AFEX launches $100 million food security fund for expansion across African market

AFEX, Nigeria’s commodity market has launched a new $100 million 10-year bond called the Food Security Fund (FSF) to enable it produce as much as three million metric tonnes of food annually in Africa.

According to a press release seen by Nairametrics, the fund will help to finance 250,000 hectares of land for commercial and smallholder farming across states in Nigeria more than the 30,000 hectares in Nigerian states of Kano, Kaduna, Oyo, Ogun, Cross River and the FCT which is initially covered.

It stated that the fund will aid further expansion beyond markets across East and West Africa.

What AFEX is saying

Expectedly, a large chunk of the funding will be allocated to constructing warehouses as Nigeria, according to the release, has capacity to store only 4% of annual grain production.

It added that the restricted production has led to a 300,000 metric tonnes gap between demand and supply of seeds in addition to a 10 million metric tonnes gap in demand and supply of grains, thereby increasing food import costs, and declining capacity utilization of processing plants.

Commenting on this, Ayodeji Balogun, CEO, AFEX said the launch of the FSF is another really important milestone as the commodity market chart journey into building the physical and technology-enabled infrastructure for the continent’s commodity sector.

He said, “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 United Nations SDGs from the outset, in particular the first and second goals to end hunger and eliminate poverty.”

What this means

In the view of AFEX, the focus of the FSF 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.

Also, AFEX’s $100 million bond will expectedly boost food security in Nigeria as a blended finance structure with an external fund manager, impacting across Ghana, Côte d’Ivoire, Kenya, Rwanda, Uganda and Tanzania.