KENYA – AFEX, Nigeria’s leading commodities market player, has crossed borders to set base in Kenya, East Africa’s largest and most diverse economy.
AFEX works closely with smallholder farmers and uses its unique tech solutions to increase yields and productivity and enhance market linkages.
The expansion by the commodities exchange company follows its launch of the US$100m 10-year bond dubbed The Food Security Fund (FSF) late last year.
Other than supporting the financing of 250,000 hectares of land for commercial and smallholder farming in the Nigeria, the blended financing also targets expansion to Ghana, Côte d’Ivoire, Kenya, Rwanda, Uganda, Tanzania, Benin, Togo, Tanzania, Ethiopia, and Zambia within the next 10 years.
AFEX decided to make its first stop in Kenya following a successful pilot phase in the last quarter of 2021, during which time maize was the main commodity traded.
According to the company, it has already recorded significant results, with over 4,000 metric tonnes of commodities traded and an estimated 7,100 served by AFEX through its eight warehouses currently operational in the country.
The pilot phase also brought to the fore a number of challenges experienced by local producers in Uasin Gishu County, in the North Rift region of Kenya, including access to affordable storage facilities, which meant many farmers storing their crops at home.
Additionally, despite a high level of mechanization, as well as relatively expansive land holdings, producers find themselves cut off from opportunities to sell their produce, often relying on middlemen.
“We’ve been massively encouraged by what we’ve seen since our pilot phase rolled out with thousands more farmers experiencing productivity, value capture and access to structured mechanisms for commodity trading in Kenya.
“With our experience of helping farmers to directly access markets, we’re uniquely positioned to help Kenyan farmers contribute to their national food security while ensuring sustainable development for future generations,” said Ayodeji Balogun, CEO at AFEX.
AFEX’s entry into Kenya is timely, as of November 2021 analysts estimated 7.9 million people in Kenya lacked sufficient food for consumption, which represents 15.4 percent of Kenya’s population.
As part of the expansion, AFEX Fair Trade Limited (AFTL), has launched a US$1 million loan program that will allow farmers to gain access to seed and fertiliser for their crops, to mitigate ever rising commodities prices.
Under the program, 5000 Kenyan farmers will be able to take out input loans to access timely inputs and gradually scale their businesses.
Other than financial support, AFEX is bringing its depth of experience, and unique storage and distribution solutions to Kenya, with a goal of trading over 500,000 metric tonnes of agricultural commodities by 2025.
There are plans to add rice, sorghum, and coffee to the exchange in the coming months.
“This is one of the most dynamic commodities markets in the world and we are excited to work with Kenyan farmers to help them scale their operations,” said Ayodeji.
To spearhead growth in the new market, AFEX has appointed Tabitha Njuguna as it Managing Director, currently heading a team of 14 people.
“The technology powering our operations is one of the best on the continent and is instrumental to our capacity to provide access to logistics delivery, advisory services, inputs, and crucially, access to the market, which are all key to the future of agriculture in Africa.
“We want to dismantle one of the biggest barriers for farmers growing their business – access to finance. So far, we’re delighted to have enabled 70 percent of the 5,000 Kenyan farmers who approached AFEX for input loans and we are committed to empowering many more farmers over the next few months,” said Tabitha
Having built itself from the ground up in an agricultural sector widely perceived as one difficult for businesses to operate in, AFEX is anticipating strong growth and significant measurable impact in Kenya’s relatively more developed agricultural sector.
Since its launch in 2014, AFEX has committed to levelling-up Africa’s agro-tech sector and was recently named first in the Financial Times (FT) ranking of Africa’s Fastest-Growing Companies – Agriculture & Commodities category 2022.