Mr. Ayodeji Balogun is chief executive officer, AFEX Nigeria, a private sector-led commodities exchange, where he leads a team of experts leveraging technology, innovative finance and inclusive agriculture to connect agriSMEs and smallholder farmers to commodity and financial markets. He is on a mission to create inclusive, scalable and efficient food systems in Africa by enabling producers of different commodities obtain guaranteed access to markets.
AFEX provides the infrastructure for the capital market to play in commodities and consequently, unlock capital for the agriculture sector in Nigeria. Starting at the bottom of the pyramid – the smallholder farmers, it avails them the critical services needed to improve productivity, get access to credit and markets and consequently activate the potential of Africa’s commodity value chains.
Balogun is leading the way forward to finding a solution to critical problems hindering the agricultural sector in Nigeria – the knowledge gap, limited access to capital and inefficiency of the market system. His approach is to drive systemic changes by simultaneously addressing the problems.
He began the journey of providing scalable and efficient food systems in Africa in Nigeria and is rapidly expanding across the continent. The high technology-enabled processes are backed by massive infrastructure investments, which foster continuous expansion in the commodities ecosystem.
This is a pioneering role in developing a private sector-led commodities exchange and warehouse receipt system, leading the value chain development in the agricultural sector and designing physical and derivative contracts for commodities across markets in Africa.
“At AFEX, we harness Africa’s commodities and talent to build shared wealth and prosperity.
Our infrastructure and platform investments work to unlock capital to power a trust economy in Africa’s commodities markets.
“Since inception in 2014, we have developed and deployed a viable commodities exchange model for the African market and are on track to impact one million producers, provide services in productivity and value capture and access to finance and markets”, he said.
AFEX has undertaken a critical task of establishing warehouses in Nigeria, covering the country’s major grain-producing states to provide storage as a service to farmers. “This means that rather than a farmer renting warehouses or storing his grains in his house, where he will lose 20 to 30% of the volume over time, he may put it into a warehouse and pay for the three bags he is storing for three months”, Balogun said.
The storage service that AFEX provides relieves farmers of the burden and danger associated with storage, he said.
AFEX’s strategy for improving farmers’ access to funding takes the form of inputs such as fertilizers, seeds and crop protection products as well as extension services support that provide expert knowledge on appropriate agronomic practices.
The company goes further to develop technology-enabled exchange that enables efficient trading and settlement of commodity transactions, contributing to the structure and formalization of the commodities markets.
Balogun identifies the key benefit targeted as that of price stability, which a commodities exchange provides, as buyers and sellers interact on the exchange. He said prices are determined transparently with the information asymmetry reduced across the value chain.
“We are also then able to provide price data that further contributes to closing knowledge gaps in the agriculture sector and provides clarity for potential investors. When potential investors feel comfortable with a sector, they can invest more easily in it, attracting more players and so increasing investment in bridging the infrastructure gap. This effectively increases food availability and helps to stabilise prices”, he said.
Balogun is looking forward to multiplying the impact of AFEX over the next five years in terms of infrastructure capacity, the number of farmers reached, the volume of trading and value of funding. The aim, he said, is to scale 10 times on all our key numbers and metrics by deploying an efficient market system.
“We are looking to expand our trade infrastructure to include a one million MT storage capacity that will support a robust supply chain network. The goal is also to enhance the livelihoods of one million smallholder farmers, aggregate one million MT in trade volumes and facilitate funding of 500 million dollars for the agriculture value chain in Nigeria.
“In terms of innovation, we are looking to continue our string of firsts by growing into Africa’s first multi-asset commodities exchange trading derivatives of agriculture, metals and minerals”, he said.
He also plans to extend his focus from smallholder farmers to mid-sized commercial farmers -cultivating a range of 30 to 50 hectares, connected to a support ecosystem. He envisages such farms emerging as fast-growing SMEs and national champions in a decade.
The commodities market player marked the 2022 World Food Day with the launch of a 100,000MT/year Grain Quality Enhancement Center and 30,000 MT storage capacity warehouse in Kaduna State. The facility is a key infrastructure designed to cut post-harvest losses, strengthen quality and standardization criteria in grain value chains and improve the incomes of primary producers.
The grain processing centre meets the challenges of grain quality enhancement through cleaning, grinding, heating, drying, packaging and storage services.
Balogun stated that the project was embarked upon in view of the growing demand for grains against limited national storage capacity of 5-7 percent of agricultural produce, resulting in a post-harvest loss of N3.5 trillion of the produce annually.
Since 2014, AFEX has built a network of warehouses to support the growth of agricultural commodities and provide off take agreements to farmers at market prices with a same-day payment model.
Currently, the company has a footprint of over 100 warehouses across 23 grain-producing states in Nigeria which accounts for over 300,000 MT of the total national storage capacity. It has reached over 430,000 farmers and traded over one million MT of commodities. The milestones have impacted rural households positively and boosted general economic prosperity.