Written Evidence Submitted by Sahel Capital Agribusiness Managers Ltd.

3rd February 2023


Investment for development: The UK’s strategy towards Development Finance Institutions



  1. Introduction

Sahel Capital is a Nigerian headquartered agribusiness-focused investment manager with offices in Lagos, Nigeria, and Abidjan, Côte d’Ivoire.  Sahel was established in 2013 and today oversees $90 million in investment capital from a mix of European and African development finance institutions (“DFIs”).  It manages two funds, one domiciled in Mauritius and the other in Luxembourg.


Sahel Capital is focused on addressing food security and strengthening regional food supply chains across sub-Saharan Africa through its investments into small and medium sized agribusinesses (“SMEs”).


Sahel Capital received a $15 million investment from BII in 2017, which has been instrumental in enabling it impact over 475,000 beneficiaries across Nigeria.



  1. What current investments does BII hold?


In 2017, BII invested $15 million in Sahel’s maiden fund – Fund for Agricultural Finance in Nigeria (“FAFIN”).  BII’s involvement in the process enabled Sahel to unlock capital from other development finance institutions, ultimately enabling Sahel to raise the total fund size to $66 million.


FAFIN invested its capital in 8 companies, geographically disbursed across Nigeria, and across different value chains. Investments were made in:

  1. A family-owned integrated dairy company with a 130-milking cow herd and which also aggregates milk from over 460 smallholder pastoralists through milk collection centers. This milk is then processed to yoghurt and other dairy products which are sold across Nigeria. The company provides access to markets for nomadic pastoralists in northern Nigeria, and a high quality healthy dairy product for consumers.
  2. A family-owned integrated poultry company with a parent stock farm, hatchery operations, broiler rearing, and processing operations. The company produces frozen chicken which is sold to consumers primarily across southern Nigeria (approx. 1.9 million birds were processed and sold in 2022). The company also partners with 200 smallholder poultry farmers, who account for over 70% of its broiler supply to its processing plant. It provides these farmers with feed, training, vaccines for their birds, and an off-taker market for the birds that they rear. The company provides affordable animal protein to consumers and a market for small farmers rearing birds.
  3. An integrated cassava processing company with 1,000ha of cultivated land, a processing plant converting the cassava to food grade starch, and a smallholder farmer out-grower network of over 1,000 farmers which also provide cassava tubers to the plant. The food grade starch is sold to a range of food processing companies as an ingredient into their end packaged food products and provides a substitute to imported corn starch. The company enables value addition within the value chain to be captured domestically, while providing off-take for a key crop in Nigeria.
  4. An edible oils company which produced vegetable oil that is sold bulk to mass market consumers as an affordable cooking oil.
  5. An integrated rice processing company with a 2,500ha rice farm, 36,000 MTPA rice mill, and an out-grower network of over 5,000 smallholder farmers that provide rice paddy to the rice mill.
  6. A family-owned shea butter processing company that sources shea nuts picked primarily by women in rural communities from south-western to north-central Nigeria. These nuts are processed into shea butter for export to confectionary companies, and also processed for the domestic market for use as an input into packaged food and snacks.
  7. A family-owned packaging materials company that produces multi-layered polyethylene wrap for packaged food and consumer companies. The company also recycles its own waste for use in some of its end products, enabling a reduction of its carbon footprint.
  8. A technology enabled food and consumer goods distribution company that is focused on (i) increasing the efficiency of the delivery of food and consumer products to small informal sector retailers (which accounts for roughly 85% of trade in Nigeria), (ii) providing credit to these retailers, and (iii) solving distribution challenges of SMEs by providing visibility into which markets their products would most likely have the greatest acceptance. The company has built over 63,000 active micro-retailers within its distribution network.



  1. What due diligence does BII undertake prior to making investment decisions and how does this compare with best practice?


Sahel Capital first reached out to BII in mid-2015 with a proposal for BII to invest in FAFIN. FAFIN’s strategy was focused on generating attractive returns while backing SME agribusinesses in Nigeria to address food security constraints through strengthening supply chain links to Nigerian smallholder farmers. Over the subsequent 18-months BII had multiple touch points with Sahel Capital prior to executing investment legal agreements in June 2017.

1.       BII focus on vetting credibility of team:

(a)    BII had multiple meetings with Sahel’s team in London and in Lagos, as well as periodic conference calls. Meetings were also scheduled around industry conferences in other cities. Focus was on understanding Sahel team motivations, team dynamics, knowledge of the food and agricultural sector, and ability to execute on the intended strategy.

(b)    BII did extensive reference checks of key Sahel team principals going back the previous 10-years.

2.       BII focus on vetting Sahel’s investment strategy and investment pipeline: BII was the only investor in FAFIN that insisted on doing field due diligence to vet the fund’s investment pipeline.  In 2016, Sahel scheduled a multi-day trip across Nigeria to visit companies (some in hard-to-reach locations in northern Nigeria) where the BII team could physically meet the (mostly family-owned) companies that Sahel was considering investing in through FAFIN. Discussions focused on viability of business model, why the companies wanted to partner with Sahel/FAFIN, and the potential scope of impact that could be achieved should the investment be made.

