IFC, a member of the World Bank Group, is providing a $3 million loan to SLCM Limited, the Yangon-based subsidiary of Sohan Lal Commodity Management, a Delhi-based agri-logistics group. The aim is to help the company expand its warehousing services and allied services, in Myanmar, thereby improving the livelihoods of the rural population that rely on agriculture.
In Myanmar, despite poor storage conditions, farmers are often forced to store harvested products to sell at a later time, leading to substantial losses-currently estimated at around 20 percent. IFC’s investment will help the company bring sophisticated warehousing and allied services to Myanmar. It will further help farmers to be able to store higher volumes and reduce post-harvest losses caused by infestation, excess humidity and inadequate storage.
“We have replicated our best practices and expertise in agriculture warehousing domain in Myanmar. In the past five years, we have been able to reduce post-harvest losses to 0.5 percent in the country, thus helping every player in the farm-to-market chain. We intend to utilize the capital to further scale up our operations and expand our presence here,” said Sandeep Sabharwal, Group CEO, SLCM.
The SLCM Group entered the Myanmar market in 2014. It has, so far, managed 3.24 million square feet of commodity storage space in 127 industrial zones and has handled 521 commodities with a total volume of 10.14 million tons.
IFC will provide the loan to SLCM through its own account and in its capacity as an implementing entity of the private sector window of the Global Agriculture and Food Security Program (GAFSP). Subsequently, it will help attract more banks and collateral managers to engage in the business of commodity-backed financing, which is new to Myanmar.
“Myanmar’s agricultural sector is a key pillar of the economy and provides employment to about 53 percent of the labor force. Further, developing this sector is key to helping people move out of poverty. A World Bank research has shown that progress in the agricultural sector was directly responsible for at least 46 percent of the reduction in poverty between 2005 and 2015,” said Vikram Kumar, IFC Manager for Myanmar and Thailand.
Agribusiness is a strategic pillar of IFC’s work in Myanmar. IFC is a major investor in the country’s agribusiness sector and works with local food producers and the government to provide training in food safety management systems, reforming regulations, and improving the business environment in this sector. Since 2013, IFC has invested and mobilized over $1.3 billion in Myanmar.