British International Investment (BII), the UK’s development finance institution and impact investor, on Monday announced a $26.5 million commitment to AFEX, Africa’s leading commodities platform.
The investment, according to a statement made available to BusinessDay, will support structural improvements in Africa’s agricultural industry, as AFEX currently operates over 200 warehouses in Nigeria, Kenya, and Uganda and serves over 450,000 farmers.
Hence, this new investment is poised to significantly benefit smallholder farmers and lead to improvements in food security.
The signing of BII and AFEX’s new partnership took place Monday and was attended by Jonny Baxter, British deputy high commissioner in Lagos, Nick O’Donohoe, BII chief executive officer, and Ayodeji Balogun, AFEX Group CEO.
“BII’s investment will be used to build 20 modern warehouses in strategic locations in Nigeria, Kenya, and Uganda,” the statement said.
“It will also scale warehouse technology and next-generation software that captures post-harvest pricing. Smart storage solutions have the potential to preserve the lifespan of harvested crops, and so increase the volume of food available.
“The additional warehouses will provide 230,000 MT of storage capacity, enabling up to 200,000 more farmers to access low-cost storage and maximise sales from crop harvests, potentially helping increase farmer incomes by more than 200 percent.
“Supporting smallholder farmers to achieve a fair wage is vital to ensuring they remain in operation, producing more and higher-quality crops for local consumption,” it added.
Agriculture in Nigeria, Kenya and Uganda accounts for a quarter of GDP and employs 70 percent of their populations, 80 percent of whom are smallholder and subsistence farmers.
Currently, farmers face a difficult financial outlook due to macroeconomic uncertainty, limited market access, and poor reliability of sales from crop harvests. Yields have fallen, and farmers’ incomes are increasingly affected by price hikes of agricultural inputs and extreme weather events.
“BII’s capital will also be used to develop a soybean processing plant in Ibadan, the third-largest city by population in Nigeria, and a drying facility in Uganda. The construction of the storage facilities and soy processing facilities will generate over 700 temporary jobs and more than 80 permanent roles,” the statement said.
Commenting on the transaction, BII Chief Executive Officer, O’Donohoe, said, “The World Bank estimates that Africa’s food import bill has reached US$30 billion in recent decades. This is why we need to back technology-driven companies like AFEX because they help reduce that import cost by supporting smallholder farmers to increase local food production while also boosting their incomes.”
Speaking about the raise, Ayodeji Balogun, AFEX Group CEO, said, “This investment from British International Investment is a landmark moment in our mission to revolutionise agriculture and elevate food security across Africa.
“By directing fresh capital towards the development of technologically advanced warehouses and critical facilities, we are significantly enhancing market access and income potential for smallholder farmers.
“In alignment with the UN SDGs, our mission is to enable Africa to feed itself efficiently and sustainably. Today’s investment doesn’t just propel AFEX’s growth; it forges a more secure and prosperous future for an entire continent.”
Baxter said: “I am proud of British International Investment’s support which will enhance agricultural productivity and bolster food security in Nigeria. The agricultural sector stands as a vital pillar to Nigeria’s economy, playing a significant role in job creation and investment potential.”
This investment will contribute to the United Nations sustainable development goal on Zero Hunger (SDG2), Decent Work and Economic Growth (SDG8) and Responsible Consumption and Production (SDG12).