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Project Information

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature.
Project Name Icam Chocolate Uganda Limited
Guarantee Holder Icam S.P.A.
Investor Country Italy
Host Country Uganda
Sector Manufacturing
Gross Exposure ($million) 2.1
Fiscal Year 2011
Status Proposed
Project Number 9368
Environmental Category B
Date SPG Disclosed November 9, 2010
Project Board Date November 24, 2010

This summary covers an investment by Icam S.P.A. of Italy in Icam Chocolate Uganda Limited. The investor has applied for a MIGA guarantee of $2.1 million for a period of up to six years against the risks of transfer restriction, expropriation, and war and civil disturbance.

The project consists of the establishment of a new company, Icam Chocolate Uganda Limited, that will set up collection, storage, and processing facilities in three cocoa-producing regions. These facilities will source organically grown green cocoa beans directly from local farmers. Icam Uganda will use a bean-drying and fermentation process what will dry the beans faster and more thoroughly to meet the stringent standards of Icam Italy. This process reduces the risk of mold and fungi, and preserves the cocoa’s desirable taste and aroma. The project intends to source a combined 3900 tons of dry cocoa from the three facilities by the fifth year of operation.

Technical assistance will be provided by agronomists to support local farmers in improving farming practices, which could increase productivity by up to 100 percent. Furthermore, by sourcing the cocoa beans before they have been dried and fermented by the farmers, the project will substantially reduce harvest failure due to bad weather (heavy rains) during the drying and fermenting process.

Environmental Categorization

The project is a Category B under MIGA’s policy on environmental and social sustainability.  The key environmental and social issues are community and workers’ health and safety; cocoa supply chain considerations related to child labor and fair trade; solid waste management; and traffic management while transporting the cocoa to and from the drying facility. Construction activities associated with the cocoa drying sites are expected to be temporary and localized at the three sites. Two of the three sites are yet to be determined and further information regarding site location, vegetation, and land use will be supplied by the client once the sites are identified. A management plan should be submitted, detailing supply chain as well as community and worker health and safety management.

Development Impact

The project is expected to help boost and diversify Uganda’s agricultural exports. Although the cacao plant was introduced to the country in the early 1900s, it has never become a major export crop like coffee.  Uganda is specifically encouraging cocoa-growing as part of a plan to diversify its exports.

Growing cocoa beans offers also small-scale farmers in Uganda and other tropical countries a livelihood from a product that has strong foreign demand and local environmental benefits, according to researchers at the International Food Policy Research Institute. Cacao bushes can grow alongside food crops on small parcels of land and on poor soils, which makes production more feasible for small farms and women growers.

This project is consistent with the World Bank Group’s Country Assistance Strategy for Uganda, which includes increased productivity and commercialization of agriculture as an outcome. The proposed project would be underwritten through MIGA’s Small Investment Program.

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