ZANZIBAR SUGAR FACTORY LIMITED
Status: Approved investmentWhy disclosure?
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Disclaimer
The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.
Who is our customer
Zanzibar Sugar Factory Limited (ZSFL) is an existing sugarcane production and processing company in Mahonda, Zanzibar, with a nucleus farm of 3,900 acres.
What is our funding objective?
FMO will provide a USD 11.5 million loan to ZSFL for the rehabilitation and expansion of a sugarcane estate (plantation) and processing facility. The funds will be used for capex investments, with a tenor of 10 years (2 years grace). The new management is in the process of restarting the business and expanding processing plant from existing 500 MT/day to 800MT/day. ZSFL already invested close to USD 10 million over the last 2 years in order to refurbish the factory and plantation. The company will produce 19,000MT of sugar and 1.9 mln liter of ethanol. The bagasse (residue product of sugar processing) will be used to heat the boilers. The generation of this ‘green’ energy makes a small part of this financing green. Sugar will be sold straight to Zanzibar retail (both in 1kg and 50kg bags). The high import cost (import duties) in combination with the ability to directly serve the retail market, give ZSFL a competitive edge to produce sugar on a relatively small-scale. The company is in discussion with the United Nations Industrial Development Organization (UNIDO) to sell the ethanol, which wil be used for special cooking stoves for low-income households. Ethanol fueled stoves are a healthier alternative to the wood-fired stoves, which have a bad effect on the peoples lungs as they are contaminating the air in small huts.
Why do we fund this investment?
The transaction is expected to generate substantial development impact. The farm and factory are currently neglected. ZSFL will become one of the few commercial activities on Zanzibar next to tourism. The farm and factory will create approximately 200 direct and 400 indirect jobs. In the medium-run ZSFL expects to buy cane from around 1000 smallholder farmers (out growers). Currently already >100 out growers have started growing cane, a number which is expected to increase substantially once the factory is up-and-running and the first farmers receive payments. FMO plays an important role in ensuring adequate environmental and social practices, with the help of an external consultant.
More investments
| Date | Total FMO financing |
|---|---|
| 8/24/2022 | EUR 0.09 MLN |
| 12/18/2018 | EUR 0.13 MLN |
- Region
- Africa
- Country
- Tanzania, United Republic of
- Sector
- Agribusiness, Food & Water
- Effective date
- 12/16/2015
- Total FMO financing
- USD 11.50 MLN
- Funding
- Building Prospects
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Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk
Environmental & Social Category
(A, B+, B or C) - B+