3.       BII focus on governance structures of FAFIN: BII actively engaged with other DFIs with whom Sahel Capital was speaking with to gauge 3rd-party investor interest in FAFIN.  During the legal document contracting stage, BII (through its legal counsel) also actively provided input on governance structure requirements at both Sahel Capital and FAFIN that would be requirements should BII invest. BII’s requirements were fully incorporated into FAFIN’s legal documentation and aligned with other investors.


The 2-year due diligence and legal process to the investment closure of the fund was more extensive than Sahel had gone through with other investors prior to this point and was also instrumental in enabling Sahel to strengthen its own investment and operational processes.



  1. How effectively does BII manage funds following its initial investment?


Since BII’s investment in 2017, BII has provided oversight of Sahel and FAFIN in the following manner –

  1. Via scheduled quarterly meetings alongside other investors: These meetings include at least one physical meeting a year in Nigeria, where BII and other investors can also meet the leadership teams of the companies in FAFIN’s portfolio, as well as do site company visits. During these meetings there is a detailed review and discussion on FAFIN investment pipeline, portfolio performance, financial accounts of FAFIN, development impact, environmental and social issues tied to the fund, and Sahel Capital team dynamics/changes.
  2. Via required scheduled reporting to BII: Sahel Capital provides quarterly investor reports, annual impact reports, quarterly management accounts, and annual audited financials to BII (and other investors).
  3. Via specified audits: As part of BII’s requirements at investment in 2017, FAFIN had to have a 3rd-party led audit of environmental, social, and governance (“ESG”) related issues when the portfolio was fully formed. BII was the only investor to request this.  This 3rd-party ESG audit was conducted in 2021 and the report shared with BII and other investors in FAFIN.
  4. Via scheduled training and knowledge share sessions: BII has organized periodic training sessions for Sahel’s team on Business Integrity and ESG. BII has also actively connected Sahel to other ecosystem stakeholders to foster knowledge sharing amongst the impact investing community.
  5. Via periodic “catch-up” calls: BII is the only DFI that has been consistent about scheduling ongoing calls with Sahel’s leadership team. These calls have been well received by Sahel and allow us (i) to share information with BII outside the regular reporting cycle, and (ii) to use these forums to ask for clarifications on issues where needed.
  6. Via multiple touch points between BII and Sahel: Different members of Sahel’s team interface with different members of BII’s team. This helps build good cohesion and information flow between the firms.  Sahel interfaces with BII’s (i) investment team, (ii) ESG team, and (ii) technical assistance facility team.  Sahel has also periodically interfaced with BII’s direct investments team to share our perspective on agribusiness investment opportunities within the region.



  1. How does BII evaluate the impact of its investments?


BII was very clear on the areas of impact it expected its investment capital to unlock, and some of these requirements were inserted into BII’ investment agreement with FAFIN in 2017 and are discussed on an ongoing basis with Sahel.  These requirements include: (1) a code for responsible investing, (2) financial sustainability, (3) strengthening of governance within the portfolio companies, (4) a focus on environmental issues linked to the portfolio company’s operations, (5) job creation (number and quality of jobs; gender split), (6) smallholder farmer engagement, and (7) and sector specific impact targets for each investment.


Sahel provides BII with quarterly data on key development impact metrics, as well as a more in-depth annual impact report.  A summary of some of the development impact achieved by FAFIN is highlighted in the table below:



Developmental Impact

Est. 31Dec22


Number of individuals indirectly impacted (employees, suppliers, farmers, retailers)



Total number of smallholder farmers engaged



Number of female smallholder farmers engaged



Active micro-retailers within food distribution network



Direct job creation at portfolio companies



Food security –                                                                             Milk aggregated

Poultry meat

Rice paddy processed

Cassava processed

Shea nuts processed

3.1 million litres

11,945 MT

49,732 MT

96,608 MT

18,491 MT


Sahel has also been able to leverage BII’s technical assistance facility (and that of other DFIs) to support FAFIN portfolio companies.  Funding from the TA facility has been used to (1) provide training and capacity building to the management and staff of portfolio companies, (2) embed technical talent into the portfolio companies, (3) upgrade factory waste treatment processes, and (4) provide technical support for the build-out of smallholder farmer out-grower networks, amongst other initiatives.



  1. Conclusion

Not only has BII catalyzed direct development impact across a range of indicators within FAFIN’s portfolio of companies, BII has also enabled the strengthening of Sahel’s team itself and Sahel’s investment process over the past 6-years.  This has enabled Sahel to secure (1) interest in its successor funds from a broader set of institutional and DFI investors, and (2) investment capital to help agribusinesses scale in 13-countries across sub-Saharan Africa (up from just a Nigeria focus in 2017).  This will have substantive impact in addressing food security and strengthening the food ecosystem in sub-Saharan Africa over the next 10 years.


Kind regards,


Mezuo O. Nwuneli

Managing Partner

Sahel Capital Agribusiness Managers Limited


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