Grassroots Job Growth in Cambodia: IFC Invests $450,000 in NGO-Backed Soy Milk Project
Adriana Gomez
Phone: +(202) 458 5204- Fax:+ (202) 974 4384
Email:Agomez@ifc.org
Washington D.C., July 9, 2003—Using
a new approach to support job creation for the poorest in one of Asia’s
least developed economies, the International Financial Corporation (IFC)
has invested $450,000 in Hagar Soya Ltd., a pioneering new commercial venture
in Cambodia developed by one of the country’s most effective grassroots
nongovernmental organizations (NGOs), Hagar.
Since its launch in 1994, Swiss-based Hagar has helped transform the lives
of more than 20,000 destitute Cambodian women and their children. It first
provides relief and rehabilitation in the form of temporary housing
and counseling at its Phnom Penh’s shelter, then offers education and
job training to give the women the tools they need to live independently
after completing its program. Hagar also operates fFoster hHomes for formerly
trafficked and abused children and oversees new rural communities where
landless mothers and children earn a living for themselves through agriculture.
Recently the Phnom Penh-based group has also worked closely with the IFC-managed
Mekong Private Sector Development Facility (MPDF) to develop new small
businesses that provide jobs for its assisted women and produce income
that reduces its donor dependency. Among these was a small soy milk operation
that began in 1999 with a work force of 20 trained mothers and two Cambodian
supervisors.
After carrying out market studies that showed great demand for the product
if produced in higher volume and quality, MPDF helped Hagar develop a $1.2
million expansion project proposal and presented it to IFC. After conducting
its own due diligence review, IFC has now invested $450,000 in a
new formal sector business carrying out the project. Hagar Soya Ltd. With
financing in place, MPDF will now continue to support Hagar with marketing
and sales advice as it prepares for the product’s commercial launch in
September.
The investment supports the establishment of a manufacturing plant using
better processing and packaging technology that is expected to:
· raise current the daily
production level from 300 to up to 12,000 liters of soy milk that will
be sold in 200 milliliter paper carton drink boxes at affordable prices
- create at least 32 more jobs, mostly for
disadvantaged Cambodian women
“IFC’s investment will help Hagar achieve several important objectives,”
said Hagar Director Pierre Tami. “First and foremost it restores hope
in the conviction of those who “seek justice, rescue the oppressed, defend
the orphan, and plead for the widow.” Formerly poor and destitute
women are now employed in a viable and sustainable business and able to
support themselves. Second, it will turn locally grown soy beans into a
nutritious, delicious drink that is affordable for Cambodia’s poor and
often malnourished population.
“From a technical point of view, IFC financing will enable Hagar Soya
to build a factory and buy the high-tech equipment needed to package UHT
soya milk which doesn’t need refrigeration and has a long shelf life,”
Tami added. “This means our product can be distributed nation wide and
even exported.”
“IFC was glad to provide this combination of technical assistance and
investment to help Hagar transform one of its income-generating projects
into a viable commercial business. These efforts strengthen the foundation
for long-term SME development impact in Cambodia,” added Javed Hamid,
Director of IFC’s East Asia/Pacific Department.
MPDF’s track record of helping NGOs develop profitable businesses provides
an innovative model that can be replicated in many other countries. “The
use of private sector mechanisms is increasingly regarded as a sustainable
path out of poverty for the most vulnerable members of society,” said
Adam Sack, MPDF’s Regional Manager for Cambodia and Lao PDR.
In addition to Hagar Soya, MPDF and IFC’s SME Capacity Building Facility
are also simultaneously providing technical assistance and advisory services
to another one of Hagar’s business units, Hagar Design, which produces
quality top end design, ladies’ accessories, and households items. Working
with the US-based NGO Aid to Artisans and others, MPDF has helped
Hagar Design separate its silk -based products production unit
from Hagar’s NGO, and created a new commercial company that is able to
take advantage of larger local and export markets. Hagar Design is currently
exporting to Switzerland, Japan, Singapore and now in the US.
IFC's mission is to promote sustainable private sector investment in developing
countries, helping to reduce poverty and improve people's lives. IFC finances
private sector investments in the developing world, mobilizes capital in
the international financial markets, helps clients improve social and environmental
sustainability, and provides technical assistance and advice to governments
and businesses. From its founding in 1956 through FY 2002, IFC has committed
more than $34 billion of its own funds and arranged $21 billion in syndications
for 2,825 companies in 140 developing countries. IFC's worldwide committed
portfolio as of FY 2002 was $15.1 billion for its own account and $6.5
billion held for participants in loan syndications.
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