Sahel Capital has announced the launch of the Social Enterprise Fund for Agriculture in Africa (SEFAA). The fund manager will act as an investment adviser to the US$24 million fund sponsored by the German development bank, KfW.
SEFAA is an impact fund with the goal of reducing poverty by investing in social agricultural enterprises (SAEs) that contribute significantly to enhancing the business eco-system, or income opportunities, of smallholder farmers (SHFs) in sub-Saharan Africa.
In addition to SEFAA’s targeted impact of reducing poverty through its investments, the fund is also expected to create and preserve jobs and deliver on six of the UN sustainable development goals (SDGs 1, 2, 3, 4, 5 and 6).
Sahel Capital will invest the capital in SAEs across the agricultural value chain with a particular focus on enterprises or intermediaries that increase the productivity of SHFs, address market access limitations or information asymmetries or offer agricultural finance tailored to the specific needs and production cycles of SHFs.
KfW has been a committed supporter of agricultural development on the African continent, and over the past 8 years has anchored several other funds such as Africa Agriculture and Trade Investment Fund (AATIF), Fund for Agricultural Finance in Nigeria (FAFIN), and Lending for African Farming Company (LAFCo).
Established in 2010, Sahel Capital raised its debut US$65.9 million Fund for Agricultural Finance in Nigeria (“FAFIN”) in 2014 (final close in 2017) and has since invested in and grown SME agribusinesses across 7 agricultural value chains. Through these investments, FAFIN has created over 118,000 direct and indirect jobs – over 50% of which are occupied by youth – and engaged with or sourced produce from more than 16,000 smallholder farmers (43% of which are women) by supporting innovative business incentives and out‐grower schemes.
With SEFAA, Sahel will implement a new impact first investment strategy that is distinct from, but complementary to, its debut FAFIN fund and incoming successor Fund II, both of which are growth capital funds targeting high-growth, established SMEs.
SEFAA will invest primarily debt (but with the flexibility to invest some equity or quasi-equity) with the aim of filling the financing gap for earlier-stage enterprises that may not yet be mature or profitable enough to get equity and/or debt from commercial capital providers.
SEFAA fits well into the overall Sahel mission and strategy of allocating capital and technical support to solve hard agribusiness challenges, which ultimately will drive transformational and inclusive growth on the African continent.
Speaking on the final close of SEFAA, Mezuo Nwuneli, Managing Partner at Sahel Capital said: “We are delighted to be selected as investment adviser to SEFAA and grateful to KfW for its constant support and commitment to our shared mission of driving growth in this critical sector.
“We are excited at this next phase in the firm’s evolution as we leverage existing sector expertise, a broad network and regional partnerships to expand our investment footprint outside Nigeria into West, East and Southern Africa.”
