Expanding Financial Access: Building a Marketplace for Agrocommodity Trade and Export in Nigeria with Abiola Jimoh

[00:00:00] You're listening to the Unlocking Africa Podcast.

[00:00:30] We give them access to be able to do collections and payments as an SME trader. And this guy went from having just one barbershop to having about three. Stay tuned as we bring you inspiring people who are unlocking Africa's economic potential. You're listening to the Unlocking Africa Podcast with your host, Terser Adamu.

[00:00:55] Welcome to the Unlocking Africa Podcast, where we find inspirational people who are doing inspirational things to unlock Africa's economic potential. Today, we have Abiola Jimoh, who is co-founder, co-CEO of Exchangebox, a company that facilitates a marketplace for agro-commodity financing, both for local trade and export.

[00:01:21] Welcome, welcome, welcome to the podcast, Abiola. How are you? Thank you so much. I'm doing great. It's great to be here. Fantastic. It's great to have you here as well. Where are you currently today? Oh, I'm in Morocco today. Very nice weather. Africa is beautiful. It is indeed. I know we've spoken before and you've listened to the podcast.

[00:01:46] As usual, I like to get straight to it. So I was hoping you could introduce yourself and tell us a bit more about Abiola. All right. Thank you. My name is Abiola Jimoh and I trained originally as a lawyer and also have further studies in public policy. I've been practiced for a while and advised companies. I branch out with my co-founders to set up a company called Exchangebox as a startup

[00:02:14] focused on agro-commodity financing and SMEs trading, both locally and for exports. It's been about three, four years now that we started and it's been a great journey with apparent challenges and successes along the way. Thank you. I can imagine. I can imagine. And I look forward to discussing those challenges and journeys that you've experienced so far. So what was the actual catalyst or the inspiration behind starting Exchangebox?

[00:02:46] We're proud to now watch myself and my co-found a mobile money company called TZ Mobile, where we have opportunity beyond sitting behind the desk to go to the field to see what a common trader in the agro sector goes through. And we see a lot of opportunity and a lot of ways to help them do better. So around 2019, we branch out of our different companies and started Exchangebox together.

[00:03:13] First, we demanded to support SMEs, just basic traders, to do their trading better, have more room for accounting, easier way of collecting payments. Eventually, we saw a lot of potential and opportunities in the agro-commodity sector. So my co-founder is a very deep-protected person in operations, grand-to-grand work.

[00:03:33] Myself, I'm deep-protected in looking at strategy and policy, looking at operational process and managing that energy and experiences together. We found out that we indeed need to provide a solution that enables people not just to have so much avest of their produce, but give them room to trade.

[00:03:55] And give them room to trade by having a marketplace enabled by technology, where the buyer can reach them and the seller can sell their commodities for good value. And making that exchange happens, of course, makes us happy together. And that's the reason for what we call Exchangebox today, a box to enable trading from local farmer, from the local SMU trader, to either someone that wants to export or someone that wants to consume or refine locally in Nigeria.

[00:04:19] You mentioned that you saw opportunities in the agro space, but what was it specifically that inspired you to focus on financial inclusion, especially for SMEs, farmers in the rural communities in northern Nigeria? First of all, like I said, we worked in that industry for a couple of years, so we've seen what they go through.

[00:04:43] We also see that we would be helping a lot of people solve problems around financial inclusion, digitize records of financing, giving them access to credit and alongside introducing other basic services they need to live a better life. If we give an opportunity to first end from what they do without any capacity, they cannot do much for themselves. These are people that have families who depend on them. They have siblings who depend on them.

[00:05:12] They have a community that believe and depend on them. Of course, these are where they farm. These are where they trade. So we then decided that we can create an aggregator model where people help them aggregate their produce, help them aggregate what they farmed, and help them introduce you to our marketplace. When we say the aggregators, these are people who have some basic education to be able to list the items the farmers have farmed and say, hey guys, this is available for trade, and this is how you can pick it up and all that.

[00:05:41] And this is the basic cost price. With being able to do that, we are expanding the opportunities for sales. They produce so much and they can consume it. We've been to Benoist State in Nigeria. There's a lot of farming activity going there. We've been to Katsina. We've been to Kirby. You see a lot of paddy rice in all the states I've mentioned. Paddy rice are the raw, you know, avested rice before you process it into fine rice, other long grains or short grains.

