Lending per region
Increased coffee prices caused ongoing disruption to local coffee markets in Latin America throughout 2022. The limited amount of coffee available was in high demand and this caused supply chain issues, with farmers being offered higher prices by intermediaries. In addition, some customers within this region did not use their facilities as they received government loans with minimal interest rates to support them financially during the pandemic.
Central America saw several account closures, as some customers were determined as too high risk, but those that remained active were in regular use. We began to see an increase in prefinance requests from June onwards in line with the start of the coffee harvest season across the region. In fact, by September 2022, lending was higher than anticipated. Interestingly, other CSAF members reported a growth in disbursements, but this includes those in countries where our interest rate is not competitive such as Guatemala where bank rates are much lower.
Although the number of Shared Interest customers in Africa is greater than in Latin America, the difference in disbursements is considerable: £8.5m compared to £27.6m. Africa has far fewer disbursements due to the number of customers using a repayment plan and, in some cases, customers were only utilising their facility once per year.
Nevertheless, due to new accounts opened during the year and existing customers increasing their facilities, the total value of disbursements made in East Africa rose to just over £2m. The majority of these funds were sent to producer groups in Rwanda (£1.1m) and Uganda (£818k), with a high number of disbursements made to coffee producers experiencing similar challenges and market volatility to producers in Latin America.
Following many years of growth, we have experienced a decrease in disbursements in West Africa. A large portion of the funds in this region are used to prefinance cocoa producers, especially in Ivory Coast, where £6m out of the £6.5m disbursed was sent. As mentioned previously, there has been increased availability of finance here as larger co-operatives, who have a license to sell directly to international buyers, have been offered facilities with higher limits from other social lenders.