AfDB approves $9m commitment to agribusiness

The fund aims to support growth in Nigeria's agriculture sector through quasi-equity deals.

The African Development Bank has committed $9 million to the Fund for Agricultural Finance in Nigeria.

The impact investment fund provides financing and technical assistance to small- and medium-size enterprises in Nigeria’s agriculture sector. It targets investments of $3 million to $5 million in logistics and storage companies, producers, processors and inputs providers. However, investments from the fund can be as little as $500,000 or up to 10 percent of its total commitments.

The fund is managed by Mauritius-based Sahel Capital.

The majority of the fund’s investments are given to projects in the form of quasi-equity instruments, including convertible bonds, preference shares and structured royalties. The fund also makes minority equity acquisitions and secured debt deals.

With 397 million people and gross domestic product of $182 million, Nigeria is Africa’s largest country by population and GDP. The country’s main export, oil, has seen significant losses in international markets. The IMF recently predicted Nigeria’s economy will contract in 2016.

Despite the importance of oil to Nigeria’s economy, agriculture remains the major source of livelihoods and incomes in the country according to the FAO.

The FAFIN is sponsored jointly by Germany’s KfW Development Bank and the Government of Nigeria’s Ministry of Agriculture and Rural Development. The fund can also make investments through equity acquisitions and debt financing.