The Board of Directors of the African Development Bank (AfDB) approved on Monday, 6 December 2010 in Tunis, a €30-million senior private sector loan and a €35 million loan from the public sector window to finance the Markala Sugar project (MSP) in Mali. The two loans amount to €65 million, equivalent to CFAF 42.5 billion.
The project is the Bank's first public and private partnership (PPP) agribusiness operation in the country. The agricultural component, CaneCo, involves establishing a 14,132 ha irrigated cane estate in Markala, 275 km northeast of Bamako, on the north bank of the Niger River to produce 1.48 million tons of sugar cane per annum. It will support an outgrower scheme as well as community development.
The industrial component, SoSuMar, will comprise a sugar mill, ethanol plant and power co-generation facility. The mill will have a cane crushing capacity of 7,680 tons per day at full operating capacity, producing 190,000 tons of sugar per annum (180,000 tons of mill white sugar for direct human consumption and 10,000 tons of refined sugar for industrial use). The sugar will be traded on the domestic as well as the regional market, especially in Burkina Faso, Niger and Senegal. The ethanol plant will produce 15 million litres of ethanol per annum, while the co-generation facility will produce 30 MW of electricity per annum.
From a socioeconomic perspective, the project will have a strong development impact. At the local level, it will inject capital into the Segou District economy and help increase the living standards of the rural population. MSP will contribute positively to job creation (about 8,000 direct employments), enhance of food security, income generation, poverty alleviation, and skills transfer.
In line with the Bank's priorities outlined in its 2008-2012 Medium-Term Strategy, the MSP seeks to contribute to human resource development objectives and to agriculture and rural development. In addition, the project is in line with the two pillars of the Bank's country strategy paper, which aims at improving private sector competitiveness and strengthening participation of the poor in growth. It is also consistent with the sector priorities of Mali's 2007-2011 Poverty Reduction Strategy Paper (PRSP).
The project sponsors mandated the Bank to co-ordinate:
i) raising debt financing;
ii) organizing joint due diligence with co-lenders;
and iii) preparing Common Term Sheet for SoSuMar lenders. This transaction is a unique opportunity for the Bank to fully use its public and private sector leverage to develop a major PPP project in a low-income member country. So far, the Bank's role has been recognized by both the sponsors and the government as catalytic to the project's development.