Cassava processors seeking financing may need to secure buyers for more than 60 per cent of their planned production if they are to convince lenders and investors that their businesses are commercially viable, according to insights from the Nigeria Cassava Investment Accelerator (NCIA).
The 60 per cent threshold has emerged as a key indicator of investment readiness as small and medium-scale cassava processors struggle to access the capital required to establish or expand their operations.
The NCIA, which has engaged commercial lenders, development finance institutions and impact investors, identified weak investment readiness as one of the major constraints limiting financing in Nigeria’s cassava processing industry.
NCIA is an initiative of Lagos Business School Pan-Atlantic University.
Investment readiness refers to a processor’s ability to demonstrate, with credible evidence, that its business can generate sufficient returns to support the investment being sought.
According to the NCIA, financiers typically assess four critical areas before committing capital: market feasibility, commercial feasibility, operational feasibility and financial health.
On the commercial side, the Accelerator said processors should demonstrate identifiable demand for their products, noting that commitments covering more than 60 per cent of planned production, with clearly defined volumes, specifications and commercial terms, provide greater confidence that projected revenues are based on real customers rather than assumptions.
However, the report warned against excessive dependence on a single buyer. A processor relying on one customer for more than 30 to 40 per cent of sales could face significant risks if that relationship is delayed or lost.
According to the report, feedstock security is another major concern for investors because freshly harvested cassava is highly perishable and must generally be processed within 48 to 72 hours, according to the Food and Agriculture Organisation.
The NCIA said commercial lenders typically expect processors to produce about 40 per cent of their own cassava requirements, with the balance secured through structured arrangements with outgrowers and aggregators rather than reliance on spot-market purchases.
Beyond securing markets and raw materials, processors must demonstrate that they have the operational capacity to deliver consistently.
The report said credible projects should have experienced personnel covering production, quality control, maintenance and feedstock management. It also advised greenfield projects to begin with one or two core derivatives before expanding into more complex product lines.
Quality assurance is equally important, with processors expected to obtain relevant permits and embed appropriate standards, including SON, NAFDAC, HACCP and ISO 22000, where applicable.
Financial credibility remains another major hurdle. Many processors approach funders without audited accounts, reliable records or sufficiently detailed financial models, making it difficult for investors to assess their performance and repayment capacity.
The NCIA also stressed the importance of meaningful sponsor equity as evidence of the promoter’s commitment and as a cushion against early-stage setbacks.
For greenfield projects without operating histories, the report recommended supporting financial projections with feasibility studies, supplier quotations, pilot results and comparable industry benchmarks.
The NCIA concluded that investment readiness is one financing barrier cassava processors can directly address.
A credible, evidence-backed business plan demonstrating that markets can absorb output, demand and feedstock are secured, operations are viable and the underlying economics are sound could significantly improve processors’ prospects of attracting the capital needed to expand Nigeria’s cassava industry.