NISRAL, AFEX Call for Unlocking Capital Market for Sustainable Long-term Funding

Dike Onwuamaeze

As the prevailing high interest rate regime bites harder on businesses, the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NISRAL) along with the AFEX Commodities Exchange Limited (AFEX) and stakeholders in the agribusiness value chain have called for financial products that would attract long term funding from the capital market for the Nigerian agricultural value chain.

This call was made during the 5^th Agri-investment and Capital Market Forum (AICM 2025), held in Lagos State with the theme, “Cultivate Change: Agri-Food Investment as a Catalyst for Industrialisation.”

Speaking during the event, Group Head, Finance Facilitation, NISRAL, Mr. Michael Adeoye, said that people are shying away from banks and resorting to the capital market to fund their agribusinesses because of high cost of funds from deposit banks.

Adeoye  said: “You can hardly get a loan that is less than 33 or 35 per cent in Nigeria now. The profit can never be okay if you want to fund agriculture with that level of interest rates. So, people are shying away from approaching banks to finance their agro business. In NISRAL, we have realised this and our strategic direction now is to move toward the capital market because funds from the capital market are low cost and patient.”

According to him, the AICM 2025 attracted players in the capital market, financial regulators and agribusiness people to brainstorm on how to create investments into agribusiness that could drive industrialisation.

He said: “We cannot under estimate the power of agribusiness because nearly every raw material comes from agriculture. NISRAL is providing guarantee to agribusinesses looking for fund from the capital market.   

“NISRAL guarantees start from the off stream which means inputs, mechanisation to the upstream, which is the main cultivation and rearing of animals to the midstream, which is value addition, to the downstream which is the market. NISRAL coverage is not limited to primary production but covers all the value chain.”    

Speaking, the Chief Operating Officer, AFEX, Ms. Oluwafunto Olasemo, said that a country like Nigeria that has a N20 trillion pension assets and N56 trillion capital market capitalisation and is desiring a $1 trillion economy should channel funding from the capital market to agriculture that accounts for 25 per cent of its gross domestic product.

Olasemo said that the capital market and commodity exchanges should engineer a process that would unlock capital agro value chain.  

She said: “This is where AFEX comes in. What we do essentially is to create products that enable agribusinesses to access the capital market and unlock funding. The critical thing that we do is creating the products and developing the standards that drive price discovery so that value will really get to the farmers.”

The Group Managing Director/CEO of Raedial Farms, Mr. Uwadiale Agenmonmen, said that agriculture and its value chains are capital intensive and required long term financing.

Agenmonmen said that challenges of accessing suitable long term financing in Nigeria constrained his firm to go outside the country to raise finance.

He said: “We have accessed a five year fund, which was a mismatch. That has led us to seek funds outside the country that can last 15 years. Those are the kind of structures we need in Nigeria’s capital market space. We need government and private sector collaboration to design programs that actually fit into the agricultural space.”

The Chief Executive Officer, Sourcing and Produce Limited, Mr. Awojoodu Lanre, advised agro firms desiring to raise financing from the capital market to staff their firm with professionals, put in place structured process and entrench corporate governance in the operation.  

“The people that give you capital will give you more if you perform. MBO Capital is the first to give me N30 million that has grown to $4 million investment within five years,” Lanre said.  

The Program and Partnership Manager, FMN Food and Agro-Allied Group, Ms. Kehinde Akanni, said that access to financing, quality input, access to the market and lack of training are major setbacks to wheat farming in Nigeria.      

“Being a major up taker of this produce, it is important for us to ensure that the quality is right. So, we give farmers quality inputs, support them with right technological practices and then buy their produce at a good price. Today, we have over 15,000 farmers that we are supporting with input loans,” Akanni said.