[L-R] – Naana Winful Fynn, Regional Director – West Africa, Norfund; Ellen Cathrine Rasmussen, Executive Vice President, Green Infrastructure and Scalable Enterprises, Norfund; Nathaniel Durant, Managing Director, OH Ecosystems Ltd, and Akin Laoye, Managing Director, FTN during the signing ceremony for a $12 million USD investment in OH Ecosystems by Norfund.
Through an investment of USD 12 million in OH Ecosystems Ltd (“Eco”), Norfund, the Norwegian Investment Fund for developing countries, aims to create jobs in Nigeria, while contributing to addressing some of the challenges in the cocoa value chain.
OH Ecosystems Ltd (“Eco”) builds and operates cocoa processing and confectionery businesses on the African continent. Eco has successfully acquired a majority stake in FTN Cocoa Processors PLC (“FTN”)—a publicly traded company based in Ibadan, Nigeria. With 20,000 metric tons of installed capacity, FTN transforms cocoa beans into semi-finished products (cocoa liquor, butter and powder) for commercialization to global and local clients. Prior to this investment, FTN had been dormant and underutilised for several years.
Norfund’s investment will upgrade FTN’s operating facilities and extend its reach to produce and sell additional products into the cocoa supply chain. Eco is supported by established leaders in the global cocoa chain including Niche Cocoa Industry Ltd, Africa’s largest indigenous cocoa processor, who will serve as technical partner.
Increasing the share of cocoa processed locally
At 4 million metric tons per year, West Africa produces more than 75% of the world’s cocoa. In 2021 Nigeria produced 290,000MTs, ranking 4th behind Cote d’Ivoire, Ghana, and Cameroon. Unfortunately, more than 70% of West Africa’s cocoa is exported as raw material with no significant value addition. Norfund’s investment directly supports the increase of local, value-added transformation leading to quality job creation, local tax revenues, and foreign exchange for West Africa’s cocoa-producing countries. The investment furthers Norfund’s strategy to help create sustainable, scalable businesses in Sub-Saharan Africa that promote value addition at origin.
“Increasing the share of raw materials that are processed locally can create a large number of jobs that give the fast-growing population of Nigeria the opportunity to work their way out of poverty, and we are confident that this investment can contribute to this,” says Obafemi Awobokun, Investment Manager at Norfund.
“We are thankful for Norfund’s partnership as we focus on building out value-add production in Nigeria. Having partners who are aligned over the long-term on both the financial and social impact of our work is extremely important. Together, we can contribute to Nigeria’s agricultural manufacturing with a focus on financial sustainability for farmers in the value chain.” says Nathaniel Durant, Managing Director of Eco.
“This is a strategic alliance come through that will help FTN sew up her pursuit of conversion of cocoa beans, job creation, contribution to the economic diversification goals of the government, delivering value to stakeholders and actualising the vision of being a global player” says Akin Laoye, Managing Director of FTN.
Norfund’s investment will help create both technical and non-technical employment directly for 600 people and indirectly for more than 1,500 across the cocoa value chain. The investment also contributes towards the Nigerian government’s efforts to diversify export revenues by reducing its reliance on oil and gas.
Contributing to tackle challenges in the value chain
The cocoa sector faces challenges related to working conditions and the use of child labour, as well as environmental concerns. Norfund is committed to supporting companies that seek to operate in a sustainable manner, in sectors with challenging dynamics. As part of the partnership, Norfund will support Eco’s efforts in establishing a sustainable supply chain through its farmer empowerment programme dubbed ‘EcoWise’. The programme seeks to address farmer poverty, which is one of the root causes of child and forced labour in the cocoa value chain.
Eco has partnered with industry experts to establish a farmer-focused program that ensures fair compensation, improved extension services, and training for farmers working with Eco’s operating units. The program has been previously piloted in Ghana.
“The cocoa sector is a very important one for Nigeria and West Africa and could be a key one in the push to diversify Nigeria’s revenue sources. By partnering with this management team which has deep sector experience in West Africa, a strong technical partner, local investors and current owners, we aim to contribute positively to this effort. This investment also presents us the opportunity to partner with these stakeholders to increase local processing of cocoa beans and thus capture more of the value chain dollars at origin, to create jobs and to positively impact the fight against child and forced labour and deforestation in this important value chain,” says Naana Winful Fynn, Regional Director for West Africa for Norfund.
