Nigeria

Feed the Future Nigeria Agribusiness Investment Activity

Overview: 

The five-year USAID Feed the Future Nigeria Agribusiness Investment Activity aims to strengthen the enabling environment for agribusiness finance and investment. To achieve this goal, the Activity focuses on four interrelated components: improving the enabling environment for agricultural sector growth; broadening access to finance by mitigating the credit risks of agribusinesses; promoting and facilitating investment opportunities for agribusinesses to expand and scale up operations; and sustainably enhancing the performance of agribusiness micro, small and medium size enterprises (MSMEs). In line with the U.S. and Nigerian governments’ commitment to growing the non-oil-based economy, these efforts will increase the depth, breadth, dynamism, and competitiveness of Nigeria’s agribusiness sector.

Beginning in December 2018 and closing in December 2023, the $15.7 million Agribusiness Investment Activity, with Cultivating New Frontiers in Agriculture (CNFA) as the prime implementing partner, aims to viably and sustainably link thousands of MSMEs and producer organizations with high-performing commercial actors in the rice, maize, soybean, aquaculture, and cowpea value chains. As a result of streamlined regulations, more effective policies, improved production and processing practices, and significantly increased finance and investment flows, the Activity will increase the competitiveness and returns of both large, medium and small-scale agricultural enterprises. The overall objective of the Activity is to measurably improve the agribusiness investment climate in Nigeria, which plays a pivotal role in attracting foreign direct and domestic investment, leading to food security and improved nutrition.

Methodology

The Agribusiness Investment Activity’s four main components are:

  1. Improving the Agribusiness Enabling Environment: The policy, legal and regulatory burdens faced by agribusinesses – whether farmers, processors, or traders – constrain their productivity and growth. This initiative seeks to implement reforms to improve Nigeria’s agricultural and agribusiness enabling environment. This component focuses on making relevant policies, laws, and regulations less cumbersome, lowering the cost of compliance; reducing tariff and non-tariff barriers to promote more exports and import substitution; addressing infrastructure, land ownership, logistical constraints; minimizing the time it takes to perform statutory business functions; and limiting the scope for bureaucratic discretion.
  2. Broadening Access to Finance: The infrastructure and market reach of both formal and informal banking services remains inadequate in many regions, presenting a significant barrier for rural agricultural smallholder farmers (SHF) and MSMEs. The Agribusiness Investment Activity works to expand access to financial services across the value chains through informal, community-based savings plans; formal and informal credit; guarantee programs; insurance offerings, and more. Working with both lenders and borrowers, this component also supports initiatives that facilitate new and innovative funding approaches that expand access to capital and facilitate greater lending to the agriculture sector.
  3. Facilitating Investment: To catalyze new agribusiness investments, the Agribusiness Investment Activity works with both investors and investees to create commercially viable linkages. This includes building investors’ understanding and appetite to invest in the agribusiness sector as well as improving the investment readiness of agribusinesses and supporting enterprises desiring to scale-up operations. Through a demand-driven, private sector-led value chain approach, this component directly supports agribusinesses with technical assistance in areas such as identifying investment opportunities as well as helping firms meet investors’ selection criteria. By providing business development services and supporting strategic partnerships, the Activity strengthens market linkages and the competitiveness of smallholder farmers and agribusiness MSMEs to take advantage of emerging investment opportunities.
  4. Enhancing Agribusiness MSME Performance: Improving the performance of agribusinesses is a process that requires behavioral change. Most agribusinesses need direct technical assistance in adopting best practices as well as meeting the minimum assessment criteria of financial institutions (FIs) and investment groups. This component works directly with agribusinesses to improve financial, managerial and operational efficiency to enable them to become more competitive and able to access finance and investment opportunities.

Program Approach:

The Agribusiness Investment Activity employs a unique strategy by focusing on larger agribusinesses (called “Lead Firms”) as the central engine of its work. Through supporting the Lead Firms’ growth and expansion objectives, the Activity assists out-growers, financiers, investors, input suppliers, agrodealers, and service providers within their value chains. While the primary focus is on facilitating finance and investment, the Activity does not directly offer finance, investment, grants, or any other cash-based incentives. Rather, it identifies the best sources of financial and non-financial resources and supports it partners in accessing them. This includes identifying and advocating for the reform of the most pivotal legal and regulatory constraints.

The Agribusiness Investment Activity strictly focuses on the following five value chains: Rice, Maize, Soybean, Cowpea, and Aquaculture. Furthermore, it has a geographic concentration on the following seven states: Benue, Cross River, Delta, Ebonyi, Kaduna, Kebbi, and Niger.

The Agribusiness Investment Activity strategy includes but is not limited to the following key pillars:

  1. Working with public and private sector partners, including agribusinesses, financial institutions, investment groups, and business development service providers to facilitate greater engagement with MSMEs and potential agro-entrepreneurs in their value chains.
  2. Connecting agribusiness MSMEs to business development services (e.g., business plans, loan applications) that support them from inception to the formation of profitable, sustainable enterprises. Special emphasis will be given to MSMEs that are women and youth-owned or have the potential to hire significant numbers of women and youth.
  3. Supporting the development of new financial products suitable for agribusiness MSMEs and building public awareness as to where and how to access existing financial facilities.
  4. Linking MSMEs with larger firms in the selected value chains to facilitate viable and sustainable business linkages.
  5. Addressing policies that restrict or constrain the ease of doing business, including registration, licensing, obtaining land, collateral restrictions, and access to finance and investment.