Agritech has become a beacon of hope in the commercialization of the Agricultural industry among African Nations. Applying tech has bolstered the efficiency, sustainability, and profitability of agricultural processes and businesses. Nigerian Agritech startup, Releaf, has looked to improve the output and help African farmers earn more from their agricultural ventures.
Releaf was founded by Ikenna Nzewi and Uzoma Ayogu in 2017. The core of Releaf’s service is building proprietary hardware and software solutions to make these farmers and food factories more efficient and profitable.
When Releaf launched in 2017, it took the American-based founders time before figuring out product-market fit in Nigeria. First, it planned to increase productivity in Nigeria’s agricultural sector using software. After graduating from Y-Combinator’s S17, the founders still had issues figuring out what their focus should be on. However, moving down to Nigeria gave the team a better picture of the country’s Agric industry. Having toured 20 states and studied different value chains for crops spotting inefficiencies that could be solved by technology, the founders realized the opportunities in the oil palm sector.
The oil palm market in Nigeria is a $3 billion one with over 4 million smallholder farmers. But since the industry is quite fragmented, they have many challenges processing the oil palm because it’s a crop that requires serious processing power to extract vegetable oil from it.
A look at what Releaf does
Smallholder palm kernel farmers usually have the challenge of access to finance. This problem easily transcends into the inability to carry out tasks mechanically and time wastage. To solve this problem, Releaf buys the palm nuts and process them into palm kernel oil (PKO) before selling to factories. Releaf uses it Kraken machine to achieve fast and easy cracking of palm kernels.
Releaf’s Kraken Machine
The startup reveals that it can produce 500 tonnes of PKO every week. In addition, Kraken can crack palm kernel nuts with a 95% efficiency, ensuring little wastage.
Ikenna Nzewi spoke on the startup’s vision for food processing in Africa. He outlined how Releaf is creating decentralization through its delivery.
“Many people have tried to take Western models and fit them into Nigeria because they see a country with many people. The same thing has been done to the food processing industry, so most food processing factories are set up in big cities like Ibadan, Kaduna, or Lagos.
“They are big factories with large capacity, but when you go into those factories, you will see that they are using about 30% of the capacity, and that is generally driven by the fact that they cannot get access to high-quality raw material,” said Nzewi.
By locating factories close to smallholder farmers, Releaf is helping them increase their productivity and pay them more than the bigger factories. Nzewi reveals that there are farmers in their network whose incomes have increased 5x since they started working with them.
So here’s how the company’s business model works. Releaf buys nuts from the farmers, then uses the Kraken to crack the nuts and crush the kernels into vegetable oil. Releaf then sells the vegetable oil to FMCG processors and local manufacturers, mainly in Nigeria’s South South region.
Navigating the future of Africa’s food processing
Sixty per cent of the world’s uncultivated land lies in Africa. This can translate into huge benefits for Releaf as it looks to expand into other markets. In September last year, Releaf secured $4.2 million in seed funding. The startup is expected to scale its offering by developing new technology to smallholder farmers.
“We’re not just trying to colour the African map with a presence in different countries. However, we’re more focused on deep impact,” said Nzewi while speaking on Releaf’s expansion plans. That’s why I talk about things like the volume mentality and increasing the income of one of our smallholders 5x. That’s the type of impact you should expect to see with Releaf,” he says.
Releaf’s unique service focus will remain a huge advantage for the startup. Kraken will enable Releaf become front-runners in the global $61 billion palm oil market.