Pricepally, a digital food cooperative in Lagos, plans an expansion to Abuja and Port Harcourt as Nigerian food inflation accelerates, CEO Luther Lawoyin tells The Africa Report.
The company aims to be operating in one or both of the cities by the fourth quarter of this year, when it plans a new seed funding round, Lawoyin says from Lagos. Kenya’s Nairobi is also a target for future expansion, he adds.
The disruption to supply chains caused by Covid-19 has prompted an acceleration in Nigerian food inflation. Structural factors including a poor road network, lack of storage and conflicts between farmers and herders underpin the food-price problem. Figures released on 15 April show that Nigeria’s annual inflation rose to its highest in more than four years in March, at 18.17%.
The headline figure was driven by food-price inflation, which climbed to 22.95%.
The rise in the food index was broad based, caused by increases in prices of bread and cereals, potatoes, yam, meat, fruits, vegetables, fish and fats, according to the National Bureau of Statistics.
Food inflation in Lagos is worse than official national figures show, Lawoyin says. “The food space needs a lot more innovation. It has been going on too long, and it’s getting worse.” He says that a family of four in Lagos using his platform can reduce its monthly food spend by about 25%.
Redefining the supply chain is “the only way to solve the problem. We have to do this at scale to have an impact.”
Focus on family budgets
Lawoyin started the platform in 2019 after finding that his family’s spending on food had been constantly rising. He started placing bulk orders for food with other families and realised the idea had business potential. The platform connects buyers directly with producers, and individuals can either open a new order or join in with existing orders already placed. The system aims to deliver the food the next day.
- Current investors include Japanese venture capital firm Samurai Incubate, GreenTec Capital, Launch Africa and Niche Capital.
- The funding round planned for the fourth quarter will seek to raise about $1m. The plan is to spend this on growth, and getting a better warehouse and storage system.
- As yet, PricePally does not have access to cold storage.
There’s “no coordination” in the market at present, Lawoyin says. Nigeria’s food supply chain, he says, needs to cut out extra layers that don’t add value. That doesn’t mean that wholesalers have no part to play. “If wholesalers add value, then they are welcome.”
In the next two months, Lawoyin plans to launch a new platform that will list all the products available from the farms, provide farmers with more information on future demand and give deeper discounts.
Lawoyin aims to enroll enough customers to be able to persuade farmers to sell their produce exclusively on his platform.
Buying in bulk is one of the ways consumers can overcome high food costs in Nigeria.
Source – The Africa Report