Washington D.C., July 9, 2003
—Using a new approach to support job creation for the poorest in one of Asia’s least developed economies, the International Financial Corporation (IFC) has invested $450,000 in Hagar Soya Ltd., a pioneering new commercial venture in Cambodia developed by one of the country’s most effective grassroots nongovernmental organizations (NGOs), Hagar.
Since its launch in 1994, Swiss-based Hagar has helped transform the lives of more than 20,000 destitute Cambodian women and their children. It first provides relief and rehabilitation in the form of temporary housing and counseling at its Phnom Penh’s shelter, then offers education and job training to give the women the tools they need to live independently after completing its program. Hagar also operates fFoster hHomes for formerly trafficked and abused children and oversees new rural communities where landless mothers and children earn a living for themselves through agriculture.
Recently the Phnom Penh-based group has also worked closely with the IFC-managed Mekong Private Sector Development Facility (MPDF) to develop new small businesses that provide jobs for its assisted women and produce income that reduces its donor dependency. Among these was a small soy milk operation that began in 1999 with a work force of 20 trained mothers and two Cambodian supervisors.
After carrying out market studies that showed great demand for the product if produced in higher volume and quality, MPDF helped Hagar develop a $1.2 million expansion project proposal and presented it to IFC. After conducting its own due diligence review, IFC has now invested $450,000 in a new formal sector business carrying out the project. Hagar Soya Ltd. With financing in place, MPDF will now continue to support Hagar with marketing and sales advice as it prepares for the product’s commercial launch in September.
The investment supports the establishment of a manufacturing plant using better processing and packaging technology that is expected to:
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raise current the daily production level from 300 to up to 12,000 liters of soy milk that will be sold in 200 milliliter paper carton drink boxes at affordable prices
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create at least 32 more jobs, mostly for disadvantaged Cambodian women
“IFC’s investment will help Hagar achieve several important objectives,” said Hagar Director Pierre Tami. “First and foremost it restores hope in the conviction of those who “seek justice, rescue the oppressed, defend the orphan, and plead for the widow.” Formerly poor and destitute women are now employed in a viable and sustainable business and able to support themselves. Second, it will turn locally grown soy beans into a nutritious, delicious drink that is affordable for Cambodia’s poor and often malnourished population.
“From a technical point of view, IFC financing will enable Hagar Soya to build a factory and buy the high-tech equipment needed to package UHT soya milk which doesn’t need refrigeration and has a long shelf life,” Tami added. “This means our product can be distributed nation wide and even exported.”
“IFC was glad to provide this combination of technical assistance and investment to help Hagar transform one of its income-generating projects into a viable commercial business. These efforts strengthen the foundation for long-term SME development impact in Cambodia,” added Javed Hamid, Director of IFC’s East Asia/Pacific Department.
MPDF’s track record of helping NGOs develop profitable businesses provides an innovative model that can be replicated in many other countries. “The use of private sector mechanisms is increasingly regarded as a sustainable path out of poverty for the most vulnerable members of society,” said Adam Sack, MPDF’s Regional Manager for Cambodia and Lao PDR.
In addition to Hagar Soya, MPDF and IFC’s SME Capacity Building Facility are also simultaneously providing technical assistance and advisory services to another one of Hagar’s business units, Hagar Design, which produces quality top end design, ladies’ accessories, and households items. Working with the US-based NGO Aid to Artisans and others, MPDF has helped Hagar Design separate its silk -based products production unit from Hagar’s NGO, and created a new commercial company that is able to take advantage of larger local and export markets. Hagar Design is currently exporting to Switzerland, Japan, Singapore and now in the US.
IFC's mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY 2002, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY 2002 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications.
