AFEX Beginnings — Saying Yes and Other Stories

by Ayodeji Balogun, CEO AFEX

5 min readJan 11, 2021

I have always had a passion for commodities trading, and when I travelled to Kigali, Rwanda in 2012, my love affair with the agro-commodities exchange market experience kicked off.

For me, as humans, we define our success in clear fundamentals.

First, the authenticity to pursue an ambitious dream.

It had been one year since I joined the Tony Elumelu Foundation and wanted something new. Philanthropy felt good but I was missing the adrenaline rush in business so much, and my admission letter to the PhD program at Lagos Business School, Pan-Atlantic University wasn’t going to give me that.

The second is the power of yes.

A few months earlier, we had worked on the impact-investing deal into Africa Exchange, and it was to set up exchanges in Africa, starting in Kigali. Wiebe Boer, PhD asked if I would like to join the team, and I was dumbfounded… is that even a question? Of course, I would love to. And that’s how I made my first trip to Kigali in November 2012.

I was tasked with one goal: To transform Nigeria’s commodities exchange market into a scalable, efficient, and profitable system.

To achieve this, I was to bank on data and a trusted network of investors in the agricultural ecosystem to create a market infrastructure that could work for our country. But first, I had to perform a significant task: marry the love of my life, Kemi Balogun, on 27th December 2012. I still don’t know what I told Kemi to agree to marry me, but it worked. Two weeks after my wedding, I had moved to the small city, Kigali — then only known from the movie Hotel Rwanda, but has since grown to be a place I call home — to start up the East Africa Exchange (EAX).

That was the beginning of my #myAFEXstory. It’s easy to see how interest can quickly metamorphose into an impact-driven project to fight food insecurity.

2013 was epic! I was living the #MBA dream: newly married, new city, expatriate treatment, working for two billionaires on a special project. I was learning a lot too with setting up the Exchange and having some amazing consultants help shape up the plan like Rod Gravelet-Blondin, Yohannes Assefa, Bharat Kulkarni, PhD, and Brett Riley.

EAX started as just two of us in Kigali: Dmitry Spitsberg who I call a brother and I had the task of building the relationships, setting up the office, drawing up a strategy, and working with regulators. It was amazing!

Our first problem was the furniture! “If we could set up the office, then we will have the trading floor, and the Exchange will be ready”. Hindsight is 20/20 they say. A contractor had collected funds for office setup and was on the run. I had to go on a man-hunt to Dubai; some CIA stuff. Then we had technology issues! No one understood the trading platform that we spent $7 million on; we had spent so much on technology but had never thought of a warehouse.

Some blessings, however, came with that investment. A key one was us receiving President Adesina Akinwunmi (then Minister of Agriculture, Nigeria) at EAX. Our Chairman Jendayi Frazer received him, and that was the beginning of the journey of AFEX Commodities Exchange in Nigeria. President Adesina was so impressed with the technology infrastructure that he pushed our investors to setup in Nigeria in three months. Yes, three months to setup a warehouse receipt system and an Exchange in Nigeria, and guess who had to do it?

In November 2013, we signed an MoU with the Ministry of Agriculture in Nigeria, and we began setting up the Exchange. We had actually submitted a bid for NCX (government-owned exchange in December 2012), but we needed to start this in any way possible. At this time, after our experience in Rwanda, we knew there was not going to be an Exchange without a functional warehouse receipt system, and without solving farmer problems, the whole model did not stand a chance of winning. So our approach in Nigeria was different.

  • First, set up and operate warehouses.
  • Second, connect processors to finance.
  • And third build a technology-enabled exchange.

We started with equipping four of the seven warehouses we had gotten from the Federal Government of Nigeria, then closed our first warehouse receipt finance deal with UBA Group. We also started modeling our Outreach Program that year, identifying what our value proposition to farmers would be.

Growing what was to be the largest supply chain infrastructure to unlock capital for the agricultural sector and improve the livelihoods of smallholder farmers was a big goal, and is now a big achievement, but it required commitment, courage, and resilience.

The first deal to bring life to the business was the N1 Billion financing program. Thanks to Chibuike Goodnews who was relentless in pursuing the deal to close. It was the first of its kind in the bank. It also brought some form of revenue, albeit infinitesimal since we were strangled in between the bank and the clients.

The next was our first order with Flour Mills of Nigeria Plc at their Kano plant. That was epic! Maize at the time was 35,000 and we got a Purchase Order for N36,000. We didn’t have the cash to pull the deal through and no trader was ready to deal with these traders in suit.

We carried the LPO for another 3 weeks and couldn’t fill it. Gert Kriek had given us our first chance, and he was getting impatient. He had earlier told us we will fail to deliver, and we could either prove him right or wrong. Then maize prices moved to 39,000 and he wasn’t going to change the price for us.

Over that weekend, I called my colleague Shola and said, “If we lose this deal, we may not get another one. Our salaries would dry out, and it will be over.” I had to take my first hard call. “Shola, let’s take the loss, and prove Gert wrong.” We made the deal and lost N4,000 per MT. But we delivered. Now complication two, how do we cover the cash balance?

Watch out for the next part in our next post.

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AFEX’s infrastructure and platforms drive capital to build a trust economy in Africa’s commodity markets.