In the African financial markets, commodity markets play a huge role in shaping investments. This is because the primary economic sector represents more than 15% of African countries’ economic output. Thus, it remains a very important part of financial markets in Africa since African countries continue to export their raw commodities. But there is a man who decided to transform the commodity market to facilitate exchanges. His name is Ayodeji Balogun.
Ayodeji Balogun is a Nigerian businessman. He is the Chief Executive Office of AFEX, a Nigerian corporation operating a private agricultural commodity exchange. Over $300 million worth of crops are traded on AFEX’s platform in Nigeria, and the business has recently expanded operations to Kenya. The company intends to open offices in Ivory Coast this year and Ghana in 2024, followed by an expansion into Benin, Togo, Tanzania, Ethiopia, and Zambia. AFEX was founded in 2014, and currently trades in nine commodities in Nigeria , Kenya, and Uganda, including corn, wheat, sorghum, and cocoa.
The current global turmoil caused by Russia’s invasion of Ukraine has dealt a serious blow to essential food commodity shipments to Africa, exacerbating existing trade challenges. To support its expansion, AFEX aims to raise 30 billion Naira ($65 million) in debt this year. The funds will be used to boost storage capacity to 1 million tons by 2025, obtain more commodities exchange licenses, and introduce gold and derivatives to its trading portfolio.
AFEX anticipates that the African Continental Free Trade Area, which aims to eliminate trade barriers across the continent, will unlock significant value for its spot and exchange traded contracts fixed income products, and derivatives. Balogun believes that expanding intra-Africa trade will bolster national productivity and food security for the countries involved.
In the last six years, the company traded over 500,000 tons, with a turnover of over $300 million; increasing its storage facilities from 45 in 2018 to over 200 today; provided over 450,000 smallholder farmers with access to infrastructure, finance, and markets. In over two years of operations in East Africa, the company has recorded over 20,000 farmers, financed 15,000 farmers, and traded over 12,000 metric tons, with a value of 600,000 Kenyan Shillings.
Since its inception, AFEX’s focus has been to establish a strong foothold in Africa, providing innovative solutions around financing, trading, and market development systems that would improve food security, improve livelihoods for smallholder farmers and enable seamless access to commodities trading across the continent.
Intra-trades are rather difficult so far within the continent. Protectionist policies have made intra-trades far more complex within the continent than trading with the outside world. Elevated tariffs and endless regulations complicated the trading process between neighboring countries instead of capitalizing on their comparative advantages. AFEX is slowly but surely revolutionizing the African commodity market, especially soft commodities, which are Africa’s riches. It is a matter of time before the Nigerian business becomes the undisputed leader in African soft commodity markets.