[00:06:09] We also see a lot of opportunity potential for yam from Benoist. A couple of other products, oranges from Benoist as well. And talk about Taraba as well. You know, they have lots of fine products, beans, and there are lots of other things. And these are things they cannot consume alone locally. They need to sell it. And trade barriers need to be removed if you want a better trading. Using technology to do listing, using technology to introduce them to buyers from across Nigeria

[00:06:38] and outside Nigeria, possibly for exports. We are not just only helping them, we are exposing them to new streams of revenue. And it's been a fulfilling journey as well. You touched on using technology. I know we were introduced for your contribution to a chapter in the Lagos Business School book, which is called Thrive, Mastering E-Commerce the African Way. I was wondering, how did that collaboration come about?

[00:07:04] You know, one of the basic ways you can really change the narrative in Africa or any part of the world is to put down your experiences and some of the challenges in a written document, such that from reading about what you're doing or reading about the barriers from a field perspective, people, policymakers or interested partners can actually take action with it. Because then they have a construct to work with.

[00:07:29] When the publication for Lagos Business School came up to show what we're doing using e-commerce and looking at the barriers, especially from regulatory and policy and Google, I saw that as an opportunity to tell our story, to tell people about what we do from a practical point of action and also suggest some of the things that can be done better. And not just from research based on Thrive's Works, research based on the work we actually do.

[00:07:54] So it's a very exposing experience to having to tell things from not just Nigeria, but what we've seen across Africa. Because Africa, incidentally, have clear challenges but similar issues limiting our capacity to achieve full potential. And those are issues of policies or regulation, multiple regulations, unharmonized, you know, regulation, barriers of entry that we created for no reason that we feel can be better,

[00:08:22] you know, and that was explored through the topic we addressed in the chapter, the Lagos Business and Thrive. Thank you. Fantastic. So you're touching on your chapter, which was titled, Regulatory Challenges, Remedies and Strategies for Building Africa's Sustainable E-Commerce Startups. What was the key message you wanted to share in that chapter? Okay. The key messages shared or which I intend to share.

[00:08:51] First of all, what are these businesses in Africa that are, you know, focused on e-commerce? What are the challenges they go through country by country or certain examples of countries? What are the issues that led to some of them that have failed? Why did they fail? And I found that a lot of issues leading to failure of the startups are not just about investments, are not even about non-availability of the market,

[00:09:18] because of course we have lots of people over Africa that need services, but it's regulatory challenges, multiple regulatory complexities, multiple taxes complexities, not so very easy entry model, and non-categorization of businesses in an appropriate way to be able to ease experimentation to grow. You know, I touch on the couple of companies that have failed, why they failed.

[00:09:44] I touch on things that can be done better from regulatory perspective by governments, but things that can also be done better by even the founders of the startups themselves, from being more accountable to doing more research, to experimenting properly before raising lots of funds so that you don't waste investors' money, or you don't make investors feel Africa is not the right place to invest, you know. So those are the issues I touch upon indeed.

[00:10:08] You mentioned regulatory complexities that impact the ability for businesses to operate and provide their services. I know with regards to what you're doing at Exchange Box, one of the things that you prioritize is payments, collections, health insurance, also pensions and microcredits. How did you come about to decide what areas to prioritize?

[00:10:39] Okay, our areas of priority depends on what the customer is asking for. So everything we've done or built at Exchange Box, it depends on who are the customers, what do they need, what are their pain points, and how can we address these pain points for them. You cannot be providing services that we do not need. So that's been a major determinant of the services we provide. And at every point in time, we provide a service, we try to improve the quality of the service, we try to make better the user experience or user journey,

[00:11:06] such that especially we're catering to a segment that is a bit neglected, a segment that needs proper counseling and education about why they need the service, how better they can use the service, and what improvement of quality of life it makes to them. So we rely a lot on people called aggregators network. Aggregators network are like local conversers who more or less explain our services to people. So they are like indirectly our staff. Now if you look at this volume of people,

[00:11:36] we have over 3,000 people in this segment of our company, whom we call aggregators and agents, who extend our services. So a farmer will not list their products on your platform. They need someone to say, oh, why should I trust this platform? Would I get my money? If they just bring some people to say, okay, there's a value chain for them to sell their products here. You know, why should they trust it? You know, so they need to find a local guy. They can trust. So we're dealing with people with lots of integrity. So you see the moving parts I was talking about. Yes.

