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British International Investment (BII), the UK’s development finance institution and impact investor, has announced a substantial commitment of $26.5 million to AFEX, Africa’s leading commodities platform.
AFEX currently operates more than 200 warehouses in Nigeria, Kenya, and Uganda, serving over 450,000 farmers.
This investment aims to drive structural improvements in Africa’s agricultural industry, with a primary focus on supporting smallholder farmers and enhancing food security.
The partnership between BII and AFEX was formally established, and it was attended by the British Deputy High Commissioner in Lagos, Jonny Baxter, BII’s CEO, Nick O’Donohoe, and AFEX Group CEO, Ayodeji Balogun.
Improving agricultural productivity and food security
BII’s funding will be utilized to construct 20 modern warehouses in strategic locations across Nigeria, Kenya, and Uganda.
Additionally, it will enable the expansion of warehouse technology and next-generation software, designed to capture post-harvest pricing. These smart storage solutions are anticipated to extend the shelf life of harvested crops, leading to an increase in available food volume.
The new warehouses are expected to provide an additional storage capacity of 230,000 metric tons, allowing up to 200,000 more farmers to access affordable storage facilities and maximize the sales of their crop harvests.
This could potentially result in a more than 200% increase in farmer incomes, a crucial step in ensuring the sustainability of smallholder farming, as it encourages increased production of higher-quality crops for local consumption.
The role of Agriculture in African economies
Agriculture plays a significant role in the economies of Nigeria, Kenya, and Uganda, accounting for a quarter of their GDP and employing 70% of their populations, with 80% being smallholder and subsistence farmers.
Currently, farmers face economic challenges due to factors like macroeconomic uncertainty, limited market access, and unreliable crop sales. Crop yields have declined, and farmers’ incomes are negatively impacted by rising agricultural input costs and extreme weather events.
BII’s capital injection will also facilitate the development of a soybean processing plant in Ibadan.
The construction of these storage and processing facilities is expected to create over 700 temporary jobs and more than 80 permanent positions, contributing to local employment and economic growth.
What he said
Commenting on the transaction, BII Chief Executive Officer, Nick O’Donohoe said,
- “The World Bank estimates that Africa’s food import bill has reached c.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, AFEX Group CEO, Ayodeji Balogun said,
- “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 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.”
British Deputy High Commissioner in Lagos, Jonny Baxter expressed his delight saying,
- “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”.
- “The UK provided early-stage funding to AFEX, and I am delighted to see the company grow with such success. We look forward to continuing to support Nigeria’s agriculture sector and the opportunities this provides for its economic growth.”
According to him, this investment will contribute to the United Nations development goals on Zero Hunger (SDG2), Decent Work and Economic Growth (SDG8), and Responsible Consumption and Production (SDG12).