Infrastructure First, Tech Second: In Africa, build from first principles

Advice and Lessons from building a business that supports 500,000 African farmers.

I met this month’s spotlight for the first time in 2016, at one of the Agro-value chain conferences I had attended while working with APM Terminals and exploring the potential for a cold chain logistics solution for tomatoes and other perishable items grown in Northern Nigeria.

Then in 2018, he reached out, offering me a position in the company he leads. While I wasn’t yet ready to leave APM Terminals, I came away from the discussion with a respect for his mind and approach to building solutions for Africa’s food security challenges.

His LinkedIn posts about his corporate journey written under the title Diary of a Commodity Trader, were good examples of what I wanted to emulate. His account is one of the few that provided inspiration and courage to begin writing actively myself, leading to Notes on Project Development.

This July 2025, I had the privilege of sitting down with Ayodeji Balogun, the Group CEO of AFEX, the commodity exchange and trading company adeptly navigating a complex landscape to empower farmers, increase food security, and reshape trade dynamics within Africa.

Evolution of AFEX

After obtaining a Mechanical Engineering degree at the Lagos State University (LASU) and finishing an MBA at the Lagos Business School, Ayodeji joined the Tony Elumelu Foundation as an Analyst, where one of his projects was the design of East Africa commodity exchange, launching in Rwanda.

He and another analyst spent the first 6 months of 2013 in Rwanda, working with their managers and various stakeholders to take that idea from paper to live operations.

Upon the completion of the setup in Rwanda, he was asked to come back home to Nigeria to replicate the idea and create a commodity exchange that is now Africa Exchange – AFEX.

AFEX has grown over the past 11 years from an 8-person team and 5 warehouses to one that today employs around 300 staff, manages 75 warehouses, and supports 500,000 farmers in 3 countries across 10 commodities - maize, soybeans, paddy rice, sorghum, wheat, ginger, cocoa, sesame, cashew nuts, and coffee.

The company has evolved into a group structure with 3 subsidiaries

• AFEX Fair trade A trading company, which handles the aggregation of commodities, inventory operations, and trading between farmers and off-takers. This arm is the most reliant on the warehousing infrastructure.

• AFEX Investment Limited, which raises and distributes capital to help grow commodity supply chains. For example, funding short-term working capital for food processing and beverage companies

• AFEX Commodities Exchange - A licensed commodities exchange, to carry out trade and settlements electronically on agricultural commodities.

A Pan-African Vision: 10 commodities in 10 countries in 10 years

Africa produces between 70-75% of the world’s cocoa and up to 45% of the world’s coffee yet remains a price taker at the mercy of its buyers, perpetuating the cycle of poverty with farmers, upon whose sweat many global industries – like FMCGs, beauty, hospitality – depend.

For the commodities they support, he and his Xperts – the moniker adopted by AFEX employees – are working to fundamentally redesign and transform how the continent trades within itself and with the rest of the world.

Their goal is to support "10 commodities in 10 countries in 10 years and build a Pan-African commodities exchange that is inclusive, commercially driven, and impact-oriented".

Appreciable progress is being made with this vision, having expanded to Kenya, Uganda, and recently secured a 7-year USD 25.6 Million facility from British International Investments (BII) to build across the three countries, physical Infrastructure - 20 modern warehouses, develop a soybean processing plant, and a drying facility, then develop technological solutions that includes warehouse management software.

Advice for developers & investors and lessons learned

Ayodeji and his team have built from the ground up an agribusiness enabler handling over 500,000 Metric Tonnes of commodities/year and successfully untangled value chains that has connected local farmers to willing off-takers globally. They have woven efficiently woven together physical infrastructure, technological solutions, and innovative financing, in a heavily informal sector that is sensitive to shifts in local and global dynamics.

You can imagine he has valuable insights and I was curious about what he had to share with investors, infrastructure developers, and entrepreneurs.

Be more efficient in capital blending and structuring

Ayodeji asks investors to rethink the practicality of traditional financing structures for African infrastructure projects and support to agribusinesses on the continent. The continent receives development capital in the form of grants and technical assistance, which is not efficiently deployed because it has no return expectations. While also receiving commercial capital with very stringent conditions and higher risk premiums, which makes projects too expensive for success in nascent markets.

For investors who have spent time on the continent, Ayodeji expects that they will have noticed a basket of risks that commonly occur, namely currency risk, market inefficiencies, regulatory challenges, and political risks.

He suggests that investors should demand realistic returns while providing leeway for some failure, especially in pioneering projects and pioneering markets and proposes that “investors structure capital in a way that uses development grants to buy the risk of commercial capital”. Essentially cushioning (or de-risking) the commercial (returning seeking) capital with development capital (grants) more directly within the capital structures of these projects.

He also notes that development finance institutions that typically provide both types of capital are in a better position to achieve this because, “for them, this change will be about breaking down their internal silos and adopting a holistic strategy with capital deployment to the continent.”

He further adds that this blended finance approach that de-risks commercial investments with concessional funds creates a "perfect financing architecture" that can better attract local capital.

