The
African Development Bank has approved a USD 9 million equity investment
(approximately 12% of the fund’s capitalisation) in the Fund for Agricultural
Finance in Nigeria (FAFIN) to provide expansion capital to agricultural small
and medium-sized enterprises (SMEs).
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 is expected to deliver strong development outcomes from (i) household
benefits and employment through the creation of a large number of jobs and the
provision of certain agricultural products; (ii) positive gender and social
effects through the implementation of out-grower schemes and supporting rural
development; and (iii) private sector development through alleviation of
financial constraints faced by agribusinesses and enhancing agricultural value
chains.
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 (convertible bonds, preference
shares and structured royalties) and direct equity. The ticket size ranges from
USD 500, 000 to USD 5 million.
The
Fund is aligned with the Bank’s Ten Year Strategy focusing on inclusive growth,
strengthening agriculture and food security, and access to local SME finance;
which is encapsulated in the Bank’ High Five Development Agenda for Africa,
specifically Feed Africa and Industrialise Africa. It is also in line with the
Bank’s Strategy for Agricultural Transformation in Africa (2016-2025), Strategy
on Jobs for Youth in Africa (2016-2025) and the Bank’s Country Strategy Paper
for Nigeria (2013-2017), which supports an enabling environment for
agriculture.
No comments :
Post a Comment