Experts advise leveraging capital market tools to boost agri-funding in Nigeria
Nigeria’s fight against threats of food scarcity will require an inflow of investments particularly capital as the global crisis takes a toll on food production and security, experts have said.
These experts while speaking at an agri-investments and capital markets conference in Lagos themed accelerating investments and capital markets for agribusiness expansion in Nigeria said there are numerous funding tools available however returns need to be guaranteed to attract them.
Speaking during a panel session whose discussions centered around financing the Nigerian Agri-commodities sector through capital market tools and infrastructure to promote economic development, panelists agreed that the capital market can be utilized as a source of financing the agri-business sector.
Jude Chiemeka, divisional head, capital markets, Nigerian Exchange Group said agribusiness in Nigeria has a lot of potential but it is made up of small and medium scale farmers, adding that it is not a scheme that guarantees 100 percent returns immediately.
“We have a lot of capital market tools that can be used such as corporate bonds to structure solutions for financing agribusiness, however the capital market is highly regulated to ensure that investors are protected so they can get their returns,” he said.
Speaking on crowd funding as a tool, Chiemeka said although it is relatively new in the sector it is fast gaining traction which can drive capital formation as it allows large individuals or corporations to pool resources together and fund projects but needs to be properly regulated.
He also highlighted the credit worthiness of farmers which sometimes pose a challenge in accessing funds, adding that some of them have no scalable operational base.
Kudzai Gumunyu, divisional head agribusiness, FCMB said beyond the provision of capital for agribusiness to thrive, there is need to provide structures, trainings and processes that will ease up activities, boost productivity and profitability.
“Agribusinesses deals majorly with perishable commodities which heightens the risk of losses, it requires good storage and processing facilities as well as enhanced logistics infrastructure such as road and rail to improve distribution,” he said.
Akinyinka Akintunde, chief operating officer, AFEX in his remarks said currently geopolitical events are reshaping food security hence preserving Nigeria’s food security is important and this requires access to capital because without money there is limit to what can be done.
He advised that there is need to incentivize investors especially as regards returns for enhanced investment inflow. He said the agricultural ecosystem should have a structure that assures investors of returns such as the use of a securitization system that ensure capital will be transformed across the ecosystem of agricultural activities
“There is so much capacity and impact we can do when we have the appropriate structure to ensure that capital can be effectively and efficiently channelled into the agricultural sector,” he said.
Bamidele Owoola, founder, Welcome2Africa international said agriculture and agribusiness together account for nearly half of Africa’s GDP, with estimates from the World Bank that it will be a one trillion dollar industry by 2030 in Sub-Saharan Africa.
“Nigeria can be at the forefront by leveraging on its large market with a population of over 206 million people; it is in the midst of disruptions and uncertainties that the new era of capital market ascendancy will be birthed,” she said.