Citi Turkey and Inclusive Finance: Driving Inclusive Economic Progress by Deepening Client Supply Chains
By Monika Jonusauskiene, Vice President, Citi Inclusive Finance, and Mert Eren, Vice President, Citi Commercial Bank, Citi Turkey November 27, 2017 01:45 PM
Turkey is the world’s largest exporter of dried fruits and nuts; its agriculture industry employs roughly 15 million people, nearly half of which are women. So if you’ve bought a package of dried figs or dates recently, they probably originated from Turkey. And if the fruit you bought was organic, or if you bought it from a large supermarket in the U.S. or Europe, the supplier was very likely Işık Tarım – one of Turkey’s leading organic produce manufacturers, a Citi Commercial Bank Turkey client, and the first non-financial institution to receive financing through Citi’s partnership with the U.S. Government’s Overseas Private Investment Corporation (OPIC) under its Global Inclusive Finance Framework.
This loan extended to Işık Tarım by OPIC and Citi Inclusive Finance -- Citi’s specialized unit for microfinance and inclusive finance transactions -- is just one example of the work conducted by this innovative public-private partnership that enables Citi to provide financing in local currencies to inclusive businesses and microfinance institutions in emerging markets around the world. To date, Citi has funded 49 institutions in 25 countries providing $448 million of catalytic debt capital.
Since most farms in Turkey are small, family-owned businesses that operate on an average of only four hectares of land, which are relatively small holdings compared to most European farms, which typically average 12 hectares, earning a decent living is often a struggle for the country’s conventional farmers, who rely on expensive chemicals including fertilizers and pesticides.
Işık Tarım, established in 1982, works to enhance the viability, sustainability and profitability of these smallholder farms by providing technical assistance and other forms of support that enable concentrations of farmers clustered in local villages to farm organically. The company trains and certifies qualified farmers in organic farming methods, builds critical infrastructure for clean water and medical care, and delivers other services that support the overall socioeconomic well-being of the village residents. This regional program, named the “Happy Village Project,” has enabled more than 3,000 registered farmers in more than 150 villages to start growing environmentally sustainable, certified-organic products, and to reap the economic benefits of selling premium products to a worldwide exporter.
This community-based model of sustainable agribusiness, which delivers both economic and environmental benefits, made Işık Tarım an ideal first candidate for the Global Inclusive Finance Framework. In August 2017, Citi Turkey extended a $5 million loan to Işık Tarım for their inclusive business expansion under the OPIC framework. This funding will deepen Işık Tarım’s supply chain by adding an additional 1,500 organic farmers, increasing their number by 40%. Since Işık Tarım’s suppliers will no longer need to spend money on expensive chemical fertilizers and pesticides, and because organic foods cost 20% more on average, the broader impact of this loan is a tangible economic benefit to the farmers, their communities, and to the client.
Işık Tarım is just one of many clients Citi works with that have a positive impact on its communities. But it is a compelling example of how Citi funding can spark new collaborations across our diversified businesses, enabling us to provide even more value to our clients, and most importantly, drive inclusive economic progress in the communities we serve.