Federal Government’s initiative of a vibrant private sector-led agricultural financing in Nigeria has received a boost with the successful closing of the $65.9 million money under Fund for Agricultural Finance in Nigeria (FAFIN), a private fund initiated by the Federal Ministry of Agriculture and Rural Development (FMARD).
This is to provide financial, capacity-building and technical assistance to selected Small and Medium Enterprises (SMEs) in the Nigerian agribusiness sector, and managed by Sahel Capital, an agribusiness-focused private equity firm.
Contributing to this close, a total of $31million have been jointly committed to FAFIN fund by the African Development Bank, CDC Group (managing DFID Impact Fund) and the Dutch Good Growth Fund (managed by Triple Jump), joining existing co‐sponsors of the fund to drive agricultural transformation in Nigeria.
As part of this round, the German Development Bank (KfW) has also offered to increase its commitments to FAFIN by an additional $10 million, subject to final approvals, which if provided would increase the fund size to $76 million by December 2017.
FAFIN, co-sponsored by Nigeria’s Federal Ministry of Agriculture and Rural Development, Federal Ministry of Finance, KfW, and the Nigeria Sovereign Investment Authority (NSIA), was initially launched in 2014 with $32.8 million in commitments.
The Minister of Agriculture and Rural Development, Chief Audu Ogbeh, under whose watch this progress was recorded, has expressed the full commitment of his ministry “towards the development of the agricultural sector.”
According to him, “although key developments in the sector would continually be private sector‐driven, the federal government would provide the necessary incentives to grow the sector by facilitating financing and support for Small to Medium Scale Enterprises (SMEs) through investment vehicles such as FAFIN.”
Sahel Capital intends to invest these funds over the next two years, backing sustainable businesses that seek to revolutionise the Nigerian agribusiness landscape while creating jobs, improving productivity, and strengthening priority value chains.
The Minister of Finance, Mrs. Kemi Adeosun, affirmed the focus of the federal government “on acting as a catalyst for private sector capital to drive growth in the agribusiness sector. With this close we would have succeeded in partnering with various investors to secure $76 million for agribusinesses in Nigeria.”
Mezuo Nwuneli, Managing Partner at Sahel Capital, noted: “We are especially grateful for the immense commitment and support we have received from our existing investors, and especially the Federal Ministry of Finance, the Federal Ministry of Agriculture and Rural Development, and the Nigeria Sovereign Investment Authority, in making FAFIN a reality.”
“The successful final close of FAFIN is a testament to the confidence our investors have in the scaling up and sustainability of the fund that was conceived in 2013 by the Former Minister of Agriculture ‐ Dr. Akinwunmi Adesina – and KfW. We also look forward to partnering with our incoming investors to driving catalytic growth in the sector through our partnerships with strong agribusinesses.”
Sahel Capital has assessed over 100 companies since FAFIN’s launch in 2014, out of which it has elected to invest in four indigenous high growth companies, including dairy, edible oils, poultry and cassava value chains of Nigeria. Through these, FAFIN has created over 500 new jobs, 50 per cent of which have engaged women and youth, and have improved the lives of over 1,000 smallholder farmers and their families by supporting innovative business incentives and out‐grower schemes.
Over 4,000 more direct and indirect jobs, and livelihoods improvement of no fewer than 36,000 smallholder farmer families across Nigeria are expected to follow as Sahel Capital aims to invest in nine to 10 additional companies with the additional capital raised.
Uche Orji, Managing Director/CEO of NSIA, co-investor in FAFIN, observed that, “through FAFIN, NSIA will continue to tap into key commercial and sustainable growth opportunities in agriculture.” According to Orji, “Our strategic interest in the sector is predicated on our commitment to drive rural and urban infrastructural development, and we believe FAFIN is well positioned to capture these opportunities.”
-By Dr. Olukayode Oyeleye
Special Assistant on Media & Communications to the Minister of Agriculture and Rural Development