Tosin Ojo
Branded meals and sustainable packaging. These are simply two of the areas in West Africa’s agribusiness sector the place funding agency Sahel Capital sees engaging alternatives. How we made it in Africa spoke to Tosin Ojo, a companion at Sahel, who shared her insights from efficiently investing within the area’s agribusiness business.
Matters mentioned through the interview embrace:
- Sahel Capital’s new West African agribusiness funding fund
- Classes learnt from investing within the agribusiness business
- Notable earlier investments
- Areas of alternative in West Africa’s agribusiness sector
- Sub-sectors the fund will keep away from
Watch the total interview beneath:
Interview abstract
Lagos-based funding agency Sahel Capital has launched its second personal fairness automobile, the Sahel Capital Agribusiness Fund II (SCAF II). The fund has already secured $29 million in direction of its $75 million goal and has executed its first funding.
SCAF II will goal West African agribusiness corporations, focusing totally on Nigeria, Ghana, Côte d’Ivoire, and Senegal. The fund will make investments starting from $3 million to $15 million in these entities. Based on Tosin Ojo, a companion at Sahel Capital, Nigeria has a extra developed agribusiness sector than the opposite three nations, in addition to bigger corporations working within the area.
Standout earlier investments
SCAF II is the successor to Sahel’s Fund for Agricultural Finance in Nigeria (FAFIN), launched in 2014.
Ojo highlighted L&Z Built-in Farms, a dairy and yoghurt producer based mostly within the northern Nigerian state of Kano, as a standout funding from that fund. When Sahel acquired a 25% stake in 2015, L&Z’s footprint was restricted to Kano and some neighbouring states. Backed by Sahel’s capital, the corporate considerably scaled its manufacturing capability and expanded its grocery store distribution nationwide. By the point Sahel exited in 2022 – promoting its stake again to the founder – L&Z’s revenues had grown greater than tenfold.
One other notable funding from the primary fund was Coscharis Farms, a rice processing enterprise within the southeastern Nigerian state of Anambra. The funding was predicated on Nigeria’s excessive rice consumption as a home staple and the potential for import substitution. Regardless of being a significant grower, Nigeria confronted a big shortfall between provide and demand, relying closely on imports.
Coscharis Group, a significant Nigerian conglomerate, launched the rice farm as one among its first forays into agriculture. The group introduced Sahel Capital on board as a strategic companion on the inception stage to assist begin up and stabilise the enterprise.
On the time of Sahel’s preliminary funding, Coscharis Farms had only some hundred hectares below cultivation and lacked a processing plant. Sahel’s capital financed the development of a processing facility and expanded the land below cultivation. Along with its personal rice manufacturing, the corporate additionally buys rice from 1000’s of small-scale farmers. Based on Ojo, each income and income grew considerably through the time Sahel was invested within the firm. FAFIN exited the enterprise in 2023, promoting its stake again to the mother or father group.
Areas of alternative
Inside the broader agribusiness and meals sector, Ojo is especially optimistic about branded packaged meals. She notes that Sahel is searching for companies able to distributing their manufacturers throughout a number of West African nations. The agency additionally favours meals corporations which might be built-in into the native worth chain, resembling these sourcing uncooked supplies straight from smallholder farmers.
Reflecting this technique, SCAF II’s first funding was in Delifrost Caterers, a Nigerian producer and distributor of meals merchandise starting from cheese and sausages to frozen greens.
Ojo additionally recognized meals packaging – notably sustainable packaging – as a goal space for the fund.
Nonetheless, SCAF won’t put money into pure main agriculture. Ojo famous that main farming doesn’t align with the standard personal fairness mannequin, which requires companies to exit their investments after a set variety of years. The fund will, nonetheless, think about farming companies that incorporate their very own processing operations.
