July 17, 2020

The Nigerian Agritech Company on a Mission to Industrialize Food Processing Across Africa

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TECH TOOLS :

More than 60 percent of people in sub-Saharan Africa are smallholder farmers, collectively producing about 23 percent of the region’s GDP.

With the largest amount of untapped land, agriculture will continue to play a pivotal role in the continent’s development but with a twist, as start-ups use technology to address some of the industry’s most significant challenges. 

In the vegetable oil industry, 90% of food factories run at below 50% of their installed capacity due to the scarcity of quality raw materials and the capital to purchase them.

Starting with the Nigerian vegetable oil market, Releaf is industrializing food processing in Africa with software and hardware innovation. Their proprietary hardware increases the availability and quality of raw materials, while their sourcing software connects them directly to 1000+ smallholder farmers at scale.  

Together, this marriage of software and hardware has eliminated the more than 10 hours farmers spent each week de-shelling and separating palm nuts, and helped its food factory customers increase their capacity over 75%. 

I spoke with Uzoma Ayogu, CTO of Releaf, about what led him to agritech in Nigeria, tapping into Africa’s tech ecosystem, and what Built In Africa means to him. 


How did your journey lead you to Releaf? 

I was born in Jos, central Nigeria, but I did all my primary and secondary schooling in South Africa. After secondary school, I was fortunate to get a couple of scholarships to attend Duke University, which exposed me to a whole new world around what is really possible.

At Duke, I studied mechanical engineering and had the opportunity to intern at GE Aviation. I thought I’d work in Corporate America, then return to Nigeria 20 or so years later. I didn’t see myself coming back this early.

I met Ikenna Nzewi (CEO) through Management Leadership for Tomorrow (MLT) Career Prep program, which is why I say MLT changed my life. I didn’t even know about the tech industry before MLT.

I met Isaiah Udotong’s (Chief Growth Officer) family by hosting his younger brother at Duke’s Black Student Alliance Invitational Weekend. And at the time, they were working on a project to connect the diaspora to consulting projects in Nigeria that I joined. 

We worked on the diaspora connection platform until about 2016. During that time, we built a remote engineering team in Kenya, Nigeria, Canada, the US. The idea didn’t work that well, but we got used to working with each other remotely.

We pivoted to an investment platform. Initially, our thesis was that African companies don’t have the right advice. Then it switched to they know what they are doing; they just don’t have money, and that no one’s investing because people don’t know about the opportunities, which was wrong as well. 

But that thesis got us into YC, which was a game-changer for us. At the time, Ikenna and I were graduating, I was supposed to go to Microsoft, and he was supposed to go to Bain. Isaiah, who still had a year left at MIT was ready to take a leave of absence, but adhered to his parents’ pleas and crammed the year into a semester. 

It may seem extreme, but we said to one another, we’re young and have nothing much to lose, besides maybe some money in the short run, so this is the time to take risks.

We got into YC, which was really incredible, but as I said, our initial business model did not work. Nobody wanted to pay us for access to the 80,000+ companies on our platform. 

In deciding how to pivot, we discover that a lot of the companies on our platform were Nigerian agri-businesses. This led us to think about the problems they have, and that’s when we learned that a lot of them were struggling with their supply chain.

Recognizing that we needed to be on the ground to fully understand this problem, after YC, we immediately packed up everything and moved back. 

And over the past 3+ years, it’s been a lot of ups and downs. At one point, we had to let go of some of our team and live with family because we ran out of money. Someone even wrote an article that said which start-ups are going to die in 2019, and named Releaf.

But things have picked up now, we raised money last year, and we’re growing the team and currently doing north of a million in annualized revenue. COVID’s been pretty difficult, as it forced us to shift our focus. However, despite the adversity, we’re still working towards our mission of industrializing food processing in Africa to create shared prosperity.


Why agritech? 

“Why Nations Fail” demonstrates that no other phenomenon in the history of the world has moved more people out of poverty than industrialization. And the continent needs anything that will speed it up because nothing else can absorb population growth and create meaningful lives and jobs over the next two-three decades.

When you think about value creation and how nations became developed and prosperous, they’ve all made agriculture more productive. They use those excess gains to go into industry. Societies can then invest in their health care and education, allowing subsequent generations to move into services. 

But today, if you go to any food processing factory, across the continent, outside of South Africa, because they have commercial farming, they will all tell you that the number one challenge is the supply chain. Since small farmers dominate farming, they often have to source from different people, making it hard to get consistent quality and meet processing capacity.

We thought a lot about using the combination of software and hardware to make the supply chain more efficient.

