Silvex International Limited
Silvex is an agribusiness, mining and logistics company based in Northern Nigeria. In agriculture, it works with more than 100,000 smallholder farmers and significantly improves their livelihoods. Learn how the company empowers women!
To start, can you briefly introduce yourself?
I’m Abubakar Usman Adam, the Founder and CEO of Silvex International Limited. Silvex is a wholly indigenous and rapidly growing agribusiness, mining and logistics company. We started as a mere aggregation company in the grains market over 12 years ago in Dawanau International Grain Market, Kano-Nigeria.
What motivated you to found Silvex?
My co-founder Abubakar Ibrahim Kunya and I had been dreaming of starting a company since university days. We believe that the northern part of Nigeria, where we operate, has huge potential: There is a lot of fertile but uncultivated land. Also, most people just sell raw materials instead of adding value.
Moreover, the agricultural sector is predominantly dominated by people with a low education. Most university graduates want to work for the government. We hope to be role models and change the narratives.
What does Silvex do in terms of agriculture?
We are actively involved in climate-smart and regenerative agriculture initiatives, commodity aggregation, processing, trading, and export. Our major crops of interest are rice, sesame, groundnut, soybean, and maize. We do both direct productions, in-grower and out-grower models respectively. We also go a step further to do value addition, sales and marketing.
Because of the impact of our projects in improving rural livelihoods, some State governments partner with us to incentivize our investment in the backward integration through allocation of land to us. We engage farmers as in-growers to farm directly in our land. We open this land for cultivation.
In our out-grower scheme, we support farmers with inputs, trainings, mechanization support, and access to finance and secured market for their produce. To ensure we give farmers the right support and reduce wastage, we hold regular townhall meetings. There, we do felt needs assessments in terms of input requirements. Then we seal a contract for off-taking at least 50 per cent of their produce at the end of the harvest.
How do you partner with other organisations?
We have strategic partnerships with other enterprises. In addition, we have development partners that are working on projects to transform the agricultural space. International partnerships – with research institutions, for example – have helped us access technology, global best practices, sufficient market trends and intelligence. We also partner with domestically relevant ministries and department agencies of the government to strengthen the agribusiness ecosystem. We are always ready to partner with any like-minded organisation in growing the agribusiness space.
What is the special value you create for smallholder farmers?
They receive credible and affordable inputs as well as guaranteed market. Our contract farmers do not pay up-front for the inputs they receive. Instead, they pay us with grains after they have harvested their produce. We procure large quantity of inputs from original manufacturers and re-sell to farmers at the prevailing market rates. The difference is enough for us to turn a profit without adding a mark-up to small-holder farmers. This serves as our modest contribution to reducing poverty and increasing productivity at the bottom of the pyramid.
Most farmers have over two hundred per cent return on investment and can almost double their yield. This significantly improves their livelihoods. Some have financial muscles now to send their children to school, build better houses or buy more cattle, tricycles and / or cars.
One farmer, for example, entered our scheme with just 0.8 hectares of land. At the end of the cycle, we paid him ₦1 million for his rice. He went to the nearest city to buy a tricycle cargo machine and started transporting goods from farms to aggregation hubs. He is making ₦10,000 a day on average and has invested in a second machine. So literally, we are creating a new set of millionaires from agriculture and the farming system. Our vision is to continue to create a new army of farmers in Nigeria who are dynamic, trainable and adaptable!
Could you talk more about the extension services?
We train farmers on Good Agronomic Practices (GAPs) in financial inclusivity and management, market trends and demands to be able to produce what the market is yearning for. Most importantly, we teach our Systems of Rice Intensification (SRI). This is a new way of planting rice. It requires less inputs and less water, adequate spacing and the non-application of synthetic fertilizers but significantly boosts yields and reduces the cost of production by over 75%. The method brings methane emissions down, which may attract carbon credits and could triple farmer incomes.
How do you impact women?
Firstly, we have an internal subsidiary company called Sabanah Seeds that is into seed multiplications, sales and marketing to both large and small growers. We also give our farmers from the same seeds. We realized that women farmers have the patience and resilience to comply with the sanctity of seeds production protocols. So we employ women only because we get better results with them. Currently, we have about 2,000 women in the scheme.
Secondly, in rice production - which is male-dominated -, we take a conscious decision to create an enabling environment for women by given them an opportunity to add value to paddy rice we off-take from their husbands. We came up with climate-smart parboiling and drying system initiatives. This creativity seeks to contribute immensely to reducing carbon emissions and generating carbon credits for rural women. We have launched a pilot project, which enables women to parboil and dry rice from their husbands’ fields through these climate-smart technologies. Parboiling and drying rice the traditional way takes them at least twelve hours. Now, they only need three and a half hours and can do three cycles a day. At the same time, the technology is so efficient that it reduces the energy cost for the process by eighty percent. The project also has potential to produce carbon credits. The technology is a bit costly, however, we pledge to provide a guarantee to work with women cooperatives. We will off-take all the rice they produce, which also reduces our own costs for parboiling.
We are only piloting this with women because, traditionally, they are the ones who parboil rice especially for small scale rice milling businesses. By these efforts the women can now earn premium, because they are producing not just raw rice paddy but paddy with a unique value proposition. They can earn as much as their husbands. This strengthens their position and doubles the family income.
How advanced is this pilot?
We started three to six months ago. So far, we have onboarded four clusters with two hundred women each. By the first quarter of next year, we will roll it out further. Right now, we are in discussions with a bank to perfect the transactions on behalf of the women. We would provide all comfort required by the bank on financing the equipment.
