MASSIF, a financial inclusion fund managed by Dutch development bank FMO, has extended a $4 million loan to Babban Gona, an agriculture-focused social enterprise in northern Nigeria.
Babban Gona attempts to overcome challenges stemming from low economies of scale among farmers in northern Nigeria through a “farmer service model”, providing training in sustainable farming and soil analysis as well as access to crop insurance, storage, credit, fertilizer and seeds. The enterprise has a specific focus on resilience in the face of climate change, offering farmers in its network access to drought-resistant seeds and training in water retention and soil structure improvements.
Established in 2012, the enterprise provides its services on credit repayable at the end of each season and it claims the ability to double smallholder farmers’ yields and increase their income by as much as 3.5 times.
“We are proud of our partnership with Babban Gona which will help farmers in northern Nigeria to access necessary skills, markets and services, and significantly improve their livelihoods,” said FMO director of agribusiness, food and water Suzanne Gaboury in a statement.
Agriculture accounts for about 20 percent of GDP in Nigeria. After a sharp drop in oil prices last year brought on its first economic contraction in 25 years, the IMF expects the country’s agricultural sector to play a role in supporting GDP growth of 0.8 percent this year and 1.9 percent in 2018, according to an April projection.
Last week, Sahel Capital closed its Nigerian government-backed agriculture-focused fund on $65.9 million and Nigeria is among the countries targeted by an AfricInvest fund launched in January to support small- and medium-sized French businesses investing in Africa.
Agriculture is among the four target sectors of MASSIF, a Dutch government fund that promotes financial inclusion through support for small businesses and entrepreneurs in the developing world. The fund was among investors in Injaro Agricultural Capital Holdings, a West Africa focused impact investing fund that closed on $49 million in September 2014, and is managed by FMO.
FMO is a Dutch development bank that makes private sector investments in financial institutions, energy and agribusiness throughout the developing world. Earlier this month, it contributed to a $410 million financing package for Argentine soy exporter Renova and in December FMO extended a $30 million loan to support the water resource management efforts of Peruvian agricultural processor DanPer Trujillo.