[00:12:05] I feel sometimes those are the challenge, you know. And I find out that it's better to grow that way in Africa to build a sustainable model. You can't just dump technology on people. You need technology and people to work together. If you want to bring something sustainable in Africa. I agree. As you mentioned, you provide services based on the customer's needs. So with regards to the customer's needs and delivering those services,

[00:12:29] how do you measure the real impact of those services on whether it's small traders or farmers? Okay. Impact measurements, it's a baseline assessment of what was and what it is now. So for example, you need to then factor in prior to our services being available, how many users do we have? What was their model of engagement to use as insurance, to use access financing? I'll give you an example.

[00:12:59] A lot of our users don't even have any business to go to bank to access financing for their short-term trading. These are trading that takes just a week sometimes because they just need money to buy raw commodities from the local markets and take it to the dealers who deliver it to the factories. You see the middlemen that will finance. These are people who cannot go to bank and say, hey guys, I need to take a facility of maybe less than $1,000 to say,

[00:13:27] I want to just use it to buy these commodities and then go with it. And it's also hard for us. We then need to rely on aggravators, people who know what they're doing. You can trust who can vouch for them. And do what they go, group lending in a way, which is we give this facility to this guy. All of you in this group, ensure that this guy pays. Otherwise, none of you is getting more money from us or all of you are alive before it. It's a model that has worked or is working.

[00:13:52] I mean, there are some NPL around it, non-performance of loans around it or financing around it, but very minimal because it's a group model. So they cannot go to bank to ever get this kind of credit. They come to us. We extend this credit to them. They finance the trade. And the more they perform, the more they are better written in our system, the more they can access more money. And then the more we can document records or some financial records for them, because we operate with a microfinance bank.

[00:14:21] The microfinance bank then can have these records to begin to extend credit to them. And they've been able to enjoy their services. They're able to see how life-changing it is. So it's like you have empowered them to know that they can trade and have access to finance as well and grow their trading from the basic, just two baskets, three baskets of oranges or yams they can go and buy in the communities and trade to doing bags and bags and bags to up to buying a truck for themselves.

[00:14:48] So we measure the impact from where were they before us, where are they now? I'll give you an example. We have a barber in a community. He's just a guy that has a barber in a salon. He barbs people. But we give them an access to be able to do collections and payments as an SME trader. And this guy went from having just one barber shop to having about three. It's a popular story on our case. We always showcase him in Nassarawa states,

[00:15:17] you know, in the area. He became like a champion because he's able to get an opportunity from people from a platform like ours, you know. And we're not just the only one doing this. A lot of other platforms are doing this across Nigeria, across Africa. But we're proud about what we're doing. And we've seen practically moving from one point to the other for these traders, for these farmers, for these middlemen who trade in the agro sector. And it's been very, very exciting. Of course, not without its selling years,

[00:15:47] but it's very exciting to see these points as a way to measure the impact we're making on people. Thanks. With positive impact comes growth. With your growth, you're seeing high transaction volumes daily. So what operational or tech innovations have you used to enable you to scale efficiently? Okay, so we are heavy on tech, but heavy on human as well. We make the two go side by side.

[00:16:15] So operational tech process for us is this thing. We have a mobile application. On the phone, we have the hardware for payments. It's called point of state terminal. And we have a web-based where the major big buyers of the agro-commodities are able to, you know, have a dashboard to not only source their commodities, but also track it. Technology is fantastic, but it feels so we still rely on a lot of people speaking to each other to ensure these processes go through well.

[00:16:45] So the web or mobile app or, you know, all this technology we use is sort of a tracking system for us to make the process smoother, remove minimally the human interaction as much as possible. But I'm telling you for a fact at our experimentation level so far, that it's hard to just rely on technology, especially in Africa where we're dealing with a lot of infrastructure issues, that we still rely heavily on human capacity to make calls, you know, which is still using technology

[00:17:14] to make the calls anyway. The calls to speak to each other, to sometimes travel down to communities to ensure these processes go smoothly. But technology has been fantastic for us. Our user base started with just about 40 people. In 2020, just before COVID, to managing over 3,000, to currently managing over 15,000 registered users with an active month-on-month rate of about 40% of that number. And we're still up to grow more

[00:17:43] and grow beyond just Nigeria as well to domesticate the model across different communities to make people have better opportunities and also make impact in people's lives. Thank you. You mentioned the web-based platform, obviously the need for in-person interaction, the agent model as well. But if we look at the regulatory side, how have regulations shaped or restricted your capacity to operate?

