How a new tool improved financial opportunities for West Africa’s cashew sector

A quick overview of West Africa’s cashew-processing sector 

Global cashew production has risen steadily over the past decade, crossing 1 million metric tons (kernel basis) or 5 million tons of raw cashew nuts in 2022-23, according to the according to the International Nut and Dried Fruit Council (INDFC).   

Western Africa alone accounts for about 50% of global output of raw cashew nuts. In total, cashew production contributes to the livelihoods of 2.5 million smallholders and their households in sub-Saharan Africa, including 1.5 million in West Africa. 

The crop grows in the West African savannah, with three countries – Benin, Côte d'Ivoire and Nigeria – counting among the largest producers of raw cashew nuts, alongside India, Vietnam and Brazil. Côte d'Ivoire remains the world’s largest producer.  

The United States and Europe comprise the largest consumers of roasted cashews and account for close to 60% of worldwide demand, followed by China.  

Once harvested, raw cashew nuts must undergo several processes before they can be turned into edible cashew kernels.  

The first step is shelling. The kernels are then roasted, dried and packaged before they can be exported. 

Shelling facilities are concentrated in India, Vietnam and Brazil. Although Sub-Saharan Africa represents the world’s largest production, shelling facilities on the continent currently represent a small albeit growing portion of global processing capacity. 

In West Africa, the cashew sector is largely limited to producing raw cashew nuts with some focus on marketing and shelling kernels. The former are usually directly exported to Asian shelling units, while shelled kernels are ready for export to Western roasting facilities. 

In line with this regional context and Oikocredit’s agriculture strategy, our West Africa offices have prioritised providing financial and technical support to primary processors and their associated producer cooperatives, emphasising those that offer substantial female employment. 

Understanding challenges around financial management and access in cashew processing 

Oikocredit has longstanding experience of providing loans for capital expenditure and working capital to the cashew sector. In recent years, we have developed relationships with value chain players and support organisations to address sectoral challenges.  

Across the region, informal trade between producers and processors remains prevalent. In many cases, promoters of processing units are former cashew producers or traders who are shifting from pure trade to industrialisation for the first time. As such, they also often lack formal training in accounting, auditing and compliance, international trade and other skills required to operate effectively in the global cashew industry. 

Weak balance sheets and a modest commercial track record is likewise a common feature of regional operations.  

Oikocredit worked to address these issues by strengthening trade finance in the sector. We focused on working with local processors that supply to recognised international buyers and looked to address their working capital needs. Using our experience in funding cashew processors, we partnered with CBI to provide technical support to selected processors, helping them access a broader range of international markets and establish better accounting and operations management practices.  

We developed and implemented the new performance management tool to strengthen local cashew processors’ capacity while helping mitigate our own credit risk. 

Making a difference: Cash-flow let cashew flow 

The Cash-flow let cashew flow tool aims to enable cashew-processing companies in Côte d'Ivoire to enhance their access to and eligibility for financing. 

The tool predicts monthly revenues, informs business planning, tracks key performance indicators, and monitors financials. It provides insights crucial for financial assessments by investment officers and risk analysts. 

It integrates both technical and financial information for a holistic view of business operations. Key features include monthly cash flow projections covering at least one campaign, and comparative analysis of actual versus planned results. This enables constructive dialogue between Oikocredit staff and partners during monitoring visits. 

Together with CBI, Oikocredit engaged with the Association of Cashew Processors of Côte d'Ivoire (GIC-CI), to present its investment mandate, to share its experiences of funding the sector and to provide the rationale for developing the tool. Pilot factories were then identified to support testing and related processes. 

The one-year pilot phase involved two prospective Oikocredit partners, EcoCajou SA and Cilagri SA. Both source significant quantities of their raw cashew nuts from 5,000 cashew smallholder farmers and have demonstrated a strong commitment to their operations’ management and finance.  

The concept of the business monitoring tool has now been validated, with the invaluable experience of EcoCajou and its parent Ecookim, a long-time Oikocredit partner. Factory management recognises the challenge of integrating production and financial data, particularly given the constraints of existing accounting software and regulatory requirements. 

Despite these challenges, the tool has significantly improved visibility into cash flow projections and key business indicators, leading to more informed financial and operational decisions. 

A tool to drive growth and innovation in agriculture  

As the pilot shows, the business monitoring tool can significantly advance the cashew-processing sector. 

By bridging the gap between technical operations and financial management, the Cash-flow let cashew flow tool provides processors with the insights necessary to secure adequate financing and optimise their operations. 

After the tool was presented to the cashew sector in Côte d'Ivoire last June, GIC-CI announced plans to publish materials and train cashew processors in the use of the tool, an indication of the potential for driving growth and innovation across the sector. 

We believe developing the tool further promises to unlock new opportunities and drive sustainable growth in the cashew sector and beyond.  

Oikocredit is now well positioned to expand the application of this tool to other existing partners within the cashew sector. The success of the pilot shows how the tool can be applied to other countries and agricultural sectors. This expansion reflects the tool's potential to drive financial inclusivity and operational efficiency on a broader scale.