Entrepreneurship Zone: 21 March 2023 :: Exporting coconuts from Côte d’Ivoire to Europe: How this entrepreneur got into the agri-commodity trading game

Tue Mar 21 01:53:19 CAT 2023

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Entrepreneurship Zone: 21 March 2023 ::   Exporting coconuts from Côte
d’Ivoire to Europe: How this entrepreneur got into the agri-commodity
trading game

*          

Mohamed Diaby started his business because he needed a place to intern
after his master’s degree in international trade. Diaby, who hails from Côte
d’Ivoire, was studying in France. He and his business partner Ybrahim
Traoré, were keen on promoting the export of African agricultural produce
but they soon found that the supply chain in Europe was controlled by agents
from everywhere except Africa. They couldn’t find a company focused on
African-origin food commodities where they could earn their college credits.
So, they started their own company, Zatwa, in June 2014.

As students with little savings, their list of possible commodities for
export whittled down to fruits and vegetables, specifically coconuts.

Telephone sales

Diaby and Traoré didn’t have a supply chain and were still in France, but
they hit the ground running and secured two containers of coconuts in Côte
d’Ivoire on their first day.

They then made a list of companies that traded in tropical fruits in
Europe. “We found out the number one platform for fruits and vegetables was
Holland’s Rotterdam market. We identified the major players,” says Diaby.
Several phone calls later, they were able to get a sense of the prices and
how to get the goods to Europe. Their bilingualism, having studied in UK and
France, proved their most significant asset.

Soon they had two buyers for the coconuts, one in France and another in
Holland. “We were able to reach them on the phone and discovered they
struggled with companies in Côte d’Ivoire because of the language barrier.
They felt confident engaging with us,” Diaby adds.

With no access to capital, Diaby’s mother advanced them the first $4,000
and the next day she registered the company in Côte d’Ivoire on their
behalf. “It wasn’t even enough for one container, so, we negotiated with
everybody, including shippers, to work on credit. We had to pull a lot of
strings because we had already made some commitments to buyers.”

Mohamed Diaby

Learning the market

Shortly after shipping those first containers, they headed back to Côte
d’Ivoire to establish the business. Their biggest challenge was the
logistics of moving a commodity across borders into another country and
understanding the players involved; from the farmers to the middlemen and
buyers.

A palm plantation in Côte d’Ivoire.

“There are many steps in the process and each requires documentation. Local
farmers do not work on credit, especially with those new to the market.
Also, because one farmer cannot deliver the quantity to fill a container, a
middle man gathers the crops to make up the volume. They are unable to
finance the operation on credit. We had to pay them upfront to secure the
raw material,” explains Diaby.

Another hurdle was understanding the mindset of local farmers in terms of
business. “We would fix a price with a farmer and the following day, he
would sell to someone who offered a better price.” Diaby quickly learnt to
leave his sophisticated English and French behind in the city and
communicate with the farmers in their local language. He got to know some of
their families and invited them to his own home, building a mutual trust.
“We have a saying in Côte d’Ivoire: when you go into a village, you walk the
way the villagers walk. Arrive willing to help them get the most out of
their crops. All they need is a sense of security, not someone wanting to
take advantage of their hard work.”

At the same time, the partners had to understand how buyers in the West
approached business deals. “In Europe, Monday is Monday. If the
specification is blue it has to be blue. Payment terms have to be respected
and you must keep your word. Your reputation is a great risk management
strategy,” says Diaby.

Zatwa was able to transition between both worlds and secure quality
commodities for its customers in Europe at decent prices for the farmers.

Exploring new revenue streams

Initially, the firm exported coconuts but soon added other fruits like
mangoes. Shortly after, they began importing cashew nuts from Tanzania, okra
from Uganda and peppers from Kenya and Uganda for export to the UK. However,
the entrepreneurs decided to limit themselves to a few commodities to better
manage their risk. Handling fresh produce proved tricky and at one time cost
them a lot of money after wrong documentation caused a delay at the port and
containers of mangoes to spoil.

Diaby emphasises the need to understand the product, from sourcing and
storage to transportation and documentation. “Take time with every decision
and have all the necessary information before you put any money in.”

Today, 90% of Zatwa’s volumes comprise fresh coconuts. They also export
dried coconut and flakes. The company is one of the top five exporters of
coconuts in Côte d’Ivoire, shipping 20 containers each month to around 15
countries. “We settled on coconut because of its availability and its risk
management aspect. We wanted to master the whole supply chain value of one
product before we moved on to another,” Diaby says.

Zatwa’s coconuts ready to be exported.

Zatwa has also started with the export of dried fruit, a portfolio they are
keen on growing as the coconut market is highly competitive with many new
players. Coconut farms are also making way for real estate and the remaining
ones are almost a century old. As a result, their yields are low causing a
scramble for raw material. They has had to be proactive on the ground to
secure commodities to fill orders.

Zatwa has grown its turnover from €100,000 in 2017 to €1.5 million in 2020.
Their eyes are now set on processing raw material to get the most value
rather than trading purely in unprocessed commodities.

Fresh coconuts account for 90% of Zatwa’s trading volumes.

- Howwemadeitinafrica

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