Why is it important for you to focus on women?
We believe that empowering women economically is the greatest freedom you can give to every society.
Myself and my partner, we are what we are because of two women in our lives. My co-founder’s mother supported him to go to university when his father had died. I was raised by my grandmother: a rural entrepreneur who added value to agricultural products sale in our community. If someone who has never gone to formal school can do this, we should be able to do much more.
The best way to honour their memory is to push for an agenda that will empower women economically. We strongly believe that most of our socio-economic problems, especially in northern Nigeria, have to do with our family institutions. So, doing that is not just commendable but a necessity
Could you talk more about your environmental impact?
We are championing climate-smart and regenerative agriculture. The rice seeds we use, for example, need less water than traditional ones. We are also trying to sell carbon credits to finance support programmes for the farmers.
How many people have you reached so far?
We work with over 2,000 farmers in our in-grower scheme. In the out-grower model, we have over 30,000 contact farmers. About 25 percent of them are women. These are real “organic” farmers who are verifiable. They are onboarded on a platform that was funded by the UK Government.
How do you measure the impact you create?
Before entering a community, we do a baseline data collection: We measure farmers’ incomes and conduct feasibility studies on their farms. Then, after we have competed certain milestones – like a growing cycle –, we measure again and check whether we have achieved the performance and impact we intended. Data is key to everything nowadays. It reduces our level of exposure de-risks our investment in men, money and materials.
What makes your business model commercially viable?
No local rice company multiplied new genetic materials od Faro 66/67 more than Silvexin Nigeria. We produced over 14,000 metric tons of paddy rice in 2021, up from 8,000 tons in 2018.
In agrobusiness, our total revenue is over ₦ 9 billion in 2021, with gross profit of about 9.3 percent as our revenues. The 2022 financial year is projected to close with over 19 billion naira with projected gross profit of 11.35 percent.
Do you receive any funding or technical support from outside the company?
We engage with a lot of partners. For example, we are working with the LINKS project funded by the UK government through FCDO, who are supporting us with technical interventions to enhance farmers’ incomes and catalyse the economy of Northern Nigeria. We also got bank loans that are performing steadily.
How many people do you think you could reach in future?
By 2023, we want to work with at least 100,000 contact farmers. We want to play an important role in organic production and regenerative agriculture initiatives. This requires training as many farmers as possible and opening more land for a viable and commercial agriculture.
We are also running a programme that targets young people to create a new generation of farmers. This is based on the realization that people who have been to university or any tertiary institution are easy to train and adapt to a new frontier of the farming order. We want to change the perception that only government can give people jobs even when they have skills and potentials to be business owners and job creators. The value chain is very long, and there is room for everyone to participate.
What can you point to in your track record that demonstrates the potential for profitable growth?
We have been growing profitably in last one decade. This is looking at our growth trajectory from a mere aggregation company to now one of the leading agribusiness companies with diverse interest in backward integration, processing and export across various crops and commodities. Our valuation and assets have exponentially increased in double digits. We are very impressed with the records we have achieved, but all these are not without challenges.
What would you need in order to scale?
We need strategic partners – financial institutions, development partners, government agencies – who are willing to work with us to provide a paradigm shift and make agricultural space very attractive for young people. This would significantly address our challenges of poverty, climate crisis, unemployment, insecurity, hunger and malnutrition. This is why we believe our innovations in climate-smart and regenerative agriculture are very timely, necessary measures in changing Nigeria’s food systems.
What challenges does your company face?
Sometimes, farmers do not repay our input loans. We have no option but to blacklist such communities. This is one of the reasons why we want to bring in a new generation of farmers who are innocent and trainable.
The lack of appetite, wrong mental model of considering agriculture as high-risk venture and high cost of capital coupled with short repayment plan from part of the lending institutions are major bottlenecks. Another challenge we have also been struggling with is the high inflation rate and currency depreciation, which reduce profit margins and quick turnaround. These are challenges that all businesses here are facing. The right kind of partners and patient capital from impact investors will go a long way in overcoming these challenges.
What inspires you to keep going?
Like I said earlier, somebody has to lead to show what we are capable of doing in showcasing the prime potentials of our arable land. We believe our best days are ahead of us. We are more than determined to continue to push and reconfigure our agribusiness capabilities in Nigeria, hence we intend to open more arable land to increase our production bases. The objective is that Nigeria will no longer rely on food importation but contribute to feeding African markets and the globe.
Are there any recommendations you can give to other inclusive business companies?
Traditionally, businesses in our part of the country have sole ownership structures. When the owner dies, the business dies with him. We want to build a conglomerate that outlives all of us. This is how you create a business: with partnerships. You need different perspectives and cannot claim to have the monopoly of knowledge yourself. Also, partnership helps to de-risk investments. With this kind of thinking, we believe your business can go to the highest mountains in the world.
Furthermore, value addition is the cornerstone for survival of every business idea, especially at this rapidly changing time. This implies that we receive more rewards in equal proportion to the value we added to our businesses!!! Also, make your appraisal on what kind of value you are adding. Continue to think out of the box to make your value proposition different, using black box thinking in solving complex business problems as they emerge daily.
The Impact Stories are produced by the Inclusive Business Action Network (iBAN). They are created in close collaboration with the highlighted entrepreneurs and teams. The production of this Impact Story has been led by Susann Tischendorf (concept), Katharina Münster (text, video and info graphics), and Christopher Malapitan (illustrations). The music is royalty free. The photographs are courtesy of Silvex International Limited.
Updated: 12/2022.