- Franchises Farmer Groups
- Business model
AgriFI invested EUR 5 million in the Babban Gona franchise, an investment expected to attract senior debt and reach the ambition to support one million smallholder farmers in Nigeria.
Contracting date: January 2020
Sector: Agri cash crops
Total AgriFI Financing: EUR 5 million
Environmental and Social Category: B
(A) high risk, (B+) medium high risk, (B) medium risk or (C) low risk
Babban Gona (“Great Farm” in Hausa) is an agricultural, for-profit, socially responsible private company which has developed an innovative large-scale agricultural franchise model in northern Nigeria, through which it provides a wide range of tailored end-to-end services to its network of smallholder members. The business model of Babban Gona consists of delivering training and development, financial credit, agricultural inputs, and output harvest and marketing services. The company started operations in 2012 and has grown fast to reach a size of over 16,000 farmers served in 2018, with a surface under cultivation of 13,700 ha.
AgriFI will provide junior debt funding which is especially important to Babban Gona as it allows them to crowd in additional senior debt while maintaining robust financial ratios. AgriFI investment should help Babban Gona to raise EUR 15m in senior debt, supporting the company in doubling the number of smallholder farmers. AgriFI’s contribution will finance the enrollment of additional farmers, leading to an increase in the cultivation area as well as in maize production.
Why AgriFI wants to fund this project
AgriFI is keen to support this project promoting sustainable smallholder farming and helping farmers to increase their productivity and profitability, whilst also pushing them to be more entrepreneurial. Babban Gona integrates smallholder farmers in a consolidated and functional value chain where it provides a holistic package of inputs and services to support its members in attaining yields above 2x the national average, improve the quality of their crop, reduce the cost of their inputs, and obtain premium prices at the point of sale. All of these factors combine to ultimately increase member net income over 3x the national average.
Environmental & Social rationale
Activities come with potential limited adverse risks associated with use of agrochemicals and occupational health and safety.
IFC Performance Standards 1 to 3 might be triggered. These will be addressed accordingly via existing environmental and social policies and procedures.
See the full Financial disclosure here.
- Smallholder farmers
- 48,000 by 2022
- Ha of sustainably cultivated area
- Tons of food production
- Financing instrument
- Junior debt
- EUR 5 million