Consider This As You Go Into Agribusiness in Nigeria

Consider This As You Go Into Agribusiness in Nigeria

If you are into agriculture or broad agribusiness in Nigeria, be very careful as you go and raise money. The sector is very slow and decision making, by customers, takes time. As you work with cooperatives and governments (plus farmers), they think on months and not days. So, watch and shine your eyes what you promise any investor. It is not likely you can scale like hot cake because those you are working with are not in the business of scaling; they are cultural farmers and will be doing farming whether it makes them poor or rich. The transition into business-people, from being just farmers, is just starting.

Algorithms in the server analyze the data and tell farmers on what, how and when to farm. Also, as the crops grow, the system deploys special cameras to build vegetative health of the farm for drought stress, pest and diseases etc. The cameras can be mounted on long sticks or drones. The goal is to transform farming into a business by making it data-driven over guesswork.  This improves productivity, reduces waste and increases yields.

Yes, they were born into farming and will likely do it until they retire. It is totally irrelevant what the outcome is. So, with that structure in place, you cannot run. You have to walk with them. It is only an arrogant entrepreneur that will ask someone to throw away techniques which have been passed over generations for something which looks exotic and locally untested.

Besides, if you are into the hi-tech element of modern agriculture, it would make sense to decouple that business from the largely labor intensive component of African agriculture. Though you are not the farmer, the ability to support users of your product may require hiring many people. If you do just that – hiring many people – you would dilute the value your hi-tech firm is creating before your investors. The key is thinking strategically on how you can position that hi-tech firm to work with other entities which will do the leg work and interface with the end customers – the farmers.

As a farm boy in Ovim (Abia State, Nigeria), I worked in the farm with my grandmother. In JSS 2, second year in secondary school, my agricultural science teacher introduced us to NPK fertilizers. Also, she explained the shallow and deep rooted crops, and why fertilizers used in farms should be matched with the types of crops. My grandmother had never believed that inorganic fertilizers should get close to her yam farms. It was going to be a “poison” in the land.

But I had an idea – I made a deal with her. I asked her to give me a portion of the land for me to apply the inorganic fertilizers (the “white things”) which my teacher had explained could improve yield. She agreed. As the farming season went, she noticed that my section was doing well in terms of denser vegetation. And during harvest, the tubers in my section returned better sizes. The next year, she became a believer.

That is the typical African farmer: you must demonstrate and show value before they commit. I had a clear motivation to work on helping to improve farm productivity: with better yield, there would be money for my school fees, books, etc.

To do well in farming business, you need people that have natural patience. I like speed but speed does not work therein at scale. So, to avoid dealing directly with farmers and cooperatives, we have entities that work directly with them. In Atlantic Americas, we take Zenvus to communities. I do not get close to those discussions because they take too long. A meeting can last 7 hours just to make sure everyone is on board. That requires a special skill set which I do not necessarily have.

Consider this model: create the technology-enabled business which focuses on innovation, and then get people that have the natural skills of navigating local communities to take the technologies to them. In other words, the tech firm licenses its IP, remains focused on innovation while the other entity does the work of improving farms and engaging with partners.

In Nigerian agribusiness, depending on the category, if you decouple the hi-tech from the extremely slow-moving farming system contracting, it would be easier to explain anything you want to explain to investors. While the hi-tech could grow fast, the usual agriculture system should not be allowed to cripple it.

The key is having amalgam of partners who can help you establish linkages with farmers, governments and cooperatives while you focus on the innovation in labs. Sure, you can have a primary vehicle to drive adoption but make sure it is separated from the core tech innovator. Yes, hundreds of workers may be needed in Yola but your tech firm will not need to have as many because the operating firm is absorbing them. When such a structure exists in an extremely labour intensive business, you would not carry so many staff in your books, possibly making investing in your firm more exciting.


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3 thoughts on “Consider This As You Go Into Agribusiness in Nigeria

  1. Your article resonates on the opening speech by Yaw Nsarkoh – Executive Vice President of Unilever Ghana and Nigeria at the 2nd Africa Leadership Conference in May 2018 in Accra on the topic: Creativity is from All Life – Africa and Moving the Center

    “When we see people the masses of our people and do not see the opportunity for advertising to lift society to improve communities, it is we, we are the people who should be felt sorry for, in our self-importance we the people who have lost the connection to our communities and societies and for as long as we loose that connection for just so long we become irrelevant”

    We must demonstrate to communities through demonstration and experiment on best practices into innovation of smart farming. Our acquired knowledge, opportunities educated must get us to show our relevance skills by getting to buy into these services not just push to them. Your proven experiment to show your grandmother about the fertilizer to improve her yam yield was a great example. Agribusiness in Africa is high risk investment and is up to the investor to minimize the risk by getting all risk identified turn into opportunity – where a risk is measured by combination of the probability of a perceived threat or opportunity occurring and the magnitude of its impact on objectives. Opportunity is used to describe uncertain event that would have a positive impact on objectives if it occurred.

    Kudos Professor.

    Reply
    1. Thank you Edward for the insight here. This is a great line ” in our self-importance we the people who have lost the connection to our communities and societies and for as long as we loose that connection for just so long we become irrelevant”. There is a message there for building companies in Africa.

      Reply

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