The investment (and exit) in Coscharis from FAFIN

Since 2017, DGGF – Financing local SMEs supports the Fund for Agricultural Finance in Nigeria (FAFIN), an innovative agribusiness focused investment fund that aims to transform the landscape of private sector agricultural finance in Nigeria. Among the many enterprises that have benefited from FAFIN's investments is Coscharis Farms Limited. Established in 2015, Coscharis Farms has developed a substantial presence in the agricultural landscape with 2,500 hectares of productive farmland under its management. With the backing of FAFIN, Coscharis Farms has successfully launched a rice milling operation in Igbariam, located in Anambra State's South-East region. This venture not only enhances the company's processing capacity but also allows for greater expansion of its farmland cultivation, contributing to the growth and sustainability of Nigeria's agricultural sector.

The investment thesis of Coscharis

The investment thesis for Coscharis was predicated on Nigeria's high rice consumption as a domestic staple crop and the potential for import substitution, as finished rice was primarily imported into Nigeria at this time. The benefits of Coscharis Farms extend beyond its agricultural production. It plays a pivotal role in job creation and skills development within the local community. Additionally, the farm's commitment to infrastructural improvements, such as the construction of roads, has enhanced connectivity between rural areas and urban markets in Anambra's central business district. These developments are crucial for the socio-economic advancement of the surrounding regions, highlighting Coscharis Farms' dedication to contributing to the nation's progress.

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Image: ©Sahel Capital

FAFIN’s support to Coscharis

The DGGF is proud to showcase the impressive achievements of Coscharis Farm, which has seen a period of significant growth and development with the support of (FAFIN). Over the past five years, Coscharis Farm has made great strides in expanding its rice production capabilities, which is evident from the commissioning of a new 36,000 metric ton rice mill. This facility has greatly increased the farm's processing capacity, enabling it to meet the rising demand for rice in the local market. In addition to the mill, the farm has also constructed extensive irrigation systems, which have increased the frequency of cropping cycles and bolstered its resilience against climate variability.

The farm's commitment to sustainability and community engagement is further demonstrated through its climate adaptation strategies and the development of a smallholder farmer network. By implementing flood protection systems, utilizing renewable energy sources, and developing flood-resistant rice seeds, Coscharis Farm has not only protected its own operations but has also contributed to the environmental well-being of the surrounding area. The establishment of the smallholder farmer network has not only secured additional grant funding but has also fostered strong ties with local communities, ensuring a steady supply of paddy and reducing costs. The farm's internal governance and management have seen marked improvements as well, with the introduction of key management positions, a restructured board, and an Employee Stock Ownership Plan (ESOP) for senior management, all of which have set a strong foundation for the company's future growth. The DGGF celebrates these accomplishments and anticipates Coscharis Farm's continued success in the agricultural sector.

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Image: ©Sahel Capital

The impact of Coscharis and the exit of FAFIN

In the span of two years, from 2021 to December 2023, Coscharis has significantly expanded its outreach, positively affecting over 5,000 smallholder farmers—a substantial increase from the 1,250 farmers engaged in 2021. The success of the program has led to its replication in additional communities, supported by further funding from international donors, including DGGF. This expansion has translated into a robust financial performance for Coscharis, with both revenue and earnings experiencing impressive growth. Specifically, the company has seen a compounded annual growth rate of 173% in revenue and over 217% in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

In December 2023, FAFIN concluded its investment in Coscharis, marking the end of a fruitful five-year partnership. Fund manager Sahel Capital reflects on the considerable impact that FAFIN's investment has had on the company's growth trajectory. Despite FAFIN's departure, Sahel Capital remains optimistic about Coscharis Farms' future. The company's achievements in engaging with smallholder farmers, its initiatives in climate adaptation, and the development of a skilled and empowered workforce are expected to ensure continued growth and resilience in the years to come.