FCMB Gets $25m to Fund Disruptive Business Models in Agric

By Adedapo Adesanya

The Dutch entrepreneurial development bank, FMO, and Nigerian lender, First City Monument Bank (FCMB), have signed a $25 million guarantee agreement to fund entrepreneurs limited by risks from pooling funds.

The guarantee will enable FCMB to expand its funding to agricultural, youth, and women-owned SMEs without requiring collateral, targeting a client group typically deemed too risky by banks.

Funded by the European Commission, NASIRA is one of FMO’s most innovative programs, encouraging local banks to extend their funding to small entrepreneurs without collateral.

Often, the FMO guarantee – that effectively replaces the collateral – is not fully utilised, demonstrating that these entrepreneurs, primarily women and young people, are not riskier than others.

According to a statement, Nigeria which is home to 220 million people and the largest population in Africa, faces job creation challenges. The country faces severe economic challenges, including high unemployment and a significant 70 per cent depreciation of its currency over the past year. Providing small loans to typically high-risk groups will enable them to start and expand their businesses, offering a means of income for themselves and their families.

In addition to the $25 million NASIRA guarantee, FMO will support FCMB with a syndicated loan of $60 million which includes $20 million through FMO, $30 million through the European Financing Platform on behalf of BIO, DEG, EIB, FINNFUND, Proparco, and SWEDFUND, and $10 million through FMO Investment Management.

The loan is dedicated to growing the existing FCMB loan portfolio of small and medium-sized entrepreneurs (SMEs).

Speaking during the signing ceremony at the side-lines of the 9th Nigeria EU Business Forum, the Deputy Director General, Directorate of International Partnerships (INTPA), European Commission, Ms Myriam Ferran, said: “We are very happy to see that the EU investment instruments, such as the European Fund for Sustainable Development (EFSD+) guarantees, have come to Nigeria to play a catalytic role in leveraging private sector investments for the benefit of the real sector, economic diversification and employment creation, especially for youth and women.”

The transaction also contains a technical assistance (TA) program. Through this TA initiative, FCMB and FMO will select and support 15 scalable early-stage agritech businesses in Nigeria.

Together, FMO and FCMB will identify 15 disruptive business models that address pressing problems in the agricultural sector, contributing to Sustainable Development Goals (SDG) 2: zero hunger and food security.