The Asian Development Bank (ADB) has approved an equity investment of $3 million and Canadian and Swedish-financed technical assistance for Mountain Hazelnuts, an organization promoting hazelnut production by smallholder farmers in Bhutan to help them diversify and boost their incomes.
Other financing for the project is being provided by IFC, a member of the World Bank Group with $3 million, and $6 million from the Global Agriculture and Food Security Program. ADB will administer a $1.3 million grant from the government of Canada to help the participating farmers adopt climate-resilient production techniques and a $0.2 million grant from the government of Sweden to support the inclusion of poor farmers and women in the value chain.
"The project will help develop an inclusive and environmentally sustainable hazelnut value chain in Bhutan, promote private sector agribusiness development, and help reduce poverty," said Martin Lemoine, head of agribusiness in ADB's Private Sector Operations Department. "The technical assistance, meanwhile, will train thousands of farmers, including women, to use farm practices that will help minimize crop losses from climate change."
Mountain Hazelnuts is investing more than $25 million in climate-resilient hazelnut trees to be handed over to smallholder farmers for free. The saplings will be planted on thousands of hectares of previously fallow or degraded land, aiding soil retention, watershed stability, and carbon sequestration. Once the trees produce hazelnuts, the company will purchase them at a guaranteed minimum price and market them to international buyers.
The project is estimated to help lift incomes for up to 15,000 participating farmers by 2020 - with at least half of them women. As much as 15% of Bhutan's total population is eventually expected to benefit from the project.
Bhutan is highly vulnerable to climate change impacts including temperature spikes, water scarcity, and landslides from glacial lake bursts as ice melts. The technical assistance will provide training in climate-resilient farming techniques, including harvest and post-harvest crop management, and pest management. It will help improve irrigation systems and water storage, introduce a smartphone application to allow the easy swapping of weather information and best farm practices, and provide research and development support into new crop varieties.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members - 48 from the region.
The Asian Development Bank (ADB) and CNBC presented on 2 May 2016 best transaction awards for 2015 to Credo LLC, a microfinance organization based in the Republic of Georgia, and Mountain Hazelnuts, an agribusiness company from Bhutan. The two were honored with the inaugural ADB Private Sector-CNBC Awards for their ground-breaking, impactful private sector solutions to key development challenges.
The award ceremony took place in Frankfurt, Germany during ADB's first Private Sector Day held at the ADB Annual Meeting and was co-hosted by CNBC. The awards focus on highly developmental transactions and underline the important work clients of ADB's Private Sector Operations Department (PSOD) undertake in developing countries in Asia and the Pacific.
"These awards demonstrate the critical role of the private sector in spurring economic transformation, job creation, and innovation across Asia," said PSOD Deputy Director General Mike Barrow. "The private sector is a core provider of solutions to the most urgent development challenges facing Asia and the Pacific. Today's award winners are exemplars of how the private sector can be at the forefront of inclusive growth."
Credo LLC received the award for Best Financial Sector Transaction. Credo works to expand banking services for small businesses and farming households and improve delivery of financial services to underserved regions. ADB signed an agreement with Credo for a 4-year $23 million loan in 2015 and a technical assistance grant of $300,000 to support its efforts in developing full retail services and expanding its operational systems as it transitions to becoming a bank. ADB is expected to provide local currency funding to Credo which it can onlend in lari, thereby removing the foreign exchange risk of borrowers. Credo is majority owned by Access Microfinance Holding.
The award for Best Corporate Finance Transaction went to Mountain Hazelnuts, a firm which is developing an inclusive and environmentally sustainable hazelnut value chain in Bhutan. With assistance from ADB, Mountain Hazelnuts is training thousands of farmers, including women, to use farm practices that will help minimize crop losses from climate change. ADB approved $3 million in equity in 2015 and is also providing $1.5 million in technical assistance for the company.
The winners were chosen by an independent panel of five judges selected from ADB's Independent Evaluation Department and Office of the General Counsel, as well as Credit Suisse and Commerzbank. Only transactions signed in 2015 were eligible. The judges assessed the transactions on the following criteria: innovation, impact, scalability, and value addition from ADB and the financial institution or company.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members - 48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.