SMEs: NADF, Sahel Capital sign MoU to reduce borrowing costs

By Gabriel Ewepu ABUJA – IN a bid to boost agribusiness, the National Agricultural Development Fund, NADF and Sahel Capital Fund Manager Limited have signed a Memorandum of Understanding, MoU, to expand access to affordable financing for Small and Medium Enterprises, SMEs, in the agricultural sector. The partnership which seeks to unlock more private-sector investments in agriculture, is expected to reduce the cost of borrowing for agribusinesses through innovative blended financing arrangements.

Speaking at the signing ceremony, Executive Secretary, NADF, Muhammed Ibrahim, said the agreement marked a deliberate shift from conventional agricultural financing towards building an investment ecosystem capable of attracting sustainable capital into the sector. Ibrahim explained that NADF would bring its catalytic and development mandates, as well as its understanding of national agricultural priorities, to the partnership, while Sahel Capital would contribute investment expertise, market intelligence and experience across different agricultural value chains.

According to him, the collaboration is designed to combine public-sector and concessionary capital with private investment expertise to unlock additional financing opportunities for viable agribusinesses. Under the MoU, both institutions will explore the feasibility of blended financing arrangements through which NADF provide funding alongside capital managed by Sahel Capital, including the Sahel Agribusiness Private Debt Fund, SAPDF.

The proposed financing framework may feature risk-sharing mechanisms, concessional financing and other innovative funding structures aimed at improving access to capital for eligible agribusinesses. Sahel Capital is also expected to provide investment structuring, fund management and technical expertise, identify eligible agribusinesses and develop monitoring and reporting frameworks for the proposed facility.

Other areas of collaboration include information sharing, development of a pipeline of bankable agribusiness projects, technical assistance and capacity building. Also speaking, Managing Partner, Sahel Capital, Mezuo Nwuneli, explained the partnership basically would help reduce borrowing costs for agribusiness SMEs by combining NADF funding with capital managed by the investment firm.

However, Nwuneli lamented many agribusinesses currently obtain loans at interest rates ranging between 24 and 27 per cent, a situation he said makes business expansion, investment in productive capacity and long-term growth difficult. He said that the proposed collaboration would enable both institutions to provide financing at a lower blended cost, improving the financial viability of businesses and freeing up resources for expansion.