Nigerian commodities startup AFEX has secured $26.5 million in funding from British International Investment (BII), the UK’s development finance institution (DFI), and an impact investor to address food insecurity in three African countries.
The signing of the strategic partnership between BII and AFEX, which took place in Lagos on November 1, 2023, was attended by Jonny Baxter, the British Deputy High Commissioner, and Nick O’Donohoe, BII Chief Executive Officer and Ayodeji Balogun, AFEX Group CEO.
Headquartered in Abuja, AFEX enables efficient trade for commodities in Africa. Operating through three business units, the startup addresses the challenges faced by smallholder farmers by providing better access to inputs, credit facilities, microinsurance, storage services, training, and markets.
The firm currently operates over 200 warehouses in Nigeria, Kenya, and Uganda and serves over 450,000 farmers. This investment from BII will go a long way in supporting structural improvements in Africa’s agricultural sector, significantly benefiting smallholder farmers and leading to food security in these countries.
Speaking on the investment, Nick O’Donohoe, BII Chief Executive Officer, remarked, “The World Bank estimates that Africa’s food import bill has reached $30 billion in recent decades. This is why we need to back technology-driven companies like AFEX because they help reduce that import cost by supporting smallholder farmers to increase local food production while also boosting their incomes.”
How AFEX Plans to Deploy its $26.5M Funding from BII
AFEX says that it would use the funds to build 20 modern warehouses in strategic locations in Nigeria, Kenya, and Uganda, as well as scale warehouse technology and next-generation software that captures post-harvest pricing. Smart storage solutions have the potential to preserve the lifespan of harvested crops, increasing the volume of food available.
This has become even more important as agriculture in Nigeria, Kenya, and Uganda accounts for a quarter of GDP and employs about 70 percent of their populations, 80 percent of whom are smallholder and subsistence farmers who are mostly affected by post-harvest losses.
The additional warehouses will provide 230,000 MT of storage capacity, enabling up to 200,000 more farmers to access low-cost storage and maximise sales from crop harvests, potentially helping increase farmer incomes by more than 200 percent. Supporting smallholder farmers to achieve a fair wage is vital to ensuring they remain in operation, producing more and higher-quality crops for local consumption.
The funds will also be used to develop a soybean processing plant in Ibadan, the third-largest city by population in Nigeria, and a drying facility in Uganda. The construction of the storage facilities and soy processing facilities will generate over 700 temporary jobs and more than 80 permanent roles.
According to Ayodeji Balogun, AFEX Group CEO, the investment doesn’t just propel AFEX’s growth; it "forges a more secure and prosperous future for an entire continent."
“This investment from British International Investment is a landmark moment in our mission to revolutionise agriculture and elevate food security across Africa. By directing fresh capital towards the development of technologically advanced warehouses and critical facilities, we are significantly enhancing market access and income potential for smallholder farmers. In alignment with the UN SDGs, our mission is to enable Africa to feed itself efficiently and sustainably. Today’s investment doesn’t just propel AFEX’s growth; it forges a more secure and prosperous future for an entire continent,” said Balogun.
Jonny Baxter, the British Deputy High Commissioner, lauded the investment, saying, “I am proud of British International Investment’s support, which will enhance agricultural productivity and bolster food security in Nigeria. The agricultural sector stands as a vital pillar of Nigeria’s economy, playing a significant role in job creation and investment potential. The UK provided early-stage funding to AFEX, and I am delighted to see the company grow with such success. We look forward to continuing to support Nigeria’s agriculture sector and the opportunities this provides for its economic growth.”