NIGERIA – AFEX, Nigeria’s leading commodities market player, is seeking to spread his impact across the region with the launch of new US$100m 10-year bond dubbed The Food Security Fund (FSF).
The financing is aimed to strengthen Africa’s food security and produce three million MT of food annually on the continent.
According to AFEX, the fund will support the financing of 250,000 hectares of land for commercial and smallholder farming, initially consisting of 30,000 hectares in the Nigerian states of Kano, Kaduna, Oyo, Ogun, Cross River & the FCT, before covering markets across East and West Africa.
The other markets on the blended financing radar include Ghana, Côte d’Ivoire, Kenya, Rwanda, Uganda and Tanzania.
The focus of The Food Security Fund will be to explore and optimize climate smart innovations and high yield agronomy protocols to ensure more food is produced and that land is used efficiently. A significant portion will be allocated to constructing warehouses.
“The launch of The Food Security Fund is another really important milestone as we chart our journey building the physical and technology-enabled infrastructure for the continent’s commodity sector
“Finance will always be a key component of that infrastructure and so we’re very excited to roll out this bond to deliver what will eventually be a decade’s worth of impact,” said Ayodeji Balogun, CEO at AFEX.
The funding is timely as in Nigeria alone there is only capacity to store 4% of annual grain production.
Restricted production has led to a 300,000 MT gap between demand and supply of seeds, and a 10 million MT gap in demand and supply of grains, increasing food import costs, and declining capacity utilization of processing plants.
“One of our core missions is to help the continent feed itself and we deliberately aligned our company goals with the UN SDGs from the outset, in particular the first and second goals to end hunger and eliminate poverty,” said Ayodeji.
Since its inception in 2014, AFEX has developed and deployed a viable commodities exchange model for the West African market and is on track to impact one million producers; providing services in productivity and value capture and access to finance and markets.
Having worked with capital markets players to structure debt securities for over 200,000 smallholder farmers to date, AFEX is well positioned to roll out the Food Security Fund.
Bolstered by an existing network of over 100 warehouses and digital trading platforms that link investors with producers and processors, the company’s commitment to the agricultural sector and deep industry knowledge will add crucial expertise behind this much needed funding.
By deploying an efficient market system, the company will facilitate trade with Africa worth over US$500 million in the next five years.
To achieve this goal, AFEX looks to introduce products that de-risk the sector, drive financial inclusion for rural communities, develop technology for data collection and market access, and enable capital deployment.