earmarked for short-term cashflow needs to give Kenya Nut flexibility in this particular period.

PROPARCO will also help meet Kenya Nut’s request to improve corporate governance and environmental performance, which are key areas of development for this company experiencing strong growth.

This project is fully in line with PROPARCO’s mandate in Africa, firstly by supporting a developing agriculture sector that provides employment and is a source of diversification for Kenya’s export revenues. Secondly, it will contribute to improving living conditions for the most vulnerable farmers and to their professionalization. It will also strengthen Kenya’s industrial fabric and has a climate change adaptation dimension by generating water savings in an area sensitive to water stress.

PROPARCO’s operation will support Sustainable Development Goals (SDGs) n° 2 “Zero hunger”, n° 8 “Decent work and economic growth” and n° 9 “Industry, innovation and infrastructure”.

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