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AfDB investing $9 million in agricultural finance in Nigeria

Staff Writer |
The African Development Bank has approved a $9 million equity investment (approximately 12% of the fund’s capitalisation) in the fund for Agricultural Finance in Nigeria (FAFIN).

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FAFIN is a first-generation private equity fund that provides financial, capacity-building and technical assistance to commercially viable SMEs in the Nigerian agribusiness sector, through a unique value chain-centric approach, and using a combination of equity, quasi-equity and convertible loan instruments.

FAFIN implements its strategy and constructs its portfolio through a bifocal lens consisting of the twin objectives of competitive financial returns and measurable positive social impact.

The fund is jointly sponsored by the German KfW Development Bank and the Government of Nigeria, through the Federal Ministry of Agriculture and Rural Development (FMARD). the fund Manager is Sahel Capital (Mauritius) Limited, a fund management firm incorporated in Mauritius in 2013.

The project’s contribution to inclusive growth is expected to be significant, given the large numbers of jobs to be created and out-growers to be reached at the level of sub-projects.

Its contribution to green growth is expected to be low, because the fund targets the agribusiness sector with some expected negative effects on the environment.

The fund’s primary focus will be on SMEs across the agricultural value chain with crop value chain and geographic diversification. It aims at fixing broken value chains to increase efficiencies, reduce post-harvest loss, and increase smallholder farmer incomes and SME agribusiness profitability.

Investment instruments will be primarily quasi-equity and direct equity. The ticket size ranges from $500,000 to $5 million.

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