THE CHALLENGE: Nigeria is a West African country with a population of about 200 million, making it one of the most populous countries in Africa. While it is the world’s 20th largest economy worth more than $500 billion, it is also the global poverty capital with 87m people living in extreme poverty. Nigeria’s population is estimated to double to 400m by 2040, which will require a significant investment in food factories, up to half a billion dollars, to meet this demand.

Agricultural supply in Sub-Saharan Africa is dominated by smallholder farmers and middlemen who make up 80-90% of food production. Smallholder farmers are decentralized and have variable quality while the middlemen are unreliable and deliver inconsistent quality. The result is competition among factories for a scarce amount of quality raw materials and not being able to run at full capacity. In fact, 90% run at less than 50% of installed capacity. The root cause is post-harvest quality loss. Undercapitalized farmers rely on archaic preparation practices and tools that ruin the quality of their products. Some still do this pre-processing by hand. Factories that buy these compromised raw materials cannot run profitably: crude vegetable oil factories continually shut down due to buying poor quality raw material. These challenges were opportunities for the Releaf team who saw a way to use technology to change the raw material supply landscape.

THE PROCESS: Based on the premise that ‘Industrialization has moved more people out of poverty in the shortest period of time than any other phenomenon’, Releaf saw an opportunity to solve the quality problem between the farmer and the factory – what they refer to as the bottleneck to agriculture-based industrialization. Releaf set out to do this by industrializing agricultural supply chains:

• Creating reliable direct to farmer supply chains
• Scalable pre-processing technology to control quality
• Raw material ownership & logistics from farmer to consumer

Releaf develops low-cost technology to access raw materials before they get to traders and other factories and has absolute quality control over them. They provide raw material access to other factories, serving as the raw material backbone for existing factories. The results have been consistent quality, access to 80% more raw material, a close relationship with farmers thereby eliminating the middlemen, and increasing margins and factory utilization. Factory capacity now depends on the rate of pre-processing and not middlemen availability.

With Releaf’s initial focus on the vegetable oil market, they now have the expertise to deploy the same principles of industrializing agricultural supply chains across the continent to catalyze agri-based industrialization. Adjacent markets include West African ethanol, cashews and tomato paste, markets worth $10 billion. “This will give hundreds of thousands meaningful jobs, allowing Africa to feed itself and eventually the world,” says Nzewi.

THE RESULT: Just two years into their venture, the start-up has employed more than 40 employees and actively upskills them from inexperience to industrial technical ability. Releaf has built a G Suite training academy helping field workers gather data and build marketable skills. Releaf works with more than 1,000 smallholder farmers in Southern Nigeria who now earn 48% more per month while getting back 5-10 hours a week to spend on high-value activities – more money in less time. The factories that Releaf serve now consistently have access to quality raw materials.

Releaf has achieved this by sourcing palm nuts (200 – 400T/week) from smallholders in the palm value chain. “We take the burden of de-shelling palm nuts away from farmers by using a proprietary hardware system that cracks and separates at scale (100X traditional methods). We then sell the palm kernels upstream to vegetable oil factories,” says Nzewi.

Releaf was recently one of the two inaugural co-investments of the Harambeans Prosperity Fund with an investment of $100,000. The investment will allow the venture to prioritize, scale, and improve margins. “We can focus on cost efficiencies by making investments in energy and logistics, which will help us to bring down our costs. The long-term benefit for Releaf is that when we’re ready to raise Series A, we’ll be able to leverage the co-investment network of the Alliance and show how profitable we are,” said Emmanuel Udotong H’16, Co-Founder of Releaf.

Releaf has doubled its Annual Recurring Revenue (ARR) to $1M since graduating from Y Combinator in March 2019. The start-up is using the money raised from their seed round to supercharge growth. “We can now make world-class operational hires to free up founder bandwidth to focus on margin, crop and geographical expansion, invest further in R&D to improve our technology and increase working capital spend to more aggressively saturate SS/SE Nigeria,” says Nzewi.