AFEX launches second round of funding series worth $240 million to support Africa’s Agroprocessors

Nigeria’s largest commodities market player seeks to raise $175 million (N73 Billion) to support Nigeria’s agricultural sector.

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AFEX, Nigeria’s largest commodities exchange and first private sector commodity exchange, today announced that it has reopened its $240m (N100bn), Asset-Backed Commercial Paper. This fund will aid in stabilizing Nigeria’s agriculture sector. It will offer Agro-processors low cost financing to help bridge the funding gap between lenders, borrowers and lenders.

Today’s funding is AFEX’s second in three-year Commercial Paper Program that began in Q4 2021. $65m (N27bnn) was raised. AFEX now seeks to raise $175m (N73bn), to help Agro-processors who cannot borrow in the commercial papers markets.

AFEX aims to increase the efficiency of commodity trading, and allow the wider capital market to tap into Africa’s commodities sector. The ABCP is a short-term debt instrument that typically offers investors a 15% return on their investment. The maturity period can be up to 270 days.

The continent’s most important economic sector is still agriculture. It is the mainstay of sub-Saharan Africa’s economy and employs most of its population. Despite this, many African economies face food security problems due to the widening gap between supply-demand.

Banks and other financial institutions usually issue the security, but the ABCP notes are sponsored by AFEX Commodities Exchange. The proceeds of the issuance will go to AFEX Investment Limited for working capital support. This will enable pre-qualified Agroprocessors to purchase the commodities they need to produce at a agreed price.

AFEX’s security is supported by the commodities that are used in credit enhancement. AFEX lists the ABCP ComX as its commodities trading platform. Then, it engages capital market operator for subscriptions for a specified time. The funds raised are used by pre-qualified Agroprocessors to acquire the commodities they need for their production processes at a fixed price.

Ayodeji balogun, CEO of AFEX, spoke out about the fundraise. He stated that AFEX has a solid track record in providing innovative financial instruments to market. The new Asset-Backed Commercial Paper will help close the gap between Agroprocessors, investors, and AFEX.

Africa needs capital and funding that is low-risk to enable her to thrive. We believe that capital should be available to all stakeholders in the value chain in a way that is both timely and structured. Based on our performance in the past, we believe we can attract more funding from private investors. They will, however, help us secure $175m (N73bn), investment in Africa’s food safety.

AFEX was founded in 2014 and has worked tirelessly to improve Africa’s agrotech sector. This includes increasing food security, improving food production efficiency, and helping Africa feed itself. AFEX raised $48m from 20% of its oversubscribed Warehouse Receipt Bonded Commercial Paper before 2021. This was a first-of their-kind in Africa.

AFEX uses Africa’s talents and commodities to create shared prosperity and wealth. Its platform and infrastructure investments help unlock capital for a trust economy in Africa’s commodity markets.

AFEX was founded in 2014. Since then, it has created and implemented a viable commodities trading model for West Africa. It is currently on track to reach one million producers. AFEX also provides services such as productivity, value capture and accessing finance and markets. The company will facilitate trade between Africa and the United States worth more than USD500 million over the next five-years by deploying a robust market system.

AFEX’s vision for Africa is to be the leading commodity exchange in Africa. AFEX aims to achieve this vision by introducing products that reduce the risk of the sector, increase financial inclusion for rural communities and develop technology for data collection, market access and capital deployment.

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