The private sector arm of the World Bank has approved a US$120 million (S$153.9 million) loan to Singapore agribusiness firm Olam to upgrade and expand food processing facilities in Nigeria and India.

The five-year loan agreement signed by Olam and the International Finance Corporation (IFC) is aimed at benefiting local communities, by generating rural employment and creating new market opportunities for smallholder farmers to sell their crops, the two parties said in a statement on Wednesday.

IFC's loan will support five facilities operated by Olam. These comprise upgrades to a sugar milling facility and a spice processing facility in India, the expansion of Crown Flour Mill in Nigeria, and two new facilities that specialise in mechanical cashew processing and sesame hulling in Nigeria.

The Crown Flour Mill in Nigeria will process imported wheat into flour for domestic bakers, the statement said. The other four facilities will allow more than 45,000 small-scale farmers to supply their crops directly to Olam's processing units by 2015, guaranteeing a market for their products.

"Our partnership with IFC reiterates Olam's continued focus of enabling economic prosperity and social and environmental sustainability throughout Olam's operations," said Mr A. Shekhar, Olam's executive director for finance and business development.

He added that IFC not only reviewed the five processing facilities in its loan approval process, but also a range of Olam's policies, procedures and management initiatives.

"Olam is a critical link between small farmers, businesses and global markets," added Mr Atul Mehta, IFC director for global manufacturing, agribusiness and services .

"It is a supply chain manager and partner for leading multinational corporations and recognised brands - all of whom are looking to improve traceability of their sourcing and address sustainability issues in their supply chains."