[00:18:11] Regulation, it's a plus and a minus for us. Regulation sets standards of what to do and how to do it and gives people confidence about the platform they're dealing with. We have a mix, a platform that has a mix of both agri-technology or agri-services with payment. So we're kind of very, right? But regulation impacts our growth because we are unable to expand beyond Nigeria as fast as we want to because we need to then get to Ghana

[00:18:41] and find a regulatory compliance process, get licensed, you know. So, I mean, let me give you an example. To own a business as a Nigerian in Ghana, it's very hard, except you're bringing a lot of money for a startup funder. It's very hard because you then mostly probably need to find a local in Ghana to join your team or make an investment of certain threshold of amounts before, I mean, for an African, I mean, Africa to Africa before you can establish a business.

[00:19:11] In Morocco, for example, where I'm now, you can also make an investment in Morocco, set up a business. But this is not a business in Morocco. It's just like whether you're in Shell, for example, which is multinational, or you're in startup. There's no startup act or startup regulatory issues that say, oh, this is a startup. So the standards of compliance expected of you is minimal compared to other kinds of business. So there's no differentiation, for example, in Morocco.

[00:19:41] So, you know, Morocco has this saying that to start a business is easy to close its heart because every year you are expected to contribute as a business a certain threshold of amounts. And when you're closing your business, you need to pay for all those years, whether you are profitable or not. So those regulatory barriers, limit entry in Codivore, it's hard also to establish a business alone without having a local who join, whether they buy into your mission. As an African, I can't just say, oh, Africa is my home. Unlike what you have

[00:20:10] in other parts of the world or other continents, I can't say Africa is my home and I can establish or try opportunities out in as many countries as possible in Africa. And there's so many peculiar issues, challenges, even if you have a very genuine interest to do business and make impacts in lives of people. Africa does not have this confluence of a one-place shop, a one-stop shop that makes it easy for Africa to Africa, African to African to trade or establish businesses to grow your businesses.

[00:20:38] So keeping on the theme of market strategies, I know you've mentioned a range of markets and some of the complexities and regulatory issues. Before we focus back on Nigeria, are there any specific strategies that you have found effective or useful for helping you to expand within the rural markets in Nigeria? In Nigeria, to grow rural business,

[00:21:08] you need people, model, you need technology. It's the same model that every other business you've seen grow on a man-to-man model as used. Let me give you an example. There's a business that I like to cite the example, Farmilk. Farmilk, as a model, they built a billion-dollar business in Nigeria using bicycles, people that use bicycles to put the small crates in front and ride the bicycles from every community and you buy it for less than $1, $2, a dozen, maybe cents,

[00:21:37] 50 cents sometimes depending on the size you want to be able to enjoy a good ice cream or farmilk or some sort of yogurt for every kid. All of us went through this process as a kid. These businesses have survived in years and years and years and still standing. It's the same model. So to grow a business in Nigeria, you need people. That's why a mix of technology and using agents, agents are individuals

[00:22:06] in communities who canvass, who talk about your business, someone people can trust, somebody reliable. Second agent serves as a second handle of being able to document records. Technology also serves as the way they channel for you. They channel through where they consume the services or they make the services up. But your key entry road is the people. So from the perspective of the business model we have run in Nigeria so far, we find the people more reliable,

[00:22:36] people more important in our channel than any other thing. Thank you. You emphasize the point that you need people more than technology. So how do you localize your services for different regions whilst also trying to maintain the brand integrity or their brand identity within those different regions? Are you talking about Africa or Nigeria? Maybe just in Nigeria. Okay, in Nigeria, I mean,

[00:23:06] what has worked for us, like I said, is we've used an entry model where we appoint, I mean, you put it on your website, you put it everywhere that you're looking for canvassers, agents, creators who can, and in return for extending yourself, is the end commission, so it's a shared end revenue, right, so that they see value from what they're doing as well for you. But what you do is you put a standard of performance, which is you don't give us the result we want within

