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Supporting the formation of the fund for agricultural finance in Nigeria

There is an enormous unmet demand for finance among agricultural businesses in Nigeria. Small and mid-sized agribusinesses that manage integrated farming operations, or those that purchase crops from farmers and transform that output into food and other agricultural products, often lack access to sufficient bank credit to operate at their full potential. They also face limited options for the longer-term capital they need to grow. This lack of finance holds back the development of the agricultural sector, which accounts for at least a fifth of Nigeria’s economy (the largest in Africa) and over 50% of employment in the country. Lack of finance constrains the opportunities smallholder farmers could have to improve their livelihoods.

Recognizing the scale of this problem, the Nigerian Federal Ministry of Agriculture and Rural Development (FMARD) and the German development bank KfW engaged Dalberg to design and launch the Fund for Agricultural Finance in Nigeria (FAFIN): a $100 million private equity fund for small- and mid-sized enterprises (SMEs) to accelerate Nigerian agricultural development.


Over the course of nine months, our team was responsible for all aspects of the fund formation process. First, we conducted extensive market research and on-the-ground interviews, which led to a conclusion about the type of finance that would serve the largest unmet need in the market: a new growth capital fund that could support under-served but high-potential agricultural SMEs with equity and flexible mezzanine finance products.

Second, based on this market assessment and in close collaboration with the fund’s sponsors KfW and FMARD, we developed the fund’s investment strategy and facilitated the selection of an independent fund management team, Lagos-based Sahel Capital Partners, through a rigorous and competitive public tender process. We developed a robust financial model to demonstrate a range of financial outcome scenarios, and co-created the fund’s business plan and investment processes in close collaboration with the Sahel Capital team.

Finally, we facilitated negotiations over key terms of the fund, supported the drafting of fund documentation by legal counsel, and worked with the fund sponsors to put in place unique governance arrangements reflecting the sensitivities of government investment in the fund.


FAFIN reached a first close of $34 million in 2014, including a $10 million commitment by Nigeria’s new sovereign wealth fund, the Nigeria Sovereign Investment Authority. The fund will invest up to $5 million per company using debt, equity, and mezzanine financing for fast-growing enterprises across the Nigerian agricultural sector. FAFIN’s first investment—a minority equity stake in one of the fastest-growing local dairy producers in Nigeria, sourcing milk from small dairy farms in the northern part of the country—is emblematic of this approach.

At FAFIN’s public launch in December 2014, Nigeria’s former Minister of Agriculture and current AfDB President, Akinwumi Adesina, remarked that FAFIN was “the first public-private partnership of its kind for agricultural financing in Nigeria and, indeed, any country in Africa.”

In June 2017, FAFIN reached a final close of $65.9 million. As part of this close, the African Development Bank, CDC Group, and the Dutch Good Growth Fund have jointly committed $31 million to FAFIN.

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