Chad: How CotonTchad secures agricultural jobs
Chad has traditionally been an agricultural producing country, mainly specialized in seasonal food crops such as corn, peanuts and cotton. In the late 2000s Chad has also become an oil producer and exporter.
The great plunge in oil prices in 2014 significantly reduced the country's oil profits from 18.5% of GDP in 2013 to 6.7% in 2016. This drop severely impacted Chad's overall economic activity, and among other things, resulted in great difficulties for the government to subsidize the agricultural sector. Therefore, the country faced a drastic decline in seasonal agricultural production of cotton seeds between 2018 and 2019.
As part of the implementation of its structural readjustment policy following the crisis, the Chadian state decided to privatize the cotton company, CotonTchad SN, by calling on the Singaporean group Olam*, a world leader in agribusiness, which took a 60% stake in the company in 2018.
To meet the growing demand, CotonTchad approached Societe Generale, which is partnering with the group in several areas and particularly in Africa, in order to arrange the necessary financing for the restructuring of its activities and the modernization of its means of production.
To this end, Societe Generale granted a 30 billion FCFA or 45.7 million euros revolving credit and a letter of credit to help CotonTchad SN achieve its working capital requirements, which allowed the company to modernize the harvesting and ginning processes to take greater advantage of the seasonality of its activity.
In June 2022, following the exponential growth rate of the national cotton production, CotonTchad SN renewed its financing request for to Societe Generale, which arranged a global financing of 45 billion FCFA, or 68.6 million euros.
By supporting CotonTchad SN, Societe Generale confirms its long-term commitment to the sustainable development of the African continent. In this respect and as the leader in the financing of the African agricultural sector, Societe Generale is proud to support the cotton production which is a pillar of the Chadian economy (40% of its export), which is fully in line with the "Grow with Africa" initiative. In addition, by fighting poverty through job creation, CotonTchad SN plans to increase its support from 210,000 to 270,000 farmers in the coming years.
|“We are pleased to have benefited for the second time from Societe Generale's expertise in structuring our new credit line. This financing will increase our production capacity, generate additional jobs and enable us to outperform commercially. As cotton is a very popular export product in Chad, we are proud to remain the leader in the food crop industry and also to provide significant financial resources to farmers in order to keep them on their land.”
Jacky Rivière, Managing Director of CotonTchad SN
|“We were very honored to have been selected by CotonTchad SN company to support its strategy to revive the cotton sector. This choice confirms the historical partnership that has linked our two institutions for decades and demonstrates our know-how in financing of economic activity in Chad.”
Magloire N'Guessan, General Manager of Société Générale Tchad
|“Societe Generale is convinced that the development of agricultural sectors is a major challenge for the African continent. Chad, being a country with a strong agricultural production growth, it is a golden opportunity to accompany CotonTchad SN in the second part of its project and at the same time to carry out the largest commodity transaction in Chad. We are proud to have been able to carry out this transaction thanks to the expertise of our teams in Chad and our structured finance platform for sub-Saharan Africa based in Abidjan.”
Mareme Mbaye Ndiaye, Regional Director for Central and Eastern Africa, Societe Generale
* CotonTchad SN is 60% owned by the Singaporean group Olam. It was previously 100% owned by the Chadian state. Its mission is to operate the cotton industry. Its activity involves the cotton harvest and purchase of cotton seeds, its ginning, the sale and export of cotton lint and by-products such as vegetable oils, cotton seeds and oil cakes.