NADF, Sahel Capital Partner To Cut Agribusiness Financing Costs

The National Agricultural Development Fund (NADF) has partnered with Sahel Capital Fund Manager Limited to expand access to affordable financing for small and medium-sized enterprises (SMEs) in Nigeria’s agricultural sector, in a move aimed at attracting more private investment into agribusiness.

The partnership, formalised through a Memorandum of Understanding (MoU), will explore blended financing arrangements that combine public-sector and concessional funding with private investment capital to reduce borrowing costs and improve access to finance for agricultural businesses.

Speaking at the signing ceremony, NADF Executive Secretary, Muhammed Ibrahim, said the collaboration marked a strategic shift from conventional agricultural financing towards building an investment ecosystem capable of attracting sustainable capital into the sector.

He said NADF would deploy its catalytic and development mandates, alongside its understanding of national agricultural priorities, while Sahel Capital would contribute investment expertise, market knowledge and experience across various agricultural value chains.

“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.

According to a statement by the NADF, Ibrahim explained that the proposed arrangement would combine public-sector and concessionary capital with private investment expertise to establish a financing structure capable of attracting additional investors into agribusiness.

According to him, the broader objective is to create a sustainable financing ecosystem where capital can flow into viable agricultural enterprises, generate returns and encourage further investments in the sector.

He noted that although agriculture was often perceived as a high-risk investment destination, the sector offered considerable opportunities that could be unlocked through appropriate financing structures, strategic partnerships and effective risk management.

Also speaking, Managing Partner of Sahel Capital, Mezuo Nwuneli, said the partnership would help lower the cost of borrowing for agribusiness SMEs by combining NADF’s funding capacity with capital managed by the investment firm.

He observed that many agricultural businesses currently obtain loans at interest rates of between 24 and 27 per cent, a development that significantly constrains their ability to expand operations, invest in productive assets and scale their businesses.

Nwuneli said the proposed financing arrangement would allow both institutions to provide capital at a lower blended cost, improving the financial position of beneficiary businesses and freeing up resources for expansion.

“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.

He added that the collaboration would go beyond providing finance to identifying critical challenges across the agricultural ecosystem and deploying the institutions’ respective expertise and resources to address them.

Nwuneli said Sahel Capital was attracted to the partnership because of NADF’s deliberate efforts to tackle some of the major constraints affecting agricultural development in Nigeria, including challenges in ginger production, farmers’ access to inputs and irrigation.

He described NADF as an institution committed to addressing critical problems within the agricultural ecosystem, noting that its team had demonstrated the capacity and willingness to drive meaningful interventions.

Under the MoU, both institutions will explore the feasibility of blended financing arrangements through which NADF may provide funding alongside capital managed by Sahel Capital, including the Sahel Agribusiness Private Debt Fund (SAPDF).

The proposed structure may incorporate risk-sharing mechanisms, concessional financing and other funding arrangements designed to improve access to capital for eligible agribusinesses.

Sahel Capital is expected to provide investment structuring, fund management and technical expertise, identify eligible businesses and develop appropriate monitoring and reporting frameworks for the proposed financing facility.

Other areas of potential collaboration include information sharing, the development of a pipeline of bankable agribusiness projects, technical assistance and capacity building.

The partnership is expected to explore ways of addressing financing gaps confronting agricultural SMEs while creating opportunities for increased private-sector participation in Nigeria’s agricultural value chains.