[00:23:36] certain threshold of time without any major serious challenge coming from us. You then find a replacement. Nigeria is a population of millions of people, over 200 million people, young people in the demographs looking for opportunities. A lot of people are actually looking for opportunities for genuine legitimate need that can make them go through things. And this is an opportunity as much as it looks like a problem. It's an opportunity then to find the right people, experiment with a couple

[00:24:05] and find the right people for your business to advance your growth. Just have certain level of performance you can manage, you can measure. Of course, without overlooking your challenges, there will be challenges of some people not performing to standards, sometimes resources and time wasted, but then there's the cost of doing business in this part of the world till we get it right. You know, so like I said, it's a lot of people. People are your first primer way of getting anything done and technology just becomes your enabling

[00:24:35] for doing this better. Thank you. From the experience that you've gained over the years, what advice would you give to other founders who are trying to expand their products within rural communities inside Nigeria? Okay. An experience I can share is you need to be consistent. You need to be ready for the hard work. You need to go to the field. You need to see what they go through, the experiences

[00:25:04] they go through using your product. You need to become a real person yourself for you to see whether your solution is the right thing for them in that community. You can practically not grow anything or expand to a real community sitting behind your desk in Lagos or Abuja and expecting to deliver a process or a product to people in my community in Australia or people in my partners or everyone's community either in Plato or Benway or Katina

[00:25:33] or Umaya or Owey or somewhere. You need to find people that have practical experiences in these areas. As much as possible, you need to also be involved in the process. It takes the community to grow the community. That's what I've learned so far. Thank you. Brilliant. I know from my previous conversation that we had, you mentioned that obviously as we all know, Africa is a big continent but we've never been very intentional about creating a synergized

[00:26:02] e-commerce framework. I was wondering if you could talk us through that in terms of what would that synergized framework ideally look like? Okay. First of all, Africa are peculiar similar issues. Africa is possibly a continent that is here to discover its own strengths. All right? A lot of people, young people, agile, very dynamic people which is an opportunity in the real sense of it. But we create

[00:26:32] so much barriers from the start point of we don't even have a common currency. You go to the European Union just so you spend euros. And because you're spending euros, you don't have to worry about when I go to Estonia or I go to Sweden or I go to Finland or I go to Germany I'm looking for their local currencies to spend. It's a serious barrier to entry, right? And because they spend similar money their financial regulatory system is speaking to one another because it's similar money they spend. Same money they spend it.

[00:27:01] That's one. Two is regulations sort of an umbrella regulation that governs the whole European Union which is what we don't have in Africa. We have the African Continental Free Trade Agreement AFCFTA which represents an ambitious political vision but it's so far been a very very difficult implementation process and this is because 55 member states it's not a joke across Africa right? But we need to find a way we need to be intentional about what are the key

[00:27:31] things that will drive trade among us regulatory policy that unites us currency issues that can give an umbrella spending capacity to our people when they're within Africa I'm in Morocco Morocco has dirhams to spend and the next favorite currency is euros to spend as well because they're very close to Europe right? Which is for me coming with Naira it becomes a problem I need to first find euros from my country before coming in you know it already limits my ability

[00:28:01] to do a lot of things right? I have to worry about spending currencies and all that to do anything at all it also has like I said peculiar issues about different ways of establishing businesses we need to be intentional we talk about trade routes in terms of transportation across Africa but these are big issues these are big costly infrastructure issues but there's basic things like currency basic things like harmonized regulations basic things like focusing

[00:28:31] on enabling our startup ecosystem for example to have a one-stop shop to say hey guys come to any part of Africa you have an idea we have an umbrella a sandbox for you to come in and you can establish in any part of Africa without so much regulatory barrier once a guy a young man or a young person that wants to do business to use technologies to drive change across Africa you're welcome to be part of this you know and these kind of opportunities are the only way we can truly grow Africa truly be relevant

[00:29:00] in Africa truly facilitate trade in Africa we have a very robust fish fishery market in Africa that is still under explored till date where agricultural produce heavy in Africa with serious post-averse loss over 46% because of storage systems it's a basic problem we can start fixing you know under our harmonized regulation with or without any major barrier around infrastructure yet you know

