Nigeria’s agriculture sector is emerging as a compelling destination for Shariah compliant investments with risk-sharing contracts and asset-backed deployment, One17 Capital Assistant Vice-President Zakari Ahmadu shared with IFN Investor.
“It is physical, productive and risk-bearing, exactly what Shariah mandates in economic engagement,” noted Zakari in pointing out the benefits of enabling scalable, real-economy exposure to one of Africa’s most strategic and undercapitalized sectors.
With Africa’s agribusiness market projected to achieve a US$1 trillion valuation by 2030, Nigeria is seen to be among the main players – where the National Bureau of Statistics said the local agriculture sector contributes about a fifth of the country’s GDP and employs nearly a third of its workforce.
Yet the financing gap remains wide, particularly for smallholder farmers and agri-SMEs underserved by conventional banking. Shariah compliant investment structures are now filling that void.
Mudarabah and Musharakah contracts enable co-investment into farms and processing businesses, where profits and losses are shared based on actual outcomes. Murabahah allows for structured asset purchases such as tractors or irrigation systems while Salam facilitates upfront funding in exchange for future crop yields.
These aren’t theoretical applications. One17 Capital’s models reject collateralized lending in favor of enterprise partnerships. The firm deploys them with farmer cooperatives representing thousands of smallholders. Investors are buying into pooled risk and collective scale, not isolated credit exposure.
This model of risk-sharing, transparency and asset-backing appeals to institutional capital seeking more than just yield. For Shariah-conscious funds, this translates into exposure with embedded ESG credentials, from inclusive development to climate resilience.
To support capital preservation while maintaining Shariah integrity, agronomists assess land and yield potential while Takaful provides climate risk coverage while off-take agreements with buyers lock in price and demand certainty before planting begins.
The firm manages risk at every stage, pre-investment, operational execution and harvest exit. It’s a full-stack model built for real-world volatility.
As liquidity and exit optionality remain essential for institutional uptake, Nigeria’s commodities exchanges like AFEX are increasingly used to list warehouse receipts, commodity-backed papers and Shariah compliant commercial papers tied to agricultural output.
These instruments allow investors to monetize positions without early project exits.
Banking on this potential, One17 Capital has applied for a commodities market operator license from the Nigerian authorities and is preparing to launch a Shariah compliant agricultural mutual fund, offering broad-based participation to domestic and foreign investors.
Other key developments include national-level Sukuk issuances to fund logistics centers, storage facilities and processing plants – hard assets that enable scale in agri-value chains. Tenors of five to 10 years are typical, with plans underway for sector-specific offerings targeting food security and rural employment.
Cross-border engagement is also gaining traction – including active dialogues with Kazakhstan’s Astana International Financial Centre and regional partners under the African Continental Free Trade Area – aiming to create interoperable frameworks for export-linked agri-finance and Islamic capital mobility.
“African agribusinesses can compete globally, but only if we mobilize the right type of capital. Agriculture offers us a mission-aligned platform, where we finance productivity, empower communities and deliver Halal alpha.”
