The International Finance Corporation (IFC) is considering an unfunded risk participation of up to 50 million euros ($56 million) in a 150-million-euro trade finance facility arranged by Societe Generale for French cocoa trader Touton S.A., according to project disclosures seen by DevFiNews.
The proposed facility will support the procurement and export of traceable cocoa beans mainly from Côte d’Ivoire, Ghana and Cameroon, three West African markets that are central to global cocoa supply and are eligible for support from the World Bank’s International Development Association.
The transaction comes as cocoa traders and exporters in West Africa face tighter financing conditions following sharp cocoa price volatility and growing scrutiny over sustainability standards in global supply chains.
IFC said it will provide short-term liquidity to the agricultural supply chain at a time when country and obligor limits across West Africa have constrained liquidity for agribusiness trade finance.
The financing is expected to help improve smallholder farmers’ access to cocoa markets, support continued local sourcing of traceable and sustainably produced cocoa beans, and strengthen access to structured trade and working capital finance across the cocoa value chain.
Paris-headquartered Touton is among the world’s largest cocoa traders, purchasing about 350,000 metric tons of cocoa annually and accounting for around 8% of global cocoa trade, according to the disclosure. Cocoa represents about 75% of the group’s revenues.
The proposed transaction also reflects the growing use of risk-sharing structures by development finance institutions and commercial banks to keep trade and working capital flowing into emerging-market commodity supply chains.
Societe Generale has financed Touton for more than 33 years and is a major trade and commodity finance bank active in agricultural commodities, the disclosure said.
IFC classified the project as Category FI-2 under its Sustainability Policy, citing environmental and social risks linked to cocoa sourcing. These include harmful child labor, forced labor, occupational health and safety concerns, and the possible expansion of cocoa farming into natural and protected areas.
Under the arrangement, Societe Generale will add controls tied to traceable and certified cocoa. These include verifying that warehouse receipts submitted for financing correspond to certified beans, limiting storage-financing proceeds to traceable cocoa, and requiring Touton to report annually to IFC on the effectiveness of its supply-chain risk management systems.
The controls underscore the tension in cocoa trade finance: the need to maintain liquidity for exporters and farmers in key producing countries while ensuring that financing does not support supply chains linked to labor abuses or deforestation.