The African Development Bank approved a $9 million equity investment in the Fund for Agricultural Finance in Nigeria. The fund, which is managed by Sahel Capital, held a $34 million close in July last year and counts a number of other development finance institutions among its backers. The fund targets expansion capital opportunities in agricultural SMEs in the West African country.
As well as delivering competitive investment returns, FAFIN aims to generate social and economic benefits to Nigeria’s agricultural sector by improving the access to financing for agricultural enterprises. 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.
As well as the African Development Bank, the fund’s backers include the Nigerian Government’s Federal Ministry of Agricultural and Rural Development, KfW, the German development bank and Nigeria’s Sovereign Investment Authority. In June this year, we reported that the Dutch Good Growth Fund was mulling a $7 million commitment to the fund which was expected to close by the end of September.
FAFIN is targeting a final close of $55 million and will invest quasi-equity (convertible bonds, preference shares and structured royalties) and direct equity in its deals. The ticket size ranges from $500, 000 to $5 million.