Have a strong, enduring why

For young founders, Ayodeji emphasized the importance of having a strong, clear why. “My parents were agribusiness owners. I understand from very personal experience how farmers think, how seasons and policies impact their cash flows and what happens at home. At AFEX, we are not trying to build a unicorn, we are trying to solve Africa’s biggest challenge”.

He further stresses, “your why must be bigger than the problems you will face, bigger than your ego, bigger than your doubts. It will serve as a constant anchor that you keep returning to; it must be your own, and it must be clear to you.”

You need grit and stamina

Having a strong why helps with resilience to withstand challenges that arise.

“The environment can be tough.”

“ Know that it will be harder than you think it will be.”

“In 2017, some of our warehouses were raided, and we took 3 years to fully recover. Right now, we are working to resolve a defaulted loan with a lender. We had paid down most of this loan before a crash in commodity prices eroded 60% of the value of the inventory we managed. This sharp drop in projected cash flow impaired our capacity to pay back the remainder of the loan within the tenor.”

“You and your team need to stay strong long enough for luck to catch up.”

“I am grateful to my xperts who have continued to stay committed to the vision and the purpose through any challenge we experience. They are the true heroes.”

Build from first principles, infrastructure and processes first, then tech

In Africa, physical infrastructure must precede digital solutions. No digital solution will work without properly sorting out the physical infrastructure first.

For Ayodeji, this lesson came early on the journey.

“While setting up the exchange in Rwanda, we had a 6-month deadline, which we worked hard and met. We had the license, the technology was in place, and the office was set up. The day the exchange opened, we made the first trade on the electronic exchange. But when it came time to settle it physically, the produce had been infested in the warehouse it was kept. We did everything right with the technology, but the lack of proper storage led to unanticipated challenges. When we began in Nigeria, we started by identifying and securing warehouses first.”

He goes on to warn that as your business grows, the back-office processes will increase in complexity; therefore, before automating anything, you must understand the interplay of events between your clients, suppliers, and your business to properly identify what the technology will optimize, before you deploy it.

Be prepared to build the tech; off-the-shelf may not work for you.

Off-the-shelf technology solutions often fail to address the unique problems prevalent in African markets.

“We are solving very unique problems in Africa today. When you read about a global solution or you find any expert from anywhere else in the world, they are already solving the third or fourth generation of the problem.”

AFEX has evolved to having an in-house IT product development team because the scale and volume of transactions they manage grew, and they couldn’t find suitable off-the-shelf solutions that fit their unique needs for offline payment and customer management and so developed these solutions internally.

This in-house team later built ComX, the online commodities trading platform, which was launched in March 2020, just before the movement restrictions to limit the spread of COVID-19. They have also launched Africa Exchange in 2023, which replaces ComX to expand the electronic commodity exchange to other African countries, in line with their pan-African vision.

For developers and entrepreneurs, he advises spending time to deeply understand customer needs and local market realities, before deploying a solution, then customising or building new tech solutions from scratch if what is available is unsuitable.

Start like Pirates, think like the Navy.

According to Ayodeji, “organizations possess a fundamental DNA that can be hard to shift if left in too long”. While startups need to operate like "pirates"—agile, responsive, and effective in chaos, they lack organization and structure.

But the growth of the business requires the ability a transition to a "navy" mindset, which is structured and hierarchical and better organized, therefore easier to replicate processes at scale.

He admonishes, “Start pirate but think navy. From start-up, expect to scale up. No matter how small you are on day one, clarify and separate functions, hierarchies, commanding lines, and hire strategic staff early, especially a CFO; this prevents implosion under the weight of growth when opportunities arise.”

Build a learning organisation and a leadership pipeline.

Building a company is a continuum rather than an event. Solving one problem and growing through one phase merely paves the way for the next phase and series of problems. According to Ayodeji, “The work of building a business is a continuum. You don't solve a problem you know fully, because the problem itself evolves and moves. That act of solving and building is a constant; it is never just one event. Organizations need an evolving leadership pipeline and robust succession planning, ensuring that future leaders grow with an understanding of the company, its history, and how it resolved past issues. It is very important to build a learning organization that applies lessons from yesterday's problems to solve tomorrow's problems.”

Bringing it all home

Africa's grandest challenges demand more than just capital or technology; they require a profound understanding of local realities, a willingness to build by addressing foundational issues first.

For entrepreneurs, it is often about starting lean while positioning for scale, building robust internal processes, assembling a diverse team anchored by a clear purpose, ensuring the right infrastructure is in place, before adding optimizations with technology.

For investors, it is about reimagining risk estimation, applying concessionary capital more efficiently in capital structures, and being patient while supporting an ecosystem that must build all the layers of infrastructure, technology, and human capacity at the same.

For all of us, it is finding ways to stay the course, “long enough for luck to catch up" and for the winds of change to shift, so that the lasting transformation we are building can be achieved.

Find and follow Ayodeji Balogun

Linkedin: https://www.linkedin.com/in/ayodejiobalogun/

Find and reach AFEX

Linkedin: https://www.linkedin.com/company/afex-commodities-exchange/

Instagram: https://www.instagram.com/afexnigeria/

Email: support@afex.africa

Website: https://africaexchange.com/