Traditionally, Nigerian agriculture was not the place to find educated professionals, much less experts in finance, investment banking or private equity. Ironically, for decades, the agriculture sector has amongst other challenges been bedevilled with limitations in access to finance, and a dearth of innovation to drive growth. The agric sector needed professionals that will bring their knowledge and expertise to the fields and help stimulate growth, but the fields were the last place those professionals would want to be found.
Finding a professional with expertise in private equity, investment banking, and corporate finance with 22 years of experience in Nigerian agriculture was therefore bound to be a strange sight, but for Mezuo Nwuneli, the past decade has been one of transforming agriculture in Nigeria and supporting businesses to grow. His company, Sahel Capital, has raised $65.9 million till date, the chunk of which has been invested in seven companies, with two or three other investments still to be executed.
But who is Mezuo Nwuneli, managing partner of Sahel Capital Agribusiness Managers Limited?
Mezuo has a 22-year career in a broad spectrum of finance related roles in private equity, investment banking, and corporate finance. Over the past ten years, Mezuo has worked extensively within the agribusiness sector in West Africa and across a broad range of crop value chains. He has also previously worked in the financial services, oil & gas, and telecommunications sectors.
Mezuo started his career with the corporate finance team of the Sabre Group in Dallas in 1995, and then worked in J.P. Morgan & Co’s mergers and acquisitions group in New York. He was previously a Partner at AFIG Funds, a private equity firm covering 28 countries in West and Central Africa; and has also worked in leadership positions at SecTrust (now Afrinvest), Ocean & Oil Holdings, and MTS First Wireless. He resigned from AFIG to co-found Sahel Capital in 2010. He is also the Co-Founder/Chairman of AACE Foods, an agro-processing company based in Ogun State.
Mezuo holds a Master in Business Administration (MBA) from Harvard Business School, and a B.Sc. in Industrial Management, with a minor in Information Systems from Carnegie Mellon University. He is a 2007 Archbishop Desmond Tutu Fellow and a 2015 Eisenhower Fellow.
Sahel Capital managed by Mezuo is a leading private equity firm focused exclusively on the agribusiness sector. Sahel Capital is the fund manager for the Fund for Agricultural Finance in Nigeria (“FAFIN”), a private equity fund focused on SME agribusiness opportunities in Nigeria.
Journey to agriculture and the ‘leap of faith’ with AACE Foods
In 2009 while in Senegal working in private equity, Mezuo and his wife Ndidi saw an opportunity in food and agriculture, and they “decided to dive in head first,” as Mezuo recalled in an interview. According to him, it was an opportunity to both generate commercial returns and also have an impact on people’s lives. At the time, the couple did not know so much about agriculture.
When Mezuo and his wife launched their first agribusiness in 2010, the focus was on processing. The initial business plan was to produce jams, spreads, spices, and seasonings. But, what caught their attention was that there was one noodles company in the country, which at the time was importing 50 tonnes of chilli pepper per month.
This, they considered shocking because they knew chilli pepper could be sourced in Nigeria. The business therefore started by trying to go through the import substitution model, by building the local supply chain, with the expectation that if they could ensure the right quality and price points for buyers, they would effectively displace all the FMCGs and multinationals who were importing spices. This way, build volumes, and on the back of those volumes, then launch a retail brand into market, and ultimately also start exporting. Even though seasoning was supposed to be a later stage introduction, it was fast tracked and became the main product since the market needed it more.
Looking back a decade of AACE Foods, Mezuo recalls the first day with no equipment, no real factory, a rented location in Ojokoro, Ahmadiyya where the business operated for two years before moving. The business started in a modified house with very basic equipment, but today, has grown to attain an enviable position in the industry.
With his background in investment banking, corporate finance, and other sectors, one would think Mezuo saw a vision of unlimited cash flow in agriculture, hence, the interest. As he explained, however, the attraction for food and agriculture is not just the investment potential, but also to have the ability to impact people’s lives.
Championing agricultural finance in Nigeria
While there is Sahel consulting that provides management consulting and advisory services to a range of international clients within the agricultural sector, there is also Sahel capital, which is the private equity firm that manages funds for institutional and international investors.
Initially, both were one firm, but as it grew they realised there was a need to have two separate entities to better serve each market appropriately because they are different dynamics. The firms were effectively separated in January 2017 with Sahel Capital run by Mezuo, while Ndidi (his wife) runs Sahel Consulting, with each spouse being a shareholder in the other’s company.
Mezuo’s plan to set up a private equity venture focusing on agriculture started in 2012. However, in 2013 while he was still in the process of working that business plan, the government decided to anchor a private equity fund (which was FAFIN) focused on food and agriculture and there was going to be a Request for Bid (RFB) process.
When Mezuo and his team saw this, they were excited because it was as though the announcement by government was tailor made for them. Going through the selection process, Mezuo recalls there were many international and local applicants, and Sahel got selected in the middle of 2013.
In his words: “I would guess the reason we were selected beyond track record and what we’ve done in investing, is that before there was money available for agriculture, we already showed we were interested in it by putting our own money to try and build businesses and be active in the space. That gave credibility that it wasn’t because there was money on the table that we wanted to do this.”
FAFIN is a private equity fund that provides financial, capacity‐building, and technical assistance to selected SMEs in the Nigerian agribusiness sector. Investors in FAFIN include the African Development Bank, DFID Impact Fund (managed by CDC Group), Dutch Good Growth Fund (managed by Triple Jump), the Federal Government of Nigeria, KfW Development Bank, and the Nigeria Sovereign Investment Authority.
The first close of funding was in 2014 with $33 million, followed by another round in 2017, which yielded an additional $32.9 million, to increase the total pool to $65.9 million that Sahel Capital manages.
FAFIN’s portfolio companies under Mezuo’s management have so far generated 672 direct jobs, out of which about 17 percent are women, and indirectly impacted over 16,300 individuals through their engagement across the value chain. FAFIN portfolio companies aggregate a significant amount of crop from Nigerian farmers including over 25,500 MT rice paddy, 13,000 MT cassava, 364,000 litres of milk, 260,300 birds and 24,000 MT shea nuts per year.
In terms of deliverables, Sahel Capital is expected to invest in ten to twelve companies, where it would have equity. It is supposed to build and create value in those companies, such that when money is returned to the investors, it would have made over 8 percent per year in dollar terms during the fund’s 10-year period.
So far, seven investments have been made and expecting to do another two or three investments in the next six months, with that, be done with all the capital of FAFIN, and likely going back to the market next year to raise a new fund to do the same thing in the sector.
The seven companies currently in his portfolio are; L&Z Integrated Farms; Diamond Pearls Agro Allied; Dayntee Poultry; Crest Agro Products; Coscharis Farms; Ladgroup; and Polyfilm Packaging Nigeria Limited.
If Mezuo had to advice anybody, he had to this say: “Very early on, surround yourself with mentors, a good board, and good advisers who have knowledge in areas you do not have knowledge on, because as you encounter the different challenges, they’ll be the ones to help guide you since they have gone through it before.
“If you think you can do it by yourself, you are mistaken,” he said.
CALEB OJEWALE
