AFEX announces $100mn Food Security Fund

AFEX Commodities Exchange has announced the launch of a $100 million 10-year bond named the Food Security Fund, aimed at producing approximately 3 million metric tons of food across the continent. In an exclusive interview with CNBC Africa, Ayodeji Balogun, the CEO of AFEX Commodities Exchange, shed light on the details of the fund and the critical issues it seeks to address. The fund is a strategic response to the pressing food security challenges faced by Africa, a continent projected to have the highest population growth by 2050. Nigeria, in particular, is expected to become the most populous country globally, underscoring the urgent need to bolster food security measures. With Africa currently spending $35 billion annually on food imports despite possessing over 65% of the world's available land, there is a clear imperative for the continent to focus on self-sufficiency in food production. Balogun emphasized the importance of curbing food waste, noting that nearly 30% of the food produced in Africa goes to waste annually. The Food Security Fund aims to address this crisis by investing in primary food production, enhancing agricultural yields through improved seeds and practices, and establishing food reserves to mitigate global food insecurity risks. Balogun highlighted the fund's unique structure, leveraging the United Nations Development Programme's Japan Funds to blend different pools of capital. By attracting impact investors and offering competitive returns, the fund aims to drive down the average cost of cereals in Africa and combat food inflation. The fund's deployment strategy is designed to target countries with growing populations and agricultural landscapes conducive to cereal production. By focusing on demographic trends and essential food staples, the fund aims to empower households to reduce spending on food and improve overall food security. The Food Security Fund aligns with AFEX Commodities Exchange's overarching strategy of facilitating the seamless flow of capital within the commodities market. By fostering a liquid ecosystem that connects producers, processors, and investors, AFEX aims to drive innovation and catalyze growth in the agricultural sector. Balogun emphasized that separating ownership from management in agriculture can unlock substantial economic potential and spur transformative impact. Building on the success of previous initiatives such as the asset-backed commercial paper, the launch of the Food Security Fund represents a significant step toward addressing Africa's food security crisis. With a strong focus on sustainability and alignment with the UN's Sustainable Development Goals, the fund is poised to attract a diverse range of investors committed to driving positive change in Africa's food systems.