For all the rapid expansion in Africa’s financial services and technology sectors, farming remains the backbone of many economies on the continent.
Such is its contribution that the agricultural commodities sector is the joint fourth most represented in the inaugural FT-Statista ranking of Africa’s Fastest Growing Companies. It accounts for 8 per cent of the businesses listed.
Across the region, companies are exploring how new technology and better farming techniques can boost yields, connect smallholders with markets, and help process food, to add value for domestic sales and for foreign exports. Achieving these outcomes is of growing importance, too, as food prices rise and anxiety over food security increases.
One company generating rapid revenue growth by serving the agricultural industry is Nigeria’s AFEX Commodities Exchange, the highest ranked business from the sector and third overall. Founded in 2014, AFEX had 98 employees by 2017, rising to 199 in 2020. Compound annual growth of 253 per cent from 2017 to 2020 took revenues to $31.7mn.
Chief executive Ayodeji Balogun received approval to set up AFEX in 2012. “I was tasked with one goal: to transform Nigeria’s commodities exchange market into a scalable, efficient and profitable system,” he says.
The company started by building the infrastructure needed to support the securitisation of produce, Balogun says, noting that it now has Nigeria’s largest supply chain network, with more than 100 warehouses across 23 grain-producing states, and some 300,000 tonnes of storage capacity. Since 2014, AFEX estimates that it has traded with more than 360,000 farmers and handled more than 1mn tonnes of commodities.
“We have a focused and deliberate strategy to create a fair environment for players to be able to invest in commodities seamlessly,” Balogun says. To achieve this, AFEX aims to “drive financial inclusion for rural communities, develop technology for data collection and market access and . . . enable the deployment of capital.”
Technology has played a crucial role in the company’s growth. It uses a platform called WorkBench to input financing arrangements for loans that are offered to farmers and repaid in grain at the end of the season, and ComX, to facilitate trades for retail and institutional investors seeking exposure to alternative assets. WorkBench was developed by AFEX, and allows data and warehouse transactions to be shared in real time — enabling the exchange’s clients to track and monitor progress.
“A rapidly evolving technological landscape is opening up new possibilities to target and price credit, share risk, and harness information technology to expand agricultural productivity,” Balogun says.
According to the UN Food and Agriculture Organization (FAO), farmers across sub-Saharan Africa have been benefiting from digital technologies, usually via phone and messaging systems such as SMS and USSD. The continent’s research institutions and local and foreign companies are behind many of the innovations.
“A wide range of digital agriculture solutions are providing useful climate adaptation services,” says Ken Lohento, the FAO’s digital agriculture specialist for Africa. “In Burkina Faso and Mali, for example, the [Netherlands-based non-profit development organisation] SNV and partners have used mobile phone advisory services to support livestock farmers to identify healthy forage, supporting them to cope with drought caused by climate change.”
Another fast-growing agricultural company is Silverlands Tanzania, a chicken and egg supplier established in 2013, which is 26th in the FT-Statista ranking.
It aims to tap into fast-growing regional economies and an east African population that is projected to pass 550mn by 2050. Silverlands achieved a compound annual growth rate of 40 per cent in 2017-20, resulting in revenues of $26.9mn in 2020.
Its focus has been on replacing indigenous poultry with the dual-purpose Sasso breed that produce both meat and eggs. The company has bet on a continued link between economic growth and meat consumption per capita in developing economies.
Using the dual-purpose breed has increased smallholder productivity, says Gary Vaughan-Smith, managing partner and chief investment officer, with the Sasso accounting for most of its sales in Tanzania. Silverlands is also the country’s largest chicken feed producer and its second largest supplier of day-old chicks, selling 14mn last year, up 27 per cent on 2020.
“Silverlands developed a procurement network buying from 29,000 smallholder farmers,” says Julia Wakeling, the company’s head of impact. “Prior to [this], the poultry industry in Tanzania was poorly developed. Smallholder poultry farmers were forced to use inefficient poultry breeds and low-quality feeds.”
Today, the company offers a local market for some 164,000 smallholder poultry producers and soya farmers, many of them women.