Post by Trade Coach on Apr 17, 2017 2:51:42 GMT 1
The African Development Bank (AfDB) recently approved a $9million equity investment in the Fund for Agricultural Finance in Nigeria (FAFIN) to provide expansion capital to agric 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.
The AFDB, headed by Dr. Akinwumi Adesina, stated that FAFIN used a unique value chain-centric approach, a combination of equity, quasi-equity and convertible loan instruments to provide loan for SMEs. According to the Bank, 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 Nigerian government through the Federal Ministry of Agriculture and Rural Development.
The Fund Manager is Sahel Capital (Mauritius) Limited, a fund management firm incorporated in Mauritius in 2013. The project is expected to deliver development outcomes from household benefits and employment through the creation of a large number of jobs and the provision of agric products for local consumption and exportation.
AfDB stated that this would result to positive gender and social effects through the implementation of out-grower schemes and supporting rural development and private sector development. It added that through alleviation of financial constraints faced by agribusinesses, this would enhance 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," the Bank stated.
The Fund's primary focus will be on SMEs across the agric 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 $500, 000 to $5 million.
The Fund is aligned with the AfDB's Ten- Year Strategy focusing on inclusive growth, strengthening agriculture and food security, as well as access to local SME finance. This encapsulated in the Banks' High5 Development Agenda for Africa, specifically Feed Africa and Industrialize 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). Others are the Bank's Country Strategy Paper for Nigeria (2013-2017), which supports an enabling environment for agriculture.
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.
The AFDB, headed by Dr. Akinwumi Adesina, stated that FAFIN used a unique value chain-centric approach, a combination of equity, quasi-equity and convertible loan instruments to provide loan for SMEs. According to the Bank, 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 Nigerian government through the Federal Ministry of Agriculture and Rural Development.
The Fund Manager is Sahel Capital (Mauritius) Limited, a fund management firm incorporated in Mauritius in 2013. The project is expected to deliver development outcomes from household benefits and employment through the creation of a large number of jobs and the provision of agric products for local consumption and exportation.
AfDB stated that this would result to positive gender and social effects through the implementation of out-grower schemes and supporting rural development and private sector development. It added that through alleviation of financial constraints faced by agribusinesses, this would enhance 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," the Bank stated.
The Fund's primary focus will be on SMEs across the agric 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 $500, 000 to $5 million.
The Fund is aligned with the AfDB's Ten- Year Strategy focusing on inclusive growth, strengthening agriculture and food security, as well as access to local SME finance. This encapsulated in the Banks' High5 Development Agenda for Africa, specifically Feed Africa and Industrialize 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). Others are the Bank's Country Strategy Paper for Nigeria (2013-2017), which supports an enabling environment for agriculture.
