IFC considers backing China agri loans with $44m

The proposed partnership with JD Chongqing Microcredit Company would support loans designed to encourage the use of data in agri lending and expand financial access for under-served communities.

The World Bank’s International Finance Corporation has proposed a $44 million project to support agricultural loans in China, according to a summary of investment information posted on its website.

The IFC’s support will come in the form of a three-year senior loan to JD Chongqing Microcredit Company, a dedicated agri lending affiliate of Chinese business to consumer merchant JD Finance.

JD Chongqing will use the capital provided by the IFC to work with local insurance providers and agricultural supply companies to support livestock and crop farmers with short-term loans.

Focused on the south-western city of Chongqing, the project is designed to increase access to financing for under-served agricultural companies, promote an increased use of data in agricultural lending and encourage other financial institutions and e-commerce companies to explore expanding their service offerings in China.

“The proposed business model could potentially bring revolutionary change to the traditional rural financial service approach and lay a solid ground for future big-data based agri lending,” the IFC wrote.

The JD Chongqing project is to be discussed at the IFC’s board meeting in September and if approved will continue a series of recent schemes undertaken by the IFC in support of the agricultural sector in China. According to its 2016 annual report, the IFC has invested $2.9 billion into China overall, making the country its third-largest single-country exposure and constituting 5.5 percent of its total portfolio.

Last month, the IFC provided a $200 million financing package to Kingenta Ecological Engineering Group, a specialty fertilizer manufacturer, to support its plans for a series of service centers throughout China that will be used to distribute the company’s fertilizers and high-quality seeds.

In late 2016, the IFC put forward a $50 million loan to Chinese pig and feed company Guangxi Yangxiang in support of a food safety project. That loan came after it had, earlier in 2016, committed $30 million to Beijing-based Hosen Capital’s Hosen Investment Fund III, a food-focused vehicle that closed on $440 million in March.