Cocoa Processor Impact Review

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Impact Review

Impact Capital Partners’ Emerging Market Private Debt Fund Manager has facilitated the funding of a Cocoa Processor located in the city of Makassar, Indonesia. This female-led borrower actively sources beans from 1000+ local farmers using a management system that helps farmers sell their goods in a fair and efficient way. Meanwhile, the company is educating the farmers on the latest farming techniques and cocoa bean market analysis. As a contingency of the loan, the company has agreed to implement their own Environmental and Social Management System (ESMS).

As an SME, this cocoa processor contributes positively to Indonesia’s formal sector economy by providing jobs and training opportunities to the local population in Makassar as well as contributing to the public services and institutions through tax payments to the country’s government authorities

The funding of this borrower is in alignment with the following UN Sustainable Development Goals: 5. Gender Equality, 8. Decent Work & Economic Growth.

Addressing Indonesia's lack of access to capital

This Cocoa Processor operates out of Indonesia, a country that boasts the largest GDP in Southeast Asia and the 16th largest in the entire world. However, the country's GDP per capital of $3,893 places it in the World Bank’s country category of lower-middle income. Partly hindering the country’s economic development is the financing gap for micro, small, and medium enterprises (“MSMEs”), which is estimated to be at $165.9 billion. The lack of financing for MSMEs has helped proliferate informal economic activity, which accounts for 70% of national employment and more than 90% of total business enterprises, and further contribute to the country’s high rates of poverty. In 2018, approximately 24% of the country’s total population, or 64 million people, live on less than $3.20 per day.

Improving Indonesia's labor productivity growth

Labor productivity gains have been historically modest across all enterprise sizes in Indonesia and therefore demonstrate the importance of stronger labor productivity growth in the future if Indonesia is to reach higher levels of income. According to modeling estimates from the International Labour Organization, approximately 4.5% of Indonesia’s labor force, or 8.2 million people, were unemployed in 2018. As a SME, this Cocoa Processor contributes positively to Indonesia’s formal sector economy by providing jobs and training opportunities to the local population in Makassar as well as contributing to the public services and institutions through tax payments to the country’s government authorities.

Expanding production capacity & competitiveness

As a result of this financing, the Cocoa Processor will be able to invest in its production capacity to increase efficiency and productivity, thus furthering its competitiveness in global cocoa industry. In FY2019, the borrower produced a reported 36,477 metric tons of semi-processed cocoa product (16,097 metric tons of cocoa butter and 20,350 metric tons of cocoa cake) and seeks to increase its production quantity during the tenor of its financing.

Aligned with UN Sustainable Development Goals

The funding of this Cocoa Processor addresses 2 out of 17 United Nations Sustainable Development Goals (SDGs). Collectively, these development goals were adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity.

Goal 5

Achieve gender equality and empower all women and girls.
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Goal 8

Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.
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100% Alignment with Other Key Impact Benchmarks

  • Aligned with the UN’s Sustainable Development Goals
  • Conforms to the IFC Exclusion List
  • Meets local and international laws and respective practices
  • Is in compliance with local environmental, labor, health, safety and business laws
  • Represents in writing their company’s ongoing commitment to ESG practices
  • Environmental practices such as: energy savings, waste reduction and water conservation
  • Social policies for fair hiring, compensation, maternity leave, community service and corporate donations
  • Agrees to identify and track the GIIN’s IRIS metrics

About Impact Capital Partners

At Impact Capital Partners, our mission is to connect institutional capital with the growing impact investment market to address the world’s most pressing challenges. By utilizing impact investments, institutional investors are able to generate positive, measurable social and environmental impact alongside a financial return. We are constantly finding new impact investment opportunities in both emerging and developed markets, targeting market-rate returns. Schedule a call with us HERE if you’re interested in learning more about our impact opportunities.

UN SDG ALIGNMENT