The National Agricultural Development Fund (NADF) and Sahel Capital Fund Manager Limited have signed a Memorandum of Understanding to increase access to low‑cost financing for Nigeria’s small and medium agribusinesses, seeking to reduce borrowing rates that currently hover around 24‑27 percent and unlock private investment in the sector.
What are the main objectives of the partnership?
The agreement is designed to shift away from traditional agricultural credit models toward a more sustainable investment ecosystem. It will blend public‑sector and concessionary capital with private‑sector expertise to create additional financing channels for viable agribusinesses, thereby lowering the overall cost of capital and encouraging expansion.
How will the blended financing work?
Under the MoU, NADF will provide catalytic funding alongside capital managed by Sahel Capital, including the Sahel Agribusiness Private Debt Fund (SAPDF). The framework may incorporate risk‑sharing mechanisms, concessional loans, and other innovative structures intended to improve capital access for eligible enterprises.
What roles will each institution play?
NADF will contribute its development mandate and deep understanding of national agricultural priorities, while Sahel Capital will supply investment structuring skills, market intelligence, and experience across various agricultural value chains. Sahel Capital will also identify promising agribusinesses and set up monitoring and reporting systems for the new facility.
Why is lower borrowing cost critical for agribusiness SMEs?
Current loan rates of 24‑27 percent make it difficult for many small farmers and processors to invest in productive capacity or scale up operations. The collaboration aims to deliver financing at a reduced blended cost, enhancing business viability and freeing resources for growth.
"The agreement marks a deliberate shift from conventional agricultural financing towards building an investment ecosystem capable of attracting sustainable capital into the sector," said Muhammed Ibrahim, Executive Secretary of NADF. He highlighted the importance of aligning public support with private expertise to stimulate long‑term sector development.
"The proposed collaboration would enable both institutions to provide financing at a lower blended cost, improving the financial viability of businesses and freeing up resources for expansion," noted Mezuo Nwuneli, Managing Partner of Sahel Capital, emphasizing the potential impact on Nigeria’s agricultural output and food security.
Nigeria’s agriculture sector remains a key driver of employment and GDP, contributing over 30 percent of the workforce. Initiatives like this MoU are expected to strengthen the sector’s resilience by making capital more accessible and affordable for the entrepreneurs who form its backbone.