Right now, we’re focused on the vegetable oil industry. We buy palm nuts from small farmers in southeastern Nigeria. We take them to our pre-processing centers to deshell. This produces palm kernel, which is what we sell to vegetable oil refineries. 

Our software is an internal tool that helps us do a variety of things, including geotag farm locations, trip planning, and price transparency.


What were some of the challenges of working in Africa’s Tech ecosystem? 

General: 

I think what often happens, and it’s not just exclusive to doing business on the continent, as a first-time founder, you’ll take a big macro problem that you read in a report, and generate an assumption about the root cause of that problem and start building a solution to address it.

These assumptions are often wrong, so instead of spending time learning and exploring the problem, we wasted time trying to solve it. And since geographically, we could not be near the problem, from the start, we were doomed to fail. 

Initially, we read this report from McKinsey, but once we got on ground, we used the first-principles perspective to understand the challenges further.  

And instead of creating an MVP, we used the Riskiest Assumption Test framework, which asked, what are the assumptions that if they’re wrong, can completely kill our business? And how can we prove or disprove them as quickly as possible?

So in exchange for some working capital, some of the agri-businesses showed us the end to end process. We’d hop on packed buses with people for upwards of 12 hours to meet the traders, go to the farm, etc. We got to see all the friction from harvesting, weighing, storing, payments, to logistics. 

We traveled to about 20 different states over six months, with eight different crops. With all this information, we picked palm because there was strong unit economics. The cost to start wasn’t that high, and there’s a lot of unmet demand.

Software:

From the software perspective, standardizing and digitizing data was a challenge because, in agriculture, most things are done offline. And so you had to figure out how to create a system that the data we’re collecting is one low latency and accurate. 

Right now, our current process is we train people to use Google Sheets, and then we pull from sheets into our databases, but we’re trying to shift to a direct data entry model. But not everyone has a smartphone, even on our internal team. So that has been challenging, along with the strength of internet connectivity and power. 

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How did you identify tech talent in Nigeria, and what’s been your experience thus far? 

We’ve been pretty blessed and lucky to get really good devs. It started with Sunday, who was one of the first Andela devs. When Sunday left, he provided some good recommendations: Deji, our first formal employee, who was also one of the first engineers at Andela and has been with us for three years now.

Typically we’ll work with someone who is super good, and they’ll maybe outgrow us or have another opportunity. Some of our devs have gone on to do PhDs, but they’ll recommend some they’ve trained as they prepared to leave.

It also comes down to bigger companies being able to train people because from a software engineering standpoint, that’s what drives the ecosystems.

Most of our team is remote. We’re in a less sexy part of Nigeria, so when it comes to recruiting talent, we had to allow remote positions, or we wouldn’t be able to attract the best talent. 

Currently, Deji lives with us. Calistus is in Lagos, and Chuks is based in Anambra. Our team does occasionally come down, for example, at the moment, Chuk’s is here visiting to do user testing because he just built an entirely new user flow, but we are remote for the most part. 


Why Africa?

Africa is the next big market for the world, and its success is integral to global success. 

Also, as the US is currently waking up to the centuries of systemic racism, right now, as black people, we have two options. 

The first is, asking them to finally give us a seat at the table or build our own table. 

Currently, there are no prosperous majority-black nations in the world. I feel that we can only ever truly be respected if we build our own wealth and prosperity.

I think business is important initially, but what’s more important is leveraging those success stories like Paystack or Kudi to build the narrative and excite other people about coming home to do real work in communities.

And so, the question shouldn’t be why Africa, but why not Africa. We have the ingredients; people just have to take a longer-term view. Wakanda doesn’t have to be just a movie; we can create it if enough of us get together. 

And it starts with looking inward. There’s a famous Igbo proverb that says, if you don’t know where the rain is beating you from, you can never get dry. And so we have to understand our history and what got us here and remember we have history way before colonialism and slavery. 

I feel fortunate that I’m doing the work I feel called to do, and I hope it will encourage more people to do so as well. 

Because it needs to happen in our lifetime. Our mission is to industrialize food processing in Africa to create shared prosperity (in our lifetime). 


Built In Africa. What does that mean to you?

It’s a bit cliche but FUBU, for us, by us.

I think of the concept of shared prosperity, whether you’re working on the continent or collaborating with someone here, as long as you have the continent’s best interests in mind. 

A lot of people see Africa as a great opportunity, but they extract a lot of its wealth and upside. That’s what we’ve seen for the last four centuries. 

Built In Africa represents folks that want to build here and want the returns and the value created to stay here. They want to create innovation and build wealth for Africa and its people. It’s a Pan African mindset of Africa first. 

That doesn’t always mean that you’re actually in Africa, but if you’re doing anything that advances that agenda, I feel like that’s Built in Africa. 

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