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 accomplice at Sahel, who shared her insights from efficiently investing within the area’s agribusiness business.
Subjects mentioned throughout 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 complete interview under:
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Interview abstract
Lagos-based funding agency Sahel Capital has launched its second personal fairness car, the Sahel Capital Agribusiness Fund II (SCAF II). The fund has already secured $29 million in the 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 accomplice at Sahel Capital, Nigeria has a extra developed agribusiness sector than the opposite three international locations, 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 serious grower, Nigeria confronted a big shortfall between provide and demand, relying closely on imports.
Coscharis Group, a serious Nigerian conglomerate, launched the rice farm as considered one of its first forays into agriculture. The group introduced Sahel Capital on board as a strategic accomplice 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 underneath cultivation and lacked a processing plant. Sahel’s capital financed the development of a processing facility and expanded the land underneath 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 earnings grew considerably throughout the time Sahel was invested within the firm. FAFIN exited the enterprise in 2023, promoting its stake again to the mum or dad group.
Areas of alternative
Inside the broader agribusiness and meals sector, Ojo is especially optimistic about branded packaged meals. She notes that Sahel is in search of companies able to distributing their manufacturers throughout a number of West African international locations. The agency additionally favours meals corporations which are built-in into the native worth chain, comparable to these sourcing uncooked supplies immediately 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 – significantly sustainable packaging – as a goal space for the fund.
Nonetheless, SCAF won’t spend money on 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, contemplate farming companies that incorporate their very own processing operations.
