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Ovamba, a fintech firm that uses blockchain and other new technologies to connect investors with African SMEs, has facilitated a €30mn deal for the purchase and export of cocoa for Cameroonian commodity marketing company Producam.
The transaction marks Ovamba’s first foray into commodities export: the firm has previously only been involved in domestic trade. It also marks the borrower’s first use of non-bank financing to fund its exports.
Ovamba is both a direct impact investor and syndicates larger funds that meet its “purpose-driven profit” philosophy. It combines off-balance sheet asset-backed lending with e-commerce, logistics and flexible warehousing to provide SMEs in Africa’s trade and commodities sectors with capital.
In this transaction, Ovamba brought together African Merchant Capital, Courtyard Capital and an unnamed Japanese marketplace lending platform to fund 10,000 tonnes of cocoa aggregation and export for Producam. The transaction is secured by the inventory with a one-year tenor.
A spokesperson from Ovamba explains the process to GTR:
“Ovamba uses advanced data analytics at a product, company, sponsor and sovereign level to identify potential businesses where our capital and expertise can bring the companies to the next level. We operate a blockchain-based, local tribal and ethnic language mobile and web platform that brings together the collateral manager, farmer, trader and investors and directly invests via this seamless data and transaction system.”
Ovamba provides the capital on the trader’s behalf to buy the product either at farm or warehouse delivery, with Ovamba itself investing in the more difficult tranche – that which covers the farm to warehouse.
Ovamba also provides quality control, reviews and confirms the work of the collateral manager, and then funds the delivery to the offtaker, sharing the profits and fees with the trader.
“Judging by the current demand, this is only the beginning of a significant pipeline of opportunities for Ovamba to fund,” reads a release issued by the US-founded fintech company.
Founded by Emmanuel Neossi in 2012, Producam has farms and operations in Kekem, Cameroon’s western region.
Neossi reportedly approached Ovamba before the start of the 2017 cocoa season with a request for support of capital to buy cocoa from its current and new cocoa suppliers to meet the increasing demands of its buyers, who are major cocoa product manufacturers throughout Europe. Ovamba then reached out to its pool of international investors and secured the capital required “faster than any bank that Neossi had ever used in the past”, it says.
Ovamba’s co-founder and CEO, Marvin Cole, comments on the deal: “Ovamba’s vision for cash crops commodity marketing is to make it possible for farmers to get good prices for their produce and to determine the size of their profit margin. Ovamba plans to fund the transformational growth and manufacturing potential of as many commodity marketing companies as we possibly can.”
The fintech company apparently has strong commitments in place to fund other coffee and cocoa suppliers in the Central and West Africa regions.
“We are really excited to have expanded our funding expertise into commodities exports. Many sectors are affected by the downturn in the oil industry. Helping Africa’s best performing sectors is good for the economy and is a smart portfolio differentiator for our investors,” says Viola Llewellyn, co-founder and president of Ovamba.
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