For nearly a decade Ayodeji Balogun has managed a private exchange in Nigeria, trading hundreds of millions of dollars worth of agricultural commodities yearly. Now he is taking his operation Africa-wide.
Lucy Githugo, bird story agency
When Ayodeji Balogun was just 14 years old, he made his first commodities trade. In May, his company secured first place in the Financial Times’ Africa Fastest Growing Companies 2023′ list. Not surprisingly, his company trades in agricultural commodities.
“This first trade excited me and is what drove my interest in trade despite graduating with a Bachelor of Science in mechanical engineering and practising as an engineer for three years,” Balogun explained.
Raised in Ijebu-ode in Ogun State where his father owned a plantation, Balogun early on developed a strong connection with the food production process. So it was not entirely unexpected when he decided to leave his engineering career and take over the family business, trading agricultural commodities.
That move resulted in Balogun opening an agricultural commodities trading platform, to bring greater efficiency to the trading ecosystem, AFEX, which Balogun started in 2014, facilitates trading commodities such as maize, cocoa, soya bean, paddy rice, sorghum, and ginger.
Additionally, AFEX offers support for securitization and trade finance for these commodities, with the goal of building a fair and thriving agricultural industry in Africa.
Referred to as “Deji” by his staff members, Balogun has grown the company from a ten-member founding team to a full-blown company with over 400 employees and more than 250 warehouses catering for over 50,000 farmers across Nigeria as well as in Kenya and Uganda.
“I am a strong believer in talent and that is what an individual finds at AFEX. The team always brings fresh and innovative ideas that leverage technology making agriculture more fun. There has been an increase in youth participation in agriculture in the past decade but we still need more champions,” said Balogun.
To penetrate the African commodities market and improve food security, AFEX expanded its operations by opening new offices in Kenya in 2022 and Uganda in January 2023.
“Africa has the highest number of young people in the globe, and our aim is to create an atmosphere inspired by agriculture to get a newer generation of farmers to the agricultural space,” said Balogun.
The expansion was also driven by the strategic positioning of these countries as trade hubs and the potential in the eastern agriculture market.
Over the past six years, the company has traded more than 500,000 metric tons and generated a turnover exceeding US$300 million. Additionally, they have connected hundreds of thousands of farmers to financing and markets.
The company offers innovative solutions to help smallholder farmers access markets. Its warehouse receipts system allows farmers to store their harvests, track producers’ transactions and receive payment based on current market prices.
In Kenya, one of AFEX’s 17 warehouses in Uasin Gishu County was licensed as the first Private Warehouse Receipt Operator by the Ministry of Agriculture in February, marking a breakthrough for private firms in the sector.
The receipt system allows products to be tested, cleaned, graded and then stored, with the owners of the commodity receiving a receipt as proof of ownership. This reduces post-harvest losses and gives farmers the option of selling their produce when prices are favourable.
Speaking during a tour of the warehouse, Kenya’s Trade Principal Secretary Alfred K’Ombudo commended the company’s efforts in Kenya and said that the government has a targeted focus on increasing certified warehouses in the country for the safe storage of farmer’s produce.
“Our warehouse receipt system will be strengthened because it is key to ensuring that farmers can rely on well-established and well-managed facilities and at the same time cut on the losses encountered during harvesting and storage of produce,” said K’Ombudo.
“We look forward to a time when every AFEX warehouse will be certified and licensed as a warehouse receipt operator, and we are further enabled to provide services to the market in a fair and transparent way,” said AFEX Kenya’s Managing Director Tabitha Njuguna.
Despite the many gains, there have also been some obstacles to overcome.
According to Balogun, the company lost US$7 million in its early days due to a technology glitch. An imported American system to enhance financial transparency for farmers could not work with the local mobile phone systems.
“Nothing good comes easy. The tech we had invested in was financed by proceeds we had received from a fundraising and yet all of it got lost on this technology that could not integrate mobile,” said Balogun.
To enhance food security in Africa and accelerate growth, Balogun emphasizes the importance of gaining a competitive edge.
“Africa has the freshest and juiciest fruits that need a boost through reliable biotechnology, food processing and good storage systems. This will give us a competitive advantage,” he explained.
In a telephone interview with Bloomberg, Balogun also revealed plans to expand into another seven countries, including Ivory Coast this year and Ghana in 2024 before setting up in Benin, Togo, Tanzania, Ethiopia and Zambia.
“With our expansion into African countries, we see a path to improve intra-Africa trade. This leads to increased productivity on a national level, allowing countries to be more food secure,” he said.
bird story agency
