KEY POINTS
- OPEC Fund’s $40 million loan supports ETG’s agricultural operations and smallholder farmers across sub-Saharan Africa.
- The initiative ties funding to meeting ESG targets, promoting sustainable farming and environmental impact reduction.
- Over 600,000 smallholder farmers will benefit, enhancing food security and strengthening African agricultural value chains.
The OPEC Fund for International Development (OPEC Fund) has announced a groundbreaking $40 million loan as part of a $394 million sustainability-linked financing package for ETC Group (ETG), one of Africa’s leading agricultural commodity supply chain managers.
This marks the OPEC Fund’s inaugural sustainability-linked loan, aimed at enhancing food security, strengthening agricultural value chains, and supporting the livelihoods of over 600,000 smallholder farmers across sub-Saharan Africa.
Driving sustainable agricultural growth
The financing, according to OPEC, will bolster ETG’s working capital, enabling the company to expand its operations and improve efficiency across its supply chain. In addition to providing crucial support to smallholder farmers, the loan ties financial terms to Environmental, Social, and Governance (ESG) performance metrics. ETG is incentivized to meet targets such as reducing its environmental impact, improving smallholder farmers’ livelihoods, and enhancing food systems to address the growing demand for sustainable agricultural practices in the region.
Abdulhamid Alkhalifa, President of the OPEC Fund, highlighted the importance of the initiative:
“Our first sustainability-linked loan demonstrates the OPEC Fund’s dedication to fostering sustainable development through innovative financing. Our strong and longstanding partnership with ETG enables us to address food security, strengthen agricultural value chains, and improve the livelihoods of smallholder farmers in sub-Saharan Africa. This partnership also reflects our commitment to embedding sustainability at the core of our private sector operations.”
Supporting smallholder farmers and strengthening food security
The agricultural sector is a cornerstone of Africa’s economy, employing millions and serving as a critical source of food and income. By extending support to ETG, the OPEC Fund seeks to empower smallholder farmers, who are essential to the continent’s food systems but often face challenges such as limited access to capital, technology, and markets. The financing will help bridge these gaps while advancing sustainable farming practices to mitigate environmental risks.
A milestone in sustainability financing
As the OPEC Fund’s first sustainability-linked loan, the initiative underscores its commitment to innovative solutions that align with global sustainability goals. This approach integrates financial tools with measurable ESG targets, setting a precedent for future private-sector projects aimed at achieving long-term developmental impacts.
The collaboration between the OPEC Fund and ETG reflects a shared vision for transforming African agriculture into a more resilient and inclusive sector. It also aligns with the OPEC Fund’s broader mission of promoting sustainable economic growth, reducing poverty, and improving the quality of life in developing regions.
By leveraging sustainability-linked financing, the OPEC Fund is setting the stage for an era where agriculture in Africa is more productive, sustainable, and equitable.
