

The Fund for Agricultural Finance in Nigeria (FAFIN), an impact fund, has made its first investment by buying a stake in a local dairy business.
The fund, which held a first close on $34 million earlier this year, is targeting a final close on $100 million by July. It is at various stages of discussion with both development finance institutions and commercial return-focused institutional investors including two funds of funds, Mezuo Nwuneli, managing director at Sahel Capital, the fund’s manager, told Agri Investor.
Existing sponsor investors KfW Development Bank, Nigeria’s Federal Ministry of Agriculture & Rural Development and the Nigeria Sovereign Investment Authority have also committed to increase their stakes if the fund falls short of its target, according to Nwuneli.
FAFIN bought a 25 percent stake in L&Z Integrated Farm after reviewing most other dairy businesses in the country. L&Z was chosen over others because of the work it has put into securing fresh local milk; other dairy businesses tend to import milk powder from neighbouring African countries, according to Nwuneli.
“The management seems very passionate about the sector and knows the business well,” he told Agri Investor. “They have built out milk collection centres across the country which no other dairy businesses in Nigeria has. It is almost impossible to get fresh milk in Nigeria but they are able to acquire 2,000 litres per day which is big for Nigeria.”
L&Z’s work also has a positive social impact because it secures a market for cattle herders to sell their milk to. The herders should now be able to send their children to school instead of relying on them to help sell the milk in the street, said Nwuneli.
“So with this investment there’s commercial return potential, positive contributions to the local supply chain and impactful involvement with the local community,” he said.