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The Chain: Nigerian Forex Limits Drive Palm Oil Returns; SocFin Growing in Sierra Leone; Indonesia Peatland Restoration Finance

September 30, 2016

Nigerian Forex Limits Drive Palm Oil Returns

Nigeria’s prohibition on importers using foreign exchange reserves to fund capital expenditures and trade finance may be a boon for local palm oil producers and refiners. This ban, in place since June 2015, prohibits official corporate foreign exchange reserves being used for 41 key consumer staples – including palm oil. Local producer Presco PLC has seen their revenue jump 60% to $24 million in the first half of 2016. However, the lack of foreign exchange reserves has reportedly prevented local palm oil companies from purchasing chemicals and equipment. Nigeria has maintained it crude palm oil production at 970,000 metric tons annually since 2012.

SocFin Growing in Sierra Leone

Bollore’s (BOL:FP) subsidiary, Socfin, a Luxembourg-based holding company that invests in companies engaged in the production of rubber and palm oil, is expanding in Sierra Leone. Bollore’s has a 38.8% interest in SocFin, which in turn controls 187,000 ha of mainly palm oil and rubber plantations in Africa and Asia – with an expanding plantation estate of 12,432 ha in Sierra Leone. SocFin’s estate is similar in size to KLK subsidiary’s estates in Liberia, Wilmar and PZ Cussons’s joint venture’s estates in Nigeria and a Sime Darby subsidiary’s estates in Liberia.

Indonesia Peatland Restoration Finance

Indonesia’s Peatland Restoration Agency continues to expand its work as it seeks to restore peatland impacted by forest fires and drainage. Now, with demand for restoration of 2 million hectares driven by recent fires, the agency is seeking to grow its financing network. The Packard Foundation and the Climate and Land Use Alliance have already declared they will donate $15 million. The World Bank estimates the cost of restoration at roughly $2 billion. The Government of Indonesia has stated its committed to obtaining full funding of the program within five years.

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