What’s Important in Year One?

by Ayodeji Balogun, CEO AFEX

6 min readJan 13, 2021

In year one I cannot over exaggerate the importance of sacrifice and creating value with like-minds.

We planned to cater to the influx of agricultural commodities and logistics demand from foreign investors and key stakeholders in the agricultural value chain, solidifying our role as the number one commodities exchange in Nigeria. We aimed to get this done through directing investments towards making Nigeria’s commodities market more accessible by creating value for smallholder farmers while opening the nation to other international exchanges — a traditionally difficult move without the needed infrastructure.

We floated our first instrument from family and friends along with our month-end salaries.

Akintoye Gbolahan and Olaoluwa Egunjobi were our first retail investors in 2014. Gbolahan was my classmate in the MBA program and Laolu was his rich friend, both worked at GE at the time. This happened in July 2014, just in time for Ramadan fasting. That was also the month I had to present our first budget and strategy to Jendayi for approval.

She had visited Lagos with Rod Blondin, and together with Shola, I had to present. I was fasting, had to talk all day, dine late into the night reflecting on the day, and then try to recover burnt fat from both not eating, and taking the flame from Jendayi asking for justifications. Then I had to prepare for the following day, and sometimes I would miss my night meal, and fast all the next day. It was hard! It was. But we survived.

The budget was approved, and finally, we got funding for setup and operations. And then we needed to build the team for the office. This probably was the best decision I made that year, assembling what was the best team ever.

Shola and I had successfully convinced our board that we can set up and run operations. Everybody was skeptical and indeed scared of Nigeria, except for Samuel Nwanze; and I will take the next paragraphs to acknowledge Sam and some other vital friends that made year one of AFEX possible.

Sam is an Angel, not kidding, like for real. There is just no other word for such a brilliant, humble, caring, supportive, candid, and hardworking human being. That’s 7 adjectives, and I know Sam is more than this.

Sam always opined that Rwanda was a great market to test and learn, but Nigeria was the place to grow value. While we set up Nigeria, there wasn’t any clear funding path for us. It was more like President Akin Adesina of AfDB, then Minister of Agriculture, called Jendayi and TOE, and said set up in Nigeria, and we did.

Sam and Wiebe Boer, Ph.D. created a way that we survived for the first 18 months. He was ingenious like that. In all honesty, there would not have been an AFEX Nigeria without Sam. Nonso Okpala was another lifesaver, “have you talked to Sam?” he would ask. We will figure it out. Another true brother is Obong Idiong. When my car had an accident and I wanted to replace it. I couldn’t make up the cash, Obong came to rescue. He also helped with everything legal and would leave a billion $ deal to support me.

I can go on and on acknowledging the phenomenal minds that brought the AFEX dream to life, but you would have to stay glued to my LinkedIn page for that. When we started, none of us had the experience, or capital, or team. All we had were big ideas and a dream. I never thought we might not succeed because we knew that with the right set of people, we can conquer anything thrown at us and we did.

But we didn’t know what was coming for us.

A Year of Clarity

2015 was a turbulent year, yet one with the most clarity. We had spent close to 10 million dollars of investors’ funds. Revenue was below $250,000 for both AFEX and EAX. Our investors had different views on how to proceed, and naturally, when elephants fight it is the grass that suffers. Jendayi was the hero, it was her fight and she fought it with mastery and grace. It took a year, but we came out of it wiser, smarter, and with more clarity on our purpose.

For us, necessity was the mother of inventions. We had to survive, and pay bills that’s your job as Country Manager — my new title. Bank warehouse receipt funding had dried up. Every bank executive told me the story of how they financed fish importers in cold rooms and they found empty cartons in 1980 — I wasn’t even born.

Every farmer needed a loan and no one was ready to fund them. Kola Masha had successfully deployed funding for farmers in Pampaida, and was improving the model. Ndidi Okonkwo Nwuneli also did something similar for pepper farmers. They had set the precedence, and like most innovations, we simply tweaked it and built our Outreach Model.

One of the tough decisions I had to make in 2015, and with hindsight, the wisest was disengaging CMI/AFGRI. CMI, a division of AFGRI was managing our warehouses on a USD annual contract. That contract accounted for about 70% of our total operating cost. Banks weren’t lending against the Warehouse Receipts again, so it did not make business sense again. I pushed for termination. I was seen to be crazy, but it was good crazy. And if you know me, when I make a decision, I will rather lose life than not take a battle.

We ended that contract that year, and in 2016, we had a massive USD crisis in the country. Naira devalued, and that contract would have thrown us into bankruptcy.

I was once asked if you ever had to rebuild AFEX Commodities Exchange again, what will you do differently. My answer was, “I will appoint a CFO from the beginning”, so let me talk a bit about that experience.

Lameck Muriithi was the CFO I never had in Nigeria. A great guy by all standards. He would say, “Deji, I got this.” In March 2015, Lameck had visited us in Abuja (Abùjá, as he will say in his Kenyan accent) to close out our 2014 accounts. It was a mess.

SAP, our accounting ERP worked on normal business conventions. You buy, you add value, you sell at a profit/loss. As an exchange, we neither bought nor sold, we matched, traded, and earned a commission. It was trouble in form six. Lameck came to the rescue, and with Williams Eyo we closed the books. However, some of these accounting errors would come back to bite us in later years.

To conclude this part of the series I will say that by April 2015, we had the license as an exchange, I had a new team, a beautiful office, and no money. We were broke, and it wasn’t going to get better soon.

Watch out for the next part in our next post.

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