By Gabriel Ewepu

The Chief Executive Officer, CEO, AFEX Commodities Exchange, Ayodeji Balogun, in this interview disclosed how Alliance for a Green Revolution in Africa, AGRA, has been instrumental and pivotal to the growth of AFEX, which the company recently was named 3rd fastest growing company in the African continent, and also spoke on how smallholder farmers are being carried along and their productivity boosted for enough food production, including other issues.


Congratulations on being named the 3rd fastest growing company in Africa! As the only Agricultural Commodities company that made it to the top 5 on the list, what strategies and innovations do you think contributed to the success and quick growth of AFEX?

I think fundamentally three things. First is being inclusive, we have been deliberate about creating a business model that includes the smallholder farmers. It took a while to figure out how to perfect this model and build it in a way that is sustainable as well as profitable but then it gives you a large market size. Eighty percent of food produced in Africa is produced by smallholder farmers, therefore, when you can engage on how to work with them, you have a large customer base.

Read Also:

Agric Ministry moves to prevent outbreak of Monkey-pox

The second is focusing on building infrastructure. When you can solve the underlying infrastructure issue, which means investing in the right infrastructure that allows you to reduce your per-unit cost, it reduces the risk that is typically associated with Agriculture.

Finally, technology plays an important role in scaling. Being able to build out our technology platform, one that solves and operates for the continent, allows us to be able to aggregate transactions more efficiently, have the right data to be able to make intelligent business decisions, and helps us track our impact and footprint across the food systems.

Do you think this ranking will open up opportunities for investment in the commodity exchange market and in the long-term build trust in the Nigerian commodity exchange market?

The commodities exchange primarily as a business model is one that is often misunderstood. We often say that the last effort to build commodities exchange in Africa failed and we have been lucky to have recorded the success that we have. By virtue of this ranking, we have shown that we have very strong growth potential, and we look forward to even more growth in the future. This is a testament that the model can work and is scalable. It is also a very important part of fixing the broader food system. When you have a commodity exchange that functions, production efficiency is gained but also efficiency on pricing and access to market is fixed.

AFEX is one of the leading commodity exchange companies in Africa, going forward how does AFEX intend to create awareness about the exchange, build trust, keep this current momentum going and ensure sustainability in trading commodities?

For us at AFEX, we always remind ourselves that the first customer is the farmer; building a system that ensures a farmer can build profitably, grow the business size, grow wealth, and have a better livelihood creates trust. Therefore, when the system works from the farmer, it tends to work across the whole value chain. We want to continue to remind ourselves that we are here to work with farmers, help them scale, and support optimal and efficient production of food across the continent.

Can you provide some details on the impact that AFEX is making in Africa’s commodity exchange market but most importantly on the lives of smallholder farmers?

Since our inception in 2014, AFEX has developed and deployed a viable commodities exchange model for the African market. We started by building a strong supply chain infrastructure to support the securitization of agricultural products. Currently, we have the largest supply chain infrastructure network in Nigeria, with over 100 warehouses across 23 grain-producing states in Nigeria which accounts for over 300,000 MT of total national storage capacity. We have reached over 360,000 farmers and traded over 1 million MT of commodities.

We recognize that smallholder farmers, although producers of food, continue to be the ones most at risk, as many live in poverty and lack access to inputs and credits that make a difference to their productivity. Hence, we have deployed our Input Financing Program providing them with credit and quality inputs for better yields. Since 2014, we have been able to improve the lives of about 4 million farming households and we are proud to see that farmers who have received continued support for a longer period show more resilience and lower levels of poverty and hunger.

Alliance for a Green Revolution in Africa (AGRA) has been a big supporter of AFEX, has their support helped contribute to the success of some of the innovations you’ve put in place? If yes, how?

AGRA has been instrumental and pivotal to our growth.  A few points of intervention, first is after we had built out the outreach model they supported us with a grant that helped in scaling up the reach of the program. This included an increase in the number of field extension officers and improving the quality of training given to our farmers.

The second part is that they supported with the validation of our strategy, the strategy of Project Black Elephant which essentially summed up into a 10X growth for the business. Part of what we are seeing as validation from Financial Times on our growth is because of this strategy shift. As part of that strategy, AFEX now focuses on building trade infrastructure which is aimed at unlocking capital for the agricultural sector on the continent and creating a marketplace that can connect producers, processors, and investors. This strategy shift and AGRA being a catalyst at that point has been very important to the growth.

Market linkage is one of the most crucial interventions needed by smallholder farmers. Can you tell us some ways in which AGRA’s support has made it possible to provide this?

First, you need to understand the power of the market. One of my favorite quotes is “Farmers need market not fertilizer” meaning that when you give farmers adequate market access you ultimately solve the cash flow problem for the entire value chain. When you solve for market and a producer has confidence in his ability to earn revenue from the farm, even when he does not have the cash, but he has a market fixed, other sources of financing to unlock that productivity open for him. So, the farmer can get a loan, buy the input he needs and then produce the commodity that goes into the market. It is very powerful to build a market system that works. This market access has been a key part of the work that we have undertaken with AGRA’s support.

Price is then the second most important variable for the income of the farmer. With our work with AGRA, and across the country, we have been able to create a platform where the farmers can ultimately sell and bring intermediation along the value chain which is a critical value to provide for farmers.

How many farmers have you been able to reach with the support from AGRA and what impact have you made on their livelihood?

We reached over 98,000 farmers during the project scope. Our value proposition to farmers has always been two-fold: access to finance and access to markets, which are two huge problems that smallholder farmers in Nigeria have historically been unable to surmount. By engaging with AFEX, farmers are able to gain access to finance in form of inputs like fertilizers, seeds, and crop protection products while also being enabled to access support in terms of extension services that impart knowledge on good agronomic services. At the end of the season, the farmers can also access larger markets through AFEX as their products can be aggregated with that of other smallholder farmers and furnish the orders of AFEX clients on the processor side.

How do you ensure that the benefits you provide to farmers, such as access to finance are sustainable?

We continue to drive innovations that allow us to be able to syndicate transactions on farmers in their multitude into financial instruments, and then by virtue of being a regulated capital market entity, we can raise this money from the capital market. What you see for the first time on the continent is that the money market – commercial and micro-finance banks –Institutional Investors, fund managers, and asset managers are now enabled to invest in the agricultural sector using structured tradable instruments. This is the beginning of something we are sure will be revolutionary for the continent. Also, it ties very strongly with our vision at AFEX to be the reference point for commodities in Africa.

Vanguard News Nigeria

Subscribe for latest Videos


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.