Reclaiming groundnut as a profitable venture in Nigeria

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Columbia Business School alumnus, Ladipo Lawani, is on a mission to restore Nigeria’s groundnut trade to its former dominant position in the global market.

In 2015, Ladipo Lawani and his partner, Lanre Ladipo, established L&L Foods, a Lagos-based food processing and packaging company that produces a premium brand of groundnut snacks called Mr Ekpa. The company’s primary product line includes Mr Ekpa Frosted Groundnut, Mr Ekpa Regular Roasted Groundnut, and Mr Ekpa Salted Groundnut.

L&L Foods was the winner of the Nigerian Economic Summit inaugural startup competition in 2017 and the Columbia Business School Shark Tank Competition (New Venture Competition) the previous year, in 2016.

Take us back to the beginning of this business

Nigeria is the third largest producer of groundnuts in the world and the largest in Africa. The majority of the more than three million metric tonnes of groundnuts produced annually in the country are roasted and sold locally in used bottles, as snacks.

Drawing inspiration from Alhassan Dantata – the Nigerian business magnate and great-grandfather of Africa’s richest man, Aliko Dangote – who made his wealth from the groundnut trade, Lawani and his partner teamed up to create L&L Foods with a vision to “become the market leader of the Nigerian groundnut industry”.

Lawani, a 2018 Forbes Africa 30 Under 30 honoree, says the urge to start L&L Foods came from his passion for entrepreneurship.

“I have always wanted to be an entrepreneur because I believe it creates jobs and contributes to economic development. But there is also the dimension of personal fulfilment,” says Lawani.

He was curious about agriculture and started to research the problems and opportunities in the industry. He found that there was not enough value addition, such as processing and branding, especially for groundnuts, and he realised that they could add value by creating a distinctive brand that offers different flavours and varieties.

With its 21 staff members, L&L Foods now has the ability to process about one tonne of groundnuts per day. The groundnuts are sourced locally from farmers. Then it is roasted, peeled, flavoured, and packaged for on-the-go consumption. L&L Foods currently works with over 25 wholesalers and has been able to grow Mr Ekpa from being sold in 10 stores to over a thousand stores in key cities in Nigeria like Lagos, Ibadan, Abuja, Kano and Port Harcourt.

How did the company grow into the business it is today?

To achieve its goal of becoming the largest groundnut processor in Nigeria, L&L Foods invests in the entire value chain by working directly with farmers in the country’s agricultural belt. This way it ensures a continuous and reliable supply of groundnuts.

By giving farmers better yielding seeds, as well as teaching them better farming practices, they can help them to increase their yields by 150%. They also help to improve the quality of the groundnuts by fixing the problem of aflatoxins – a toxic fungi which was one of the causes of Nigeria losing out in the global groundnut market.

To ensure that farmers get the right inputs, L&L Foods is partnering with the International Institute of Tropical Agriculture (IITA), the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), and the Central Bank of Nigeria (CBN)’s Anchor Borrowers Programme that grant loans to farmers.

L&L Foods guarantees to buy the products of farmers in their programme and consequently they qualify for loans from CBN. “We then train them how to use the inputs. So it’s a three-party agreement between the farmer, NIRSAL, and the manufacturer – which is us.”

Presently, L&L Foods works with 20 farmers in Kwara state – one of the key groundnut-producing states in Nigeria – for its pilot programme.

Surely they must have faced some challenges?

Being an entrepreneur involves solving a series of problems, says Lawani, adding that their attitude is always to learn from these as much as possible.

Lawani started L&L Foods with ₦500,000 (US$1,400) and continued to fund the company through personal savings and money from investors. One of the biggest challenges they faced was access to capital, but they managed this by being prudent with money. “We have not yet broken even but we are hoping to break even by early 2019,” he says.

Another challenge was to deal with the broken value chain in the Nigerian groundnut sector and getting the right quality raw material, which they overcame by working with different stakeholders to improve that and acquiring the right machinery.

Lawani says when he started out he would have loved to have visited another groundnut processing country like India. They only did that after their first year in the business. As a result of this visit, they totally overhauled their processes. For instance, they now have a grader with which they can grade the groundnuts to the right sizes to prevent uneven roasting.

Anything we can learn from their experience?

Having worked at various multinationals including British American Tobacco, LEAD, and Blue Lion Marketing, most of Lawani’s experience was in consumer products. He says one thing he has learnt, is to always listen to the consumer. He now uses these experiences to develop his business.

“Know what your customers want and need, otherwise you are not going to succeed as a business person.” He says the only reason a business exists is because there is somebody out there who wants to buy, or you want to solve a problem. “So, you need to first understand what their problem is and how best to fix it for them.”

Learn as much as you can about your business and become a master of your craft, is Lawani’s advice. “If you are processing cocoa, understand cocoa perfectly,” he says, adding that one should “learn from as many people as you can, read as much as you can, and be willing to pay the price.”

credit – howwemadeitinafrica.com

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