Entrepreneurship Zone: 05 February 2021: Nigerian businessman grows agricultural trading business after securing first client through LinkedIn

Fri Feb 5 12:57:56 CAT 2021

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Entrepreneurship Zone: 05 February  2021: Nigerian businessman grows
agricultural trading business after securing first client through LinkedIn

Timi Oke secured the first client for his fledgling Nigerian export trading
business through LinkedIn. At the time, in 2012, the Nigerian-born Oke was
working a nine-to-five job at a bank in the UK and decided to follow the
advice of an import-export trader he had become acquainted with.

"I had always been interested in agriculture and trading from a young age.
Even while I was working at the bank, I would research different
agricultural products that could be viable for trade," he says.

The trader told Oke to attend as many trade fairs as he could and
recommended a few industry groups on LinkedIn to join.

"For about six to twelve months, I was constantly on these groups, asking
questions, eliciting responses and then contacting those individuals
directly. Eventually an importer from Mexico asked me if I could supply five
containers of dried hibiscus flowers."

Oke took a career break, not officially quitting just yet, and asked his
brother and a good friend to join him in the newly registered company called
AgroEknor.

It was a scramble to deliver that first order. The partners crowdfunded and
used their own money to raise enough working capital to purchase the
hibiscus flowers from middlemen who procured it from small-scale farmers in
Nigeria's northern states.

Oke emphasises the importance of integrity in business. He was upfront with
this first client, admitting that the company had not done a deal before.

"What I could assure him of, though, was that he would not face any issues
getting his product out of the ports. We had connections at the Nigerian
Ports Authority. At the beginning of every business, you always need one
person to believe in you. Either your investor or your client," Oke notes.

The shipment was dispatched. Oke still remembers the day the first payment
for 60 tonnes of dried hibiscus was transferred into the company's account.
"It was a celebration. I gave notice at the bank and settled permanently in
Nigeria to do this full-time," he says.

The importance of research

One mistake many entrepreneurs make when trying to start a trading business,
says Oke, is not having adequate industry knowledge.

While working at the bank, he read up and learnt everything he could about
hibiscus and the industry, not just in Nigeria.

"Hibiscus is not the product I originally wanted to go into. I liked the
drink, but did not know that it is a cash crop which is in demand worldwide
and that people paid good money for," he says.

He learnt about the international hibiscus market, the main importing
countries and the biggest producers.

"Organic hibiscus is grown in Africa - mainly in Nigeria, Burkina Faso and
Sudan. When we started, there were a lot of trade restrictions in Sudan.
They were in the middle of a civil war. Essentially there was a global
supply gap," he says.

Oke also knew that the big hibiscus growers in northern Nigeria were unable
to get their products out of the country as local traders did not want to
deal with the tension and unrest in the area. It was a gap AgroEknor could
capitalise on.

"We essentially said: Let's be brave about this. Let's go into the north,
get it packaged and get it out," he says.

His investment in getting to know the industry has delivered results.

"Sometimes I feel like a walking hibiscus encyclopaedia, but knowing the
product helps. When you can speak about your product and industry with a lot
of knowledge, clients are more inclined to trust you with supply contracts."

Defining target markets

Oke says it was beneficial that the company's first client was from Mexico.

"I have discussions with newcomers all the time who just want to get
products into the EU or US. In the beginning, you cannot target the most
sophisticated countries."

Oke explains that a mistake in a shipment's documentation or an issue with
fumigation, could, in some ports such as the US, lead to the destruction of
the entire cargo. A start-up cannot accommodate such losses.

"There are other countries where you can refumigate or reprocess the cargo
elsewhere in the harbour, for example, Mexico or China. If you don't know
this and simply aim for the US market first, you are doing yourself a
disservice."

The company was fortunate, says Oke, to grow quite quickly. From 60 tonnes
in year one to 120 in year two and 540 tonnes in year three. The growth came
from clients in Latvia, Germany and Belgium which he secured at the Anuga
Trade Fair in Germany in 2013.

The team came back from the fair and raised another round of finance from
family and friends to be able to deliver on the orders. Oke started the
process to get certifications in place to be able to export to the EU.

At the fair, Oke also met a Mexican trade broker who helped facilitate more
Mexican deals. He used their track record of delivery to their first client
to secure 30% payment upfront from eight new Mexican clients.

AgroEknor was steadily building its client base and in 2016, in its fourth
year of operations, it penetrated the US market. The company received one
order from a US company who wanted the hibiscus packaged for retail under
the AgroEknor brand. Oke and his business partner soon started fielding
calls and emails from other potential clients in the country who found their
contact details on the packaging.

"We got proper demand in the US in 2017, and in 2018 I moved there for about
seven months, essentially selling our product from door to door. We were
able to establish our reputation and secured longer-term contracts," he
says.

AgroEknor exports hibiscus products throughout the world.

Adding value and the right sourcing strategy

On its website, AgroEknor lists hibiscus as well as cashew nuts, sesame
seeds and ginger as its trade products. The main focus, however, says Oke,
is growing the formats of its hibiscus exports.

After the success of the first Anuga Trade Fair, the company paid a visit to
a few of its overseas clients. "We found out that while we exported the
cleaned and packaged raw flowers, there also was a market for both hibiscus
powder and concentrate," he says.

AgroEknor joined forces with a chemist from Nigeria's Federal University of
Technology and began processing the flowers at a facility in Kano.

"Right now, we have clients in the EU who purchase the powder, while the
demand for concentrate is huge in the US," says Oke.

He believes that it is imperative to be involved at both ends of the
production cycle. Even before the company had an outgrower scheme with
smallholder farmers cultivating hibiscus for direct supply, it had boots on
the ground near the farms through an agronomist consultant who checked the
quality of the crop.

"Importers currently are focused on the traceability of a product. This
means that, as an exporter, you have to be involved in the entire value
chain and we are talking to three state governments to see how we can
replicate our outgrower programme there," says Oke.

The planned scheme across the three states will push the number of
outgrowers up from 2,000 to over 15,000

"We currently have a supply deficit. The demand is high, especially with the
renewed focus on healthy living due to Covid-19. We've had a lot of health
and wellness multinationals approaching us as hibiscus has been proven to be
an antioxidant."

Relationship capital

While Oke had promised his first Mexican client that port and logistics
challenges will not be a problem, he admits that the company has had to deal
with some of these obstacles along the way.

"Certain infrastructure has to be in place for you to have a seamless supply
chain and Nigeria does not have it. We have port congestion and if a client
wants his product on a specific day, you may struggle to get clearance."

In 2018, AgroEknor secured substantial funding from the Nigerian
Export-Import Bank (Nexim). "At a high level, Nexim has always been able to
connect us with the right authorities to be able to negate some of these
challenges," Oke says.

"In any business, your network can help you to solve problems and you have
to make it a point of duty to actively grow that network, especially with
regulatory stakeholders," he says. "It will be help you to go further than
the next guy who does not invest in relationships."-Howwemadeitinafrica

Timi Oke

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