Mr. Madiop Diop, a farmer in northern Senegal, is in the process of acquiring a combined harvester through Financière Africaine, a financial advisory firm offering financial services and investments to small agribusinesses in the Senegal River Valley.
The cost of operating the machine is $45,000, but Mr. Diop could rent it to surrounding farmers, achieving a net profit before amortization of $105,000. Such high margins show that despite the expanding number of hectares under rice production in the rice valley, the number of farmers is not growing as young people seek work in the cities or overseas.
Financière Africaine is a subcontractor to the Trade Hub and part of its Financial Advisors’ network. This coalition of 15 independent facilitators in eight countries tries to secure loans and formalize business practices of business development service (BDS) providers, like the rice farmers in northern Senegal. BDS providers look for equipment like tractor sets, combined harvesters, dehullers, and rice processing units, which generate strong profit margins for farmers.
Since July 2016, Financière Africaine has obtained 10 approval letters for up to $1.7 million in loans to BDS providers, out of the 38 loan applications submitted, with the others still pending. To review the year’s progress, the Trade Hub visited in April and November 2017 with BDS providers in Dakar, Senegal who are working with Financière Africaine. Jean-Francois Guay, the Trade Hub’s Finance and Investment team lead, also met with LocAfrique and Coris Bank, the two primary lenders to BDS service providers in the Valley.
The Government of Senegal has been eager to achieve cereal self-sufficiency, particularly in rice, an essential commodity and staple food. Financière Africaine targets support for West African small businesses and micro-enterprises by facilitating equipment investment in the rice valley of Senegal. The initiative also seeks to create a financial and technical assistance platform to develop the country’s private sector, including in the northern region.
In addition to connecting farmers with investments and technologies, Financière Africaine also addresses the challenges of the valley’s informal sector, helping to move traditional businesses to more formal business practices that comply with legal standards and management rules. At a minimum, BDS providers are required to register as a formal business. Financière Africaine has identified 75 providers in total, which narrowed to 40 after a screening process.