The primary time Ige Akinwale Benson, a Nigerian cocoa farmer, heard of an organization referred to as AFEX Commodities Alternate, he was unimpressed. “I checked out them and I assumed ‘these guys are completely 419’,” says Benson — utilizing a standard Nigerian time period for fraudsters.
The rationale for his first impression was that AFEX gave the impression to be providing one thing too good to be true. The corporate — which tops the FT ranking of Africa’s quickest rising corporations — gives loans to smallholders for purchasing seeds, fertilisers and pesticides after which buys their produce at market costs, shops it in warehouses, and transports it to market.
In developed economies, such companies are de rigueur. However, in Nigeria, a rustic with an estimated 34.5mn smallholder farmers, the bundle being provided is nothing short of revolutionary.
Agriculture is of essential significance to a rustic during which about 70 per cent of its 220mn individuals are engaged within the sector, primarily at subsistence degree, in accordance with the UN’s Meals and Agriculture Group (FAO). Restricted financing, poor entry to farm inputs and markets, and a scarcity of warehouses are commonplace issues, the FAO says.
Nonetheless, since Benson signed up in 2019 to be a part of AFEX’s system, he has overcome the problems that for generations have stored his household poor. “Earlier than 2019, our household’s annual revenue can be about 1.2mn naira ($1,463) however now we’re getting between about 4.5mn ($5,488) and 5mn ($6,098) naira,” says Benson, who farms about 65 acres across the village of Ajue in Ondo state.
“I don’t spend the cash extravagantly,” he stresses. “I put it within the checking account. I’ve a home and a automotive now, so I don’t want a lot. I’ll spend the cash on a very good training for my 4 youngsters. I’ll ship them to a greater faculty.”
AFEX, which was based in 2014, recorded a compound annual development charge between 2018 and 2021 of 502 per cent, in accordance with the ranking by the Monetary Instances and knowledge analysis firm Statista. Its president and group chief monetary officer, Kunle Adesuyi, says it’s aiming to boost $75mn in fairness and debt by the top of this 12 months, probably from worldwide buyers.
AFEX’s enterprise mannequin depends on taking Nigerian farmers out of isolation and subsistence and together with them in an built-in agricultural system. After farmers have signed as much as its platform, AFEX gives months of coaching on what crops to develop, which seeds are most fitted, which fertilisers, fungicides and pesticides to make use of, keep away from flooding and swarms of pests, scale back post-harvest crop losses, and different competencies, notes Adesuyi.
It gives loans within the type of farm inputs — equivalent to seeds and fertiliser — somewhat than cash. AFEX prices 15 per cent annual curiosity on the inputs loaned. When farmers come to promote produce to AFEX after harvest, the price of the inputs plus curiosity is deducted from the sum they obtain.
Making use of higher farming inputs on this approach has resulted in a dramatic enhance in crop yields. Virtually 500,000 farmers registered on AFEX’s database produced round 500,000 tonnes in crops final 12 months, up from some 307,000 tonnes in 2021, says Adesuyi.
An enormous drawback with waste has been decreased by AFEX’s community of warehouses. They’ve a capability of 600,000 tonnes, and might retailer harvested crops together with cocoa, sesame, cashew, ginger, rice, sorghum, espresso, and barley. Earlier than the warehouses have been constructed, post-harvest losses due to insufficient storage have been as excessive as 40 per cent, Adesuyi factors out. After the applying of AFEX’s strategies, he provides, the proportion of waste has come right down to a fraction of that.
AFEX will not be the one firm on this space, although. ThriveAgric, backed by California begin up accelerator Y Combinator, has 514,000 farmers on its database and works in 26 Nigerian states, says its chief government, Uka Eje. “If you go to the US, you’re travelling over a thousand kilometres and all you see is productive farmland,” notes Eje, who grew up in rural Benue state. “However once I was going to high school, I’d journey and see little or no exercise on the farms. Thousands and thousands of hectares aren’t cultivated.”
ThriveAgric’s mannequin is much like that of AFEX, however with a twist. It teams the farmers on its platform into “clusters” — often into teams of about 10 however typically as many as 50. They cross-guarantee one another’s output in order that, if one falls quick, the others are responsible for the shortfall. Eje says: “The social stress helps to drive efficiency.”
As with AFEX’s mannequin, digitalisation is a vital facet of ThriveAgric’s operations. Not solely are cell phones used to map and confirm a farmer’s land, digital processes are additionally used to offer loans utilizing a farmer’s financial institution verification quantity, identification card and on-line account. Thus, the prevalence of cell phones, which might be purchased in Nigeria for as little as $50, has turn into a vital enabler of agricultural aggregation.
“Digital expertise permits us to construct construction from a chaotic surroundings,” says Eje. “Africa, lately, is fairly chaotic and there could also be some infrastructure that doesn’t exist. However we are able to construct a expertise system that may service this unstructured market.”