At a time when President Muhammadu Buhari, is seeking to diversify the nation’s economy to Agriculture, a ‘Super Minister’, who served under the former President, Goodluck Jonathan administration, has indicated interest to assist in the process.
The President of the African Development Bank, AFDB, and former Minister of Agriculture, Dr. Akinwummi Adesina, who made this known on Monday, August 8, in a statement issued and published on the website of the AFDB, said the bank has approved a whopping sum of $9 million equity investment, through the Fund for Agricultural Finance in Nigeria, FAFIN, in a bid to provide expansion capital to agricultural small and medium-sized enterprises, SMEs, in the country.
Adesina, noted that 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.
According to him, FAFIN, operates by using a unique value chain-centric approach, a combination of equity, quasi-equity, and convertible loan instruments, to provide loans for SME’s.
Adesina, noted that FAFIN would be implemented 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 overall objective of the project, is expected to deliver strong development outcomes from household benefits and employment, through the creation of a large number of jobs, and the provision of certain agricultural products.
“The project’s contribution to inclusive growth, is expected to be significant, given the large number of jobs to be created, and out-growers to be reached at the level of sub-projects,’’ the statement said.
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 efficiency, reduce post-harvest losses, and increase smallholder farmer incomes and SME agribusiness profitability.
The 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 Bank’s ten-year strategy, focusing on inclusive growth, strengthening agriculture and food security, and access to local SME finance.
According to Adesina, the whole project is in line with the bank’s strategy for Agricultural Transformation in Africa, from 2016-2025, and Strategy on Jobs for Youth in Africa, from 2016-2025.
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