AFEX, Nigeria’s commodities market player, has announced a new $100 million 10-year bond called The Food Security Fund (FSF). The financing will strengthen Africa’s food security and produce three million MT of food annually on the continent.
AFEX’s 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 focus of the 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. As a blended finance structure, with an external fund manager, AFEX’s $100 million bond will boost food security in Nigeria, with additional impact across Ghana, Côte d’Ivoire, Kenya, Rwanda, Uganda and Tanzania.
A significant portion of the funding will be allocated to constructing warehouses. 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.
“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,” said Ayodeji Balogun, CEO at AFEX. “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. 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.”
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.
AFEX harnesses Africa’s commodities and talent to build shared wealth and prosperity. Its infrastructure and platform investments work to unlock capital to power a trust economy in Africa’s commodities markets. 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. By deploying an efficient market system, the company will facilitate trade with Africa worth over $500 million in the next five years.
AFEX’s vision is to be the reference point for commodities in Africa. 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.