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Nigerian startups helping to bridge local food supply value chain

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Nigerian startups are digitising the local food supply chain, helping merchants navigate high food costs and farmers sell their produce.

Two such firms, Vendease and Sabi, which were formed last year, have created digital marketplaces allowing wholesalers, shopkeepers, restaurateurs, and hotels to buy directly from farms and manufacturers.

Inflation has been in double digits in Nigeria since 2016, although it has eased over the past six months. Price increases peaked in March due to COVID-19 disruptions, currency devaluations, and security issues in food-producing regions.

The startups work with producers by offering credit to farms to help them grow, signing supply deals, collecting produce, and selling it at a specific rate to the buyers — making money on the interest and through commission of around 1 percent–5 percent.

Vendease CEO and co-founder Tunde Kara thought his three-month-old company was doomed when Nigeria’s commercial capital Lagos was shut down in March 2020 to stem the spread of the coronavirus, yet it turned out to be the leg up the firm needed.

“It turns out that that singular act of shutting everywhere down and people couldn’t directly go to the market themselves and we could because we had a licence as a procurement company helped to change the buying habits of these businesses,” Kara told Reuters.

Vendease said it helped more than 100 hotels and restaurants save $480,000 in food procurement costs in the last nine months.

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Vendease user Michael Williams, general manager of the EbonyLife Place hotel and restaurant in Lagos, said: “They do what we really require for most suppliers, and that is to combine quality of the actual produce with price.”

It is also helping solve a problem faced by small-scale African agriculture producers: lack of access to markets — mostly due to the challenges of transporting goods from rural areas to buyers in the cities — that often sees part of their harvests go to waste.

The UN food agency says on-farm losses in sub-Saharan Africa for fruit and vegetables were as high as 50% before the pandemic and likely rose as it limited movement.

Anu Adasolum is co-founder and CEO of Sabi, which has signed up 150,000 small business users on its platform in five states.

“What we are trying to ensure is that merchants never pay more than they have to do for the set of products and services that they accessed through us,” she said.

Sabi and Vendease also work with lenders to provide credit to businesses on their platforms. Small businesses drive most African economies but often lack credit to grow.

Farm 360 in Ogun state in Nigeria, which produces chicken, catfish, and fresh vegetables, uses Vendease and accesses financing for feed, its biggest cost. That has helped raise daily chicken production by 20 percent to 2,500, general manager Mubarak Badamosi said.

At Vendease, Kara and his team plan to expand to 20 cities across Africa from three in Nigeria and sign up to 50,000 businesses on the company platform in the next three years.

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