Nigeria: AFEX plans to raise $1.5bn next year, CEO Balogun says

AFEX, whose turnover exceeds $300m and is present in Nigeria, Kenya and Uganda, has no intention to launch an initial public offering to secure extra financing, CEO Ayodeji Balogun says during the Africa CEO Forum in Abidjan.

Nigeria’s first private licensed commodities bourse is set to tap into Cote d’Ivoire in the fourth quarter of this year and Ghana in 2024. It will later look to enter other African markets, including Tanzania and Zambia.

AFEX will also introduce derivatives of gold, maize and soybean, among other commodities, in the Nigerian market during the fourth quarter of 2023, says Balogun.

The Financial Times named AFEX the fastest-growing company on the continent this year. The bourse, which was founded in 2014 in Nigeria, has registered an absolute growth rate of %22,076.31, according to the FT rankings.

Despite its ambitious plans, Balogun expresses “caution” over the company’s potential growth in the coming years.

“We have been tripling revenue yearly for the past three years”, he says, but such growth is expected to significantly slow down: the company is seeking to only double its revenue to $600m within the next two years.

“When you move very fast like that […] you have to go back and check,” Balogun says.

“It’s like you’re driving a car, you ramp up the speed to a point, you have to slow down, check where you are, check the pulse and see that everything’s fine.”

Multiple services

AFEX offers a multitude of services to small farmers, including buying their crops and providing them access to agricultural markets and storage options, among other activities.

“With a commodities exchange, with prices and futures contracts, you will first be able to understand where prices are at the point of planting, which you can use as a basis of calibrates,” Balogun says.

“It gives you a sense of direction of what everybody’s view of the market is and where the prices are going”, which would help farmers decide the type of crops to plant.

The company also connects agricultural producers and purchasers through its online commodity exchange platform. Wheat, cocoa, and rice are among the listed items.

Kenya’s fintech advantage

The advanced fintech sector in Kenya, the second market AFEX set foot in after Nigeria, gives the East African nation a great edge, according to Balogun.

In Nigeria, we don’t have that level of penetration of digital wallets: 70% of our farmers are financially excluded

“Kenya is a lot easier because of the widespread provisional mobile money, and the ease of settlement, so 80% of our transactions in Kenya are paid into the settlement,” he says.

“In Nigeria, we don’t have that level of penetration of digital wallets; 70% of our farmers are financially excluded.”

Balogun hopes that commodity trading in Africa would draw attention and development efforts like those directed towards telecommunication and fintech, two of the most vibrant sectors on the continent.

Free trade

Balogun is a staunch believer of the African Continental Free Trade Area (AfCFTA).

He reckons that the free trade agreement could well be a turning point for commodity trading on the continent, whose food security fears have heightened since the Ukraine war erupted over a year ago.

He foresees the agreement bearing fruit in a decade. “In my view, after independence, this is probably going to be the biggest thing.”

“I give it 15 years, so 10 years from now,” he says. “The ease of flow of talents and capital across the continent is where Africa’s potential really starts.”