Accessing agribusiness and Small & Medium Enterprises, SME loans in the country has remained a thorny issue for some time now.
However, the National Agricultural Development Fund (NADF) and Sahel Capital Fund Manager Limited have stated how they intend to provide a bailout
They have spoken their readiness to back Small to explore opportunities for expanding access to affordable financing for small and medium-sized enterprises (SMEs) in Nigeria’s agricultural sector.
They stated this during the signing of a Memorandum of Understanding (MoU) , with the Executive Secretary of NADF, Muhammed Ibrahim, describing their partnership as representing a deliberate shift from simply financing agriculture towards building an investment ecosystem.
Such a system he added was capable of attracting sustainable capital into the sector.
“We are bringing our catalytic and development mandates, alongside our understanding of national priorities, to work with an investment partner that has the market expertise and experience across different agricultural value chains.
“Our goal is to create an investment ecosystem that combines public-sector capital with private-sector expertise to unlock more financing opportunities for agribusinesses”, he said.
He said the collaboration would combine public-sector and concessionary capital with private investment expertise to establish a financing structure capable of attracting additional investors into agribusiness.
Ibrahim said these are with the objective to create an ecosystem where capital could flow into viable agricultural businesses and generate returns that would encourage further investments,
According to him although agriculture was often perceived as a high-risk sector, it also offered significant investment opportunities that could be unlocked through appropriate financing structures and partnerships.
Against the backdrop of challenges in accessing loans, the Managing Partner of Sahel Capital, Mezuo Nwuneli, said the collaboration would help reduce the cost of borrowing for agribusiness SMEs by combining funding from NADF with capital managed by the investment firm.
He added that many agribusinesses currently access loans at interest rates ranging between 24 and 27 per cent, making it difficult for them to expand their operations and invest in growth.
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“One output we expect is that when we’re providing capital to SMEs in the space, that blended cost for them would be much lower than what it would be,” he said.
Nwuneli added that the collaboration would also enable both institutions to identify critical challenges within the agricultural ecosystem and jointly deploy their expertise and resources towards addressing them.
He said Sahel Capital was attracted to NADF because of its deliberate efforts to address major challenges in Nigeria’s agricultural sector, including interventions in ginger production, farmers’ access to inputs and irrigation.
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