Olawale Ajimotokan in Abuja
The African Development Bank (AfDB), CDC Group (managing DFID Impact Fund) and the Dutch Good Growth Fund (managed by Triple Jump) have joined existing co-sponsors of the Fund for Agricultural Finance in Nigeria (FAFIN) to drive agricultural transformation in Nigeria.
The firms boosted the federal governmentâ€™s initiative of a vibrant private sector-led agricultural financing by funding FAFIN to the tune of $65.9 million.
The private fund initiated by the Federal Ministry of Agriculture and Rural Development (FMARD) and managed by Sahel Capital, an agribusiness-focused private equity firm is to provide financial, capacity-building and technical assistance to selected Small and Medium Enterprises (SMEs) in the Nigerian agribusiness sector.
A statement issued wednesday by Dr Kayode Oyeleye, on behalf of Minister of Agriculture, Chief Audu Ogbeh, disclosed that AfDB, CDC Group and Dutch Good Growth Fund, committed $31million, while German Development Bank (KfW) offered to increase its commitments to the fund by an additional $10 million, subject to final approvals.
It is expected that the size of the agric-finance fund will increase to $76 million by December 2017.
FAFIN started with $32.8 million in commitments in 2014 when it was launched by the Ministry of Agriculture and Rural Development, the Ministry of Finance, KfW and the Nigeria Sovereign Investment Authority (NSIA).
Ogbeh, under whose watch this progress was recorded, has expressed full commitment towards the development of the agricultural sector.
He said though key developments in the sector would continually be private sectordriven, the federal government would provide the necessary incentives to grow the sector by facilitating financing and support for SMEs through investment vehicles such as FAFIN.
Sahel Capital will 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.
â€œWe 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,â€ Mezuo Nwuneli, Managing Partner at Sahel Capital, said.
She described the successful conclusion of FAFIN as a testament of investorsâ€™ confidence in the scaling up and sustainability of the fund conceived in 2013 by the former minister of agriculture, Dr. Akinwunmi Adesina and KfW, adding that Sahel Capital looks forward to partnering incoming investors that would drive the catalytic growth in the sector through partnerships and strong agribusinesses.
Sahel Capital has assessed over 100 companies since FAFINâ€™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 outgrower 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.
Managing Director/CEO of NSIA, co-investor in FAFIN Uche Orji said NSIA would continue to tap into key commercial and sustainable growth opportunities in the agriculture sector.
According to him, the strategic interest in the sector is predicated on commitment to drive rural and urban infrastructure development, adding that NSIA believes FAFIN is well positioned to capture these opportunities.