[00:29:30] and those are if you look specifically from a payment platform fintech perspective how do you think African fintechs can better collaborate across borders to

[00:30:00] build that shared infrastructure a lot of fintechs have indeed expanded across Africa you see flutter with the pay stack where both unicorns indeed across Africa but I mean just find out how long it took them regulation to regulation to move from one country to the other and these are companies that are not just small companies they've raised money well enough they've been invested by major investors across the world they've done fantastic solution drive across Africa

[00:30:29] across different parts of where they operate and they still need to wait tons of months to get licensed from one country to the other now imagine imagine imagine small small guy trying to drive a business that relies on payments or one thing or the other and trying to drive it faster across Africa that guy is going to probably have the idea to die before it takes off so there's need like you said for not just fintechs collaborating among themselves but government collaborating with fintechs creating an

[00:30:59] opportunity a sandbox like I used again a sandbox to say hey guys we truly genuinely want ideas that can drive Africa not just Nigeria or Ghana or Senegal or Cameroon which is west or just Morocco Tunisia Libya you know not just some parts of Africa but an idea that unifies us that truly solves a problem common to us whether it has fintech element or agri-tech element or software as a service element or any form of element it

[00:31:48] as you want check out how that will accelerate growth and it's done in a controlled environment so it's not like it's done in such a way that it's enabling crime because the guys can go free as they want you know it's in a controlled environment it's a sandbox experimented and experimented upon before you actually launch it for public consumption you know it cuts the time it takes to launch a business peculiar and uniform to the whole of Africa it also cuts the time to accelerate your growth

[00:32:17] it also makes it truly a business that can provide solution across Africa with very minimal barrier entry for anyone interested in such venture and with this kind of opportunity you're looking potential you're looking worth indeed for not just one part of Africa or the other but the whole of Africa together with this

[00:32:56] proper marketplace for beyond local trading for exports you should be able to sit in London and you desire certain kind of products from Africa that such that you can transport from Africa and move to London or move to any part of Europe or America and you

[00:33:26] upon the delivery of the item to you you can get your player to release you know of course it's a

[00:33:56] we're bringing Africa to the world and we're giving the world opportunity to access any form of products from Africa as well you know it's a lot of challenges a lot of harmonization a lot of break unit works but we it's something we want to do because we are

[00:34:26] so if we move from current trends and look to the future if we revisit this conversation in five to ten years from now what you hope would have been achieved with regards to whether it's payments collections and SME farmer support in Africa okay our hope is that an African farmer has opportunity to earn fully for the capacity of his work either to trade

[00:34:56] locally or to trade in the export markets have a decent earnings from the work they do they do a lot of work by the way they put in a lot of grit they put in a lot of belief and you know hoping that their planting will bring the and at the end of doing all that barring climate changes and weather disruptions they need to earn well for the services they provide and for the products they give to the market they bless the world with and it is indeed our aspiration

[00:35:26] that we have to provide an opportunity for them to earn value for what they do and make their families benefit better from it and change the dynamics for over the next five years especially in terms of expanding across different African markets we want to provide an opportunity for people beyond just Nigeria

[00:35:55] for people beyond Nigeria to go to all parts of Africa as much as we can we want to empower people that work in the rural SMEs which make the informal sector and this is the biggest sector in Africa for facts we want to be able to empower them to do more give them the right access to financing to finance our trading I want to create an opportunity for people to

[00:36:37] to believe in our journey is the right step for us to unlock success and make impact along the way as people we often have quotes mantras African proverbs or affirmations that keep us going when times are challenging or when times are good do you have one that you can share with us today okay there is a popular proverb in Africa that says that if you have a need for

[00:37:07] do not use it for your own benefits let everyone benefit from it the implication is that I mean what this implies is that we are Africans we have the resources to grow our own home let's do less with

[00:37:37] we face we problems and ensure that we solve our problem so that the support we need from every part of the world can be easily handed to us rather than begging for it thank you fantastic way to close today's conversation Abiola it's been a real pleasure having you on the podcast today your work at exchange box is definitely a blueprint for what's possible when technology meets people and meets purpose

[00:38:07] so thank you for sharing your knowledge and experience and it's been tuned to the podcast if you've enjoyed this episode please subscribe share or tell a friend about it you can also rate review us in apple podcast or wherever you download your podcast thank you and see you next week for the unlocking africa

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