Always have a plan A, B and C
I am a serial social entrepreneur, a wife, mother, daughter, sister, friend, Christian and proud African woman. I am actively engaged in Africa’s agribusiness sector through my roles as the co-founder of AACE Foods and Sahel Capital Partners & Advisory Ltd. I strongly believe that the African agricultural sector is pivotal to Africa’s transformation and that our ability to unlock this potential and create sustainable and viable value chains will not only create jobs and enhance the livelihoods of millions of people, but more importantly will ensure food security and more vibrant and dynamic populations.
The passion and sense of urgency behind the creation of AACE Foods was motivated by three facts. Firstly, according to the 2013 Demographic and Health Survey, 37% of Nigerian children under 5 years old are classified as stunted and 18% are considered wasted. This contributes to Nigeria’s high infant mortality or maternal mortality rates in our country. Second, field research in Nigeria has proven that between 20% to 40% of grains, tubers, herbs, fruits and vegetables, grown and harvested by smallholder farmers across the country are wasted annually. Third, 90% of the processed food consumed in Nigeria is imported.
AACE Foods aims to directly address the high levels of malnutrition in Nigeria and capitalize on the dearth of local manufactured food products by processing and packaging nutritious food sourced from smallholder farmers within Nigeria, in partnership with community groups and non-profit associations. The company provides support to the farmers, empowering them with training and access to microfinance and storage technology.
Ndidi Nwuneli at the Next 100: The business of solving poverty and hunger
Why are you passionate about helping improve the lives of people at the base of the pyramid (BoP), especially in Nigeria?
67% of Nigerians live in poverty and struggle for basic survival – access to water, nutritious food, shelter, a decent education and healthcare and safety. Given the immense natural resources, human capacity, ingenuity, work ethic and tenancy of the average Nigerian, this current reality is unacceptable. I strongly believe that my life’s purpose is to transform our country and Continent and ensure that every Nigerian and African child can achieve his or her highest potential and live a full and meaningful life. Why should companies think of the BoP when aiming to scale a business? In economies such as ours, businesses that seek to deliver value, and profitability scale their operations, cannot afford to ignore the close to 70% of the population that lives in poverty. This population is willing to purchase products and services that enhance their lives but need to be able to find what fits their needs and matches their purchasing power. Businesses that recognize this and are willing to develop and roll-out innovative product and service offerings that are acceptable, affordable and accessible will ultimately scale and survive for generations.
Why do some companies scale in a sustainable manner in BoP markets and others fail to do so?
Through my research conducted in 2014/2015 as part of a senior fellowship at the Harvard Kennedy School, which I captured in my book titled – Social Innovation in Africa: A practical guide for scaling impact, I gained three fundamental insights. Companies that scale sustainably: 1. Have the right business models for scaling. These business models exhibit six critical attributes – they are demand driven, simple, low-cost, they use technology and engage the community and they can demonstrate measurable impact. 2. Invest in talent and governance, with strong Boards, leadership teams composed of dynamic, mission driven high achievers 3. Form strategic partnerships with key stakeholders in the private, public and nonprofit sectors. No company can achieve scale working in isolation.
What factors contributed to the success of AACE Foods?
There are at least three factors that have contributed to AACE Foods’ modest success.
- We have a clear mission and vision and this has kept us focused and grounded. Our mission is to provide nutritious and tasty food products made from the best of West Africa’s fruits, herbs, cereals and vegetables. Our vision is to be the preferred provider of food products in West Africa, thereby contributing significantly to the improved nutritional status of our people, and better the livelihood of our farmers.
- We have strong governance structures including a committed and dynamic Board of Directors, and have invested in financial management systems and controls, as well as operating processes and procedures. This ensures that are operations are transparent, with a commitment to integrity. This in turn has enabled us to attract debt, equity and grants to expand our operations.
- We have invested in building partnerships with our farmers by providing training, microfinance and technology. This has enhanced the reliability of our supply chain. We have also invested in research and development to ensure that our products are demand-driven and relevant for the needs of the average Nigerian family.
Are their lessons learnt you can share from failed approaches you took when scaling AACE foods?
As an entrepreneur operating in a dynamic environment, it is important to recognize that your market changes every day, and you have to be poised to respond appropriately. Becoming a proactive entrepreneur instead of reactive one, requires that you always have a plan A, B and C, to respond to shifts in the market dynamics. For example, AACE Foods introduced jams as our first product line in the Nigerian retail space, given the high rates of post harvest losses for fruits in our country. We believed that Nigerians would enjoy pineapple, mango, guava and even papaya jam. Sadly, the price of sugar, which is a key ingredient in jam, doubled a few months into our venture, making our product uncompetitive relative to imports. In addition, we soon learned that the average Nigerian preferred “red jam” which was largely influenced by imported strawberry jam. Given the unfavourable climatic conditions for strawberry cultivation in Nigeria, we struggled to find suitable alternatives that would produce the same results. We were compelled to swiftly shift to our plans for year 3, which consisted of producing spices sourced from local farmers for fast food chains, noodle companies, and for retail. Today, AACE Foods produces 15 spices for the institutional and retail markets, and we have recently introduced a range of nutritious meals for the whole family.
What personal drivers are important for scaling an inclusive business?
Inclusive businesses have to invest in all aspects of their operations to ensure that they are creating value and impacting lives positively. This involves investing in their supply chain, creating direct linkages and ensuring that all the smallholder farmers who provide the inputs for production fully benefit from the relationship. Inclusive businesses also invest in building their distribution channels, engaging small and medium sized enterprises to provide logistics and marketing support, ultimately ensuring that these stakeholders also benefit from the relationship and that the products and services that meet the needs of masses of people and transform their lives.
What advice would you give to an entrepreneur in a market that seems to be full of barriers to scale? What could he/she do to persevere?
Entrepreneurs who are struggling to scale should critically examine their business models to determine if they are scalable. If not, they have to be willing to modify specific aspects of their operations. They also have to invest in building strong teams composed of mission-driven high achievers, and empowering these teams through stock options and other incentives to build ownership and sustain their commitment. In addition, they have to join formal and informal networks and associations with other entrepreneurs engaged in building scalable, inclusive businesses, where they can obtain support and encouragement on this difficult journey.
Do you have a personal vision you’d like to share that keeps you motivated when you are facing barriers in your work?
My primary motivation for life and work is my faith in God. I rely on this relationship for vision, passion and strength. I also stay focused on the impact that I am having in my journey – many small milestones and quick wins – which keep me motivated to keep pushing forward. The agriculture sector has many challenges, but also numerous rewards. Every time I visit the AACE Foods factory and interface with our workers – many of them who were previously unemployed and now have a stable income, health insurance and a warm meal, I am overwhelmed with joy. Similarly, our ability to source from over 10,000 farmers, whose lives have been transformed through training, the provision of microfinance and the introduction of technology, has been fulfilling. The best part is seeing our products on the shelves of supermarkets, in camps for internally displaced people or even in a friend’s kitchen and recognizing the many people and steps involved in getting it from the farm to the fork…and the impact along the way! The agricultural sector is not an easy one. Engaging in this sector requires patience, tenacity, and focus. However, the rewards are immense.
This blog post is part of the February 2018 edition of the ‘THEME’ that reflects on scaling inclusive business.
What motivated entrepreneurs to stay focused while scaling their business? How did they overcome hard times trying to reach scale? What navigated them through this process? Read the full series to see what thought leaders and practitioners think about these questions.