[Nigeria] FMDQ, AFEX in N2.5 trillion deal to support one million smallholder farmers
The Financial Market Dealers Exchange and the AFEX Commodities Exchange Limited of Nigeria have signed a Memorandum of Understanding to unlock about N2.5trillion funding targeted to support about one million smallholder farmers within the next five years.
The Chief Executive Officer, AFEX, Mr Ayodeji Balogun, signed the agreement on behalf of his company, while the Chief Executive Officer, FMDQ, Mr Bola Onadele signed on behalf of his firm.
Ayodeji said that currently, the value of credit from banks to the agricultural sector was about N500bn.
He added that this was inadequate to stimulate the type of growth envisaged by the Federal Government for the agricultural sector.
The AFEX boss said if the economy must grow at a sustainable rate of about 4.5 per cent, then there was a need to unlock additional sources of finance for the agricultural sector in Nigeria.
According to him the agreement recognised the importance of product innovation to market development and would encourage participation of a wider number of investors in the capital market.
Balogun added that products developed under the new partnership would support innovative financing structures for the sector that would leverage AFEX’s established infrastructure and supply chain network.
Currently, AFEX is working with 106,000 farmers in Nigeria, noting that about 45,000 of them had sold their products through its trading platforms in the last five months.
“We are extremely proud to be collaborating with FMDQ as this helps our goal of increasing our products offerings to investors. We see a clear path to product innovation that will unlock a wider range of products that are able to be traded within Nigeria’s capital markets, promoting broad-based wealth creation that is accessible to every Nigerian.”
“Our vision is to reach a million small-holder farmers in the next five years and we anticipate that we will boost agric sector funding by five folds. Our desire is to create new asset classes so that liquidity increases and risk will be better managed,” said Balogun.
FMDQ boss said his company would support the growth of the agricultural sector through commercial and market-driven initiatives. Through this partnership they would introduce new products aimed at de-risking the value chain as well as attracting capital market funding to the sector.
He added that the move would help to diversify the existing products available to investors in the agricultural sector.