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VENTURES AFRICA – West African-focused fund manager, Sahel Capital has unbundled a $33 million investment fund for agribusiness in Nigeria, with particular focus on the sector’s SMEs.
“We raised $33 million to invest in agribusiness SMEs across Nigeria, and will be seeking to raise additional capital during the course of the year to reach our $100 million target,” an insider at Sahel told Business Day.
According to Business Day, the investment is a mix of debt and equity with a 10-year lifespan, designed to provide financing for Agric-focused SMEs as well as partner intermediaries to with lending facilities for small scale farmers.
Nigeria’s GDP composition is largely dominated by oil exports, which accounts for nearly 80 percent of its yearly income despite enormous agricultural resources. Such streamlined revenue sourcing is unhealthy for an economy primed to become Africa’s largest within the next decade.
As the global oil price looks increasingly unpredictable owing to recent oil discoveries including large Shale reserves in US, a need for economic diversification is highly needed.
In contrast, Nigeria holds huge reserves of untapped agric resources, with exportable products such as groundnut, oil palm, cassava and rice in rich abundance as well as large arches of uncultivated fertile lands with over 80 million hectares of arable land, 23 percent of West Africa’s entire agric land.
Agriculture is therefore a profitable venture for both private and public investors and the best alternative for economic diversification.
Despite the immense opportunities afforded, the sector still lacks necessary funding, though efforts by the government to develop the entire value chain, through intervention funds and raw material subsidy, have yielded significant results with statistics now showing the sector contributes 40 percent of GDP.
A complete development of the sector is only achievable with the right mix of public and private investment. Sahel’s investment is therefore seen as the healthy addition to agri-business, which is seen as the way to drive employment and spur SME growth in the country.