Sahel Capital, a private equity firm focused on the agriculture, agribusiness, manufacturing, and consumer goods sector in West Africa, has extended a US$1 million trade finance facility to Sourcing and Produce Limited (S&P) from its Social Enterprise Fund for Agriculture in Africa (SEFAA) fund.
SEFAA is a social impact fund launched in 2021 with KfW as the anchor investor, aimed at stimulating economic activities among smallholder farmers by empowering the social enterprises that engage with them.
S&P is a trading company that specializes in procuring and distributing agricultural commodities sourced from Africa, particularly Nigeria and Tanzania, to customers globally. The company has developed supply chain links with over 80 smallholder farmers in Jigawa and Kano states in Northern Nigeria, from whom they currently source their produce. The loan will enable S&P to expand its hibiscus flower supply chain and finance the aggregation of the flowers from smallholder farmers.
Through SEFAA’s technical assistance facility, Sahel Capital will support S&P to organize the farmers into cooperatives to improve their productivity and provide access to inputs, which will significantly impact the income and livelihood of these hibiscus farmers and their families. The loan facility will strengthen the hibiscus value chain, creating export earnings and prosperity for smallholder farmers across the region.
Sahel Capital currently manages two funds: Fund for Agricultural Finance in Nigeria (FAFIN), which has investments in SME agribusinesses in Nigeria, and Social Enterprise Fund for Agriculture in Africa (SEFAA), which provides primarily structured debt to agribusiness SMEs across 13 countries in sub-Saharan Africa. Sahel Capital is also raising capital for a successor fund – Sahel Capital Agribusiness Fund II, which will focus on investment opportunities across West Africa.
The loan facility is a testament to Sahel Capital’s unwavering commitment to generating positive social and economic change in Africa through impactful investing. This collaboration will significantly scale up S&P’s operations and expand into other African countries, extending its reach. The loan will also provide S&P with the market for hibiscus flowers sourced from several smallholder farmer communities.
This investment will significantly impact the income and livelihood of these hibiscus farmers and their families. Lanre Awojoodu, Founder & Managing Director of S&P, expressed gratitude for Sahel Capital’s support and trust in their vision. The loan facility will enable S&P to expand its operations and generate export earnings while building the capacity of smallholder farmers with whom they partner.
Sahel Capital’s investment strategy focuses on generating positive social and economic change in Africa through impactful investing. The company partners with small and medium-sized enterprises (SMEs) in the food and agriculture sector in sub-Saharan Africa to stimulate economic activities among smallholder farmers. The company’s investment director, Deji Adebusoye, expressed excitement about the opportunity to partner with S&P and the company’s incredible leadership.
The hibiscus export market in Nigeria is worth $100 million, and the loan facility will enable S&P to expand its operations and generate significant export earnings for Nigeria. The macroeconomic environment in Nigeria presents several challenges, including inflation, currency devaluation, and insecurity. However, Sahel Capital is committed to investing in the Nigerian agribusiness sector, which has significant potential for fostering regional growth.
Sahel Capital’s commitment to environmental, social, and governance (ESG) requirements is evident in its investment strategy. The company’s CEO, speakers, and senior investment director have emphasized the importance of ESG considerations in the company’s investment decisions. The company’s LPs also prioritize ESG considerations in their investment decisions, and Sahel Capital’s investment strategy aligns with their LP perspectives.
In conclusion, Sahel Capital’s trade finance facility to S&P from its SEFAA fund will significantly impact the income and livelihood of smallholder farmers in Nigeria, strengthen the hibiscus value chain, and generate significant export earnings for Nigeria. Sahel Capital’s investment strategy focuses on generating positive social and economic change in Africa through impactful investing, and the company’s commitment to ESG requirements is evident in its investment decisions.
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