International Finance Corporation (IFC) has unveiled an investment of up to EUR050mn in Habesha Breweries S.C. to help the company expand its operations in Ethiopia and increase local barley sourcing from smallholder farmers.
The loan is co-funded by the Dutch development bank (FMO) and Dutch banks Coöperatieve Rabobank U.A. (Rabobank) and ING Bank N.V. (ING Bank).
Habesha was initiated by a group of local Ethiopian investors in 2009 and it has grown to be the sole supplier of inflight drinks at Ethiopian. The company is currently owned by Swinkels Family Brewers Holding N.V. (60%), 8,000 local shareholders (30%), and Linssen Participations B.V. (10%).
Ethiopia’s brewing industry is fast growing and an important contributor to economic growth, but the sector imports as much as 90 percent of its malt barley needs. In addition to the financing, IFC and FMO will help Habesha support farmers’ access to improved seed varieties and other agricultural inputs and provide best practices on agronomy and business management.
The project is expected to boost income for 15,000 smallholder barley farmers, double farm yields of participating barley producers and create 500 jobs.
“Programs that support local sourcing are critical to linking smallholder farmers to large supply chains, thus creating more economic opportunity and jobs for vital parts of the country’s agriculture sector,” said Jumoke Jagun-Dokunmu, IFC Regional Director for Eastern Africa.
Ethiopia is a key market for IFC. Over the past five years, IFC has provided US$317mn in new investment commitments and mobilized US$50mn across several sectors including agribusiness, small business development, and manufacturing.
“Increasing farmer access to improved agricultural inputs such as seeds and fertilizers and building the agronomic and technical capacity of local, smallholder barley producers in Ethiopia will create more jobs and higher efficiency,” said Linda Broekhuizen, FMO’s Chief Investment Officer.
“By being part of this financing, ING is pleased to support the farmer community in Ethiopia and at the same time reinforce the strategy of our appreciated client Royal Swinkels Family Brewers, which invested in Habesha Breweries in 2012. Thanks to our Food & Agri expertise and our longstanding history with many of the largest beverage players in the world, we feel confident to participate in this facility,” said Kiran Sanchit, ING’s Head of Food & Agri EMEA.
“Our partnership with IFC and other lenders is timely and key to growing the malt barley supply chain in Ethiopia. We aim to increase smallholder farmers from 1,000 to 14,000 in the next five years and improve household incomes. This investment has a purpose and feels like the right thing. I am extremely proud that we are able to continue to build and grow the brewery in partnership with the barley farmers and residents,” said Zewdu Negate, CEO, Habesha Breweries.
According to AsokoInsight, Ethiopia’s beer market has shown substantial growth with numerous new brands introduced in the past few years. Since 2017, ten brands entered the market, particularly tapping into the alcohol-free and low-alcohol segments.
The country produces approximately 7 million hectolitres of beer per year, a figure which is set to grow as popularity for the beverage continues to rise.
There are currently six main brewers that together own 12 breweries producing at least 24 different brands of beers. As is the case globally, multinational brewers have a strong presence in Ethiopia and there are high levels of foreign investment in the sector. However, in the last five years, the entrance of small and locally-led brewers into the industry has shifted the balance of foreign dominance.
