By Onome Amuge.
Nigeria’s leading commodities player,AFEX, has announced the listing of its N100 billion three-year Asset-Backed Commercial Paper Programme (CP Programme) on its exchange. This programme is designed to provide affordable financing solutions to agro-processors, with the aim of bridging the current $183 billion financing gap in the agricultural sector and enabling stakeholders to better manage their short-term obligations and enhance productivity and overall output.
AFEX Investment Limited SPV ABCP, a $130 million (N100 billion) commodity-backed ABCP, was the first of its kind announced in Nigeria and was originally launched in 2021 as a three-year commercial paper programme. The previous two series successfully raised N51 billion, and this latest listing was commemorated with a bell ringing ceremony in Lagos, attended by representatives from AVA Capital, FSDH Holdings, and Marble Capital.
At the bell ringing ceremony,Samirah Ade-Adebiyi, AFEX Investment Limited’s managing director, highlighted the importance of the CP in diversifying agriculture financing.
Ade-Adebiyi stated that the ABCP is instrumental in unlocking essential capital for the working capital needs of agri-businesses, contributing to the growth of the sector.
“This is also a historic moment for us, as the ABCP is the first-ever commodities-backed ABCP to be listed on a commodities exchange in Nigeria,” she added.
Efe Shaire, the MD of AVA Asset Management, expressed his enthusiasm for the prospects of the ABCP for the industry. “The ABCP Programme offers a fresh and alternative avenue for investment, allowing investors and the public to diversify their portfolios beyond traditional stocks and fixed income to commodity-backed investments, providing benefits such as risk management and superior financial returns,” Shaire said.
The ABCP’s asset-backed nature qualifies it as a senior secured debt instrument, which boosts investor confidence. The competitive pricing of the ABCP Programme translates into cost savings of up to five per cent compared to traditional methods of capital access. Additionally, issuers benefit from a buffer of approximately 25-30 per cent against the price volatility inherent in commodity prices each season.
