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Sweet boost for Africa’s sugar value chain

Home Business Management Finance & Investment Sweet boost for Africa’s sugar value chain

MANY communities within sub-Saharan Africa rely on sugar not only as a source of calorific energy, but for the employment, industrialisation, and trade opportunities its value chain provides.

That’s according to Yinka Sanni, Chief Executive of Standard Bank Africa Regions, who said investment in supporting infrastructure as well as establishing supportive ecosystems and regulatory frameworks can help improve the industry’s global competitiveness and boost yield.

“Sugar is one of the sub-sectors of agriculture with linkages throughout the economy and as Standard Bank, we are supporting the entire value chain with the aim of driving sustainable growth of this industry and that of the wider agriculture ecosystem on the African continent.”

Sanni added that levels of intra-African trade are low with the continent as a block conducting more trades externally than it does internally, citing the fact that Intra-African trade stands at less than 20% compared with 59% for Asia and 68% for Europe, this is according to the World Economic Forum.

“Sugar manufacturing has historically faced intra-African country barriers, but, as Standard Bank, it is our hope that the implementation of the Africa Continental Free Trade Agreement (AfCFTA) will help foster industrial and trade policies that create a unique opportunity for growth in Africa’s sugar market within the continent.”

Sanni said the banked hoped the implementation of the free trade agreement would create a leading single market for goods and services that will result in an increase in trade amongst African nations.

ESG investment

Commenting on the “phenomenal growth” in global sustainable finance debt issuance over the last few years, Greg Fife, Head of Sustainable Finance for Standard Bank Corporate Investment Banking said sustainable investment flows had grown from $565 billion in 2019 to around $732 billion in 2020. It is expected that come end 2021, global investment flows will exceed a trillion dollars.

“The core of the recent COP-26 debate was that emerging markets haven’t quite woken up to the climate problem yet may face the brunt of negative climate risks. As a result, it is expected that over the next decade, there will be significant investment flows going to climate adaption and mitigation through renewable energy and the like,” said Fife.

“We expect to see the availability of green loans in efforts to address climate change adaptation and transition. We continue to encourage smart agriculture with projects involving efficient water usage, waste management renewable energy and appropriate farming practices.”

Fife said Standard Bank aims to be a key role player as a conduit of sustainable capital in the economy and is well-positioned to structure and arrange sustainable finance for such projects in the sector.

Berrie de Jager, Head of Natural Resources for Business and Commercial Clients said that players in this space are increasingly considering gradually transitioning to alternative sources of energy such as solar PV installations. While there is significant interest in decentralised energy production among various players across the value chain, from small to large, they often face various pain points along the way as electricity is not necessarily their core business.

In response, the bank introduced PowerPulse for those who are in the market to generate their own power. This is a digitised platform where the generator of energy, the EPC (engineering procurement contractor) or the potential user of energy who wants to build their own plant can register. In that ringfenced environment, Standard Bank will help clients connect to credible suppliers who will assess the business’s energy needs and provide relevant quotes.

The bank will then assess the quotes from these suppliers and place the information into a consolidated report where the client, who is the user of energy, has an opportunity to make a comparison and a decision on their energy solution.

“And in the process, with that data available, as a bank, we can also extend funding for the energy solution,” said De Jager. “The savings a business generates through reduced electricity consumption can then be utilised to repay their loan over a medium-term period. Eventually, once that leverage is settled, you have electricity for free, which is the purpose of PowerPulse.”

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