Not Everyone Should Own A Business – Saudat Salami
The Interview Magazine
Saudat Salami is an agribusiness entrepreneur. She tells THE INTERVIEW how tough the business environment is and how government and stakeholders can put the necessary structures in place so that farmers and others involved in agriculture can make better impact
How exactly did Easyshop Easycook start?
It was in 2001 or thereabouts that the idea came up. It was called Home Management Logistics, but it wasn’t registered. I was looking at the challenges we all face in our busy lives and whether there was a gap we could fill. It was supposed to be a joint thing and we asked ourselves, ‘what are the challenges that working women face?’ And we started to tick them all off. We ended up with shopping and cooking. Later, it ended up as only shopping. I started to conduct a feasibility study on whether it could work as a business to shop for those who were too busy to do it themselves, by building a website for shopping. I went and did the research to find out who else was doing it and realized that there was no company doing it in Nigeria at the time. At that time, so many people with capital had failed in doing it. So I went round trying to find out why they failed, where they went shopping and who their target market was. If the business was failing in developed economies, I wondered why we would face the same issues as an emerging economy. I found out that we had the same issues of people not being able to find the time to shop, especially in urban areas. My friend, ultimately, did not come on board. She now runs her own successful business. The only person that said I should go ahead was my husband. Other people said it was just glorified housekeeping work. At this time, I was doing a programming course at a computer school and used my research as my project. So the first website that I designed for the business was my project. I faced it and that encouraged me. I started because I wanted to do something else besides IT. I have an IT background.
We started at home, doing shopping for banks on Adeniran Ogunsanya Street, doing door-to-door. Some friends linked me to their friends and other organizations and I was doing it like that, almost as a hobby, alongside my work in IT. This went on for about five years. By 2010, my mentor suggested that I should try to start it with a better structure and to register the business as a limited liability company. I brought two people on board. Four years ago, we moved to our current premises. If we hadn’t kept records, we wouldn’t have been able to see what could work or what wouldn’t, or even if the business could be viable.
Did you get startup funding from any financial institution when you started off?
Funding? From where? No banks listened to me. But I am happy that I didn’t get money initially because I didn’t know the industry. It took me time to know what the peculiarities of this industry are. It took me time to understand my customers and how they shop, how they buy and what to sell, and how long to keep stock for and the logistics around buying food. It took us a while because nobody was doing that, so if I had had access to a lot of money when I started, I would have blown it and might have gone down; not because I would use it to buy a luxury car but because I would have been spending on what I thought I needed. So I bootstrapped for the first five years. I was still doing my IT, building websites and training. Also, family helped me out. When I decided to register the limited liability company, I got money from my directors. I knew then exactly where to put that money.
What is the biggest risk that you took in starting your own business?
Doing this fulltime. I’m telling you it’s still a risk today because the infrastructure is not there. A number of people in tech are doing other things. For us it is moving food. It is no longer so much about tech. Even if your tech is working, we are still doing logistics, we are still moving food. For us , we are in three major industries – agriculture, logistics and e-commerce. The tech is just the platform we use, the way that people reach us. The agriculture is the major part - where our products come from. The logistics is how we move it.
Most people will not actually start a business either because of the fear that the product might not sell or that they might fail? What advice would you give to people in this category?
You cannot run away from failure in business unless you’re not doing anything. You cannot run away from it. I’m afraid of waking up tomorrow and I can’t run my business anymore. I’m afraid that I will not have cash to run my business, that I won’t have customers anymore. I’m afraid that one big guy will find out how to click this and put the infrastructure in place and I will close down. Of course, I’m afraid. The thing is that anything can happen. Kodak was the biggest company taking photos and they have gone. You can’t say that because you are afraid, you won’t try. Even if you start it and it fails - which can be very embarrassing and difficult, the only time you can brag about it is when you have succeeded in your next thing. The only people we hail are those that have come back. If you don’t come back, yours is a failure. The person that came back is the one that saw his mistake, corrected it and is back. That’s what you need to know. How did I fail? For example, for me, what is the source of waste? Why did we lose money? Why are customers complaining about my price?
What are some of the challenges that you face in running Easyshop Easycook?
In Nigeria right now, agriculture and logistics don’t have proper infrastructure. We don’t have food hubs or packing stations. Most places abroad where you can buy wholesale foods, you see that they are properly packed when they supply them.
If you’re buying directly from the farm, you’re also carrying waste. When it comes in, you wouldn’t believe how it’s brought in. It’s like an ambulance and that’s not proper for moving food. The value chain is broken so we need to do a lot in that regard. If, for example, we are buying food from a farm in Calabar, getting the food out is difficult. It takes hours because the roads are not good. We need to fix the roads to the farms, we need to get the right vehicles to transport them and we also need better food handling practices. The way food is handled is very poor. Abroad, they will use ladders and other equipment. Here, we just shake the tree or something. You find that all the fruits are bruised and the vegetables have sand everywhere. It is harvested with the sand and that’s not how it’s supposed to be done. All these cause damage. There’s no cold chain and there’s no storage. For instance, when they bring in tomatoes, they are already damaged from harvest. They shouldn’t be in the fridge. With open farm tomatoes and the way that we plant and harvest, by the second day, they are already sweating and giving out water, which is wrong. So we are getting between 30 – 40% waste. Our food is not supposed to be expensive. Go to any farm, you will see so much produce there but they cannot move it. They don’t have the offtakers. The offtakers will spend more money getting there because of bad transport infrastructure. From what I gather, they have started moving cattle by rail from the north. Once they get cold wagons, vegetables can also be properly transported. The cold chain is a chain from cold environment to cold environment. Elsewhere, we see whole warehouses already refrigerated and you go in there and buy the produce. Here there’s heat. Mile 12 is not a covered or refrigerated place or weather-controlled. Until we start building those kinds of packing and storage houses all over, we will still be stuck.
We were getting strawberries from Calabar but the damage to them is so much that we had to suspend sales. If there is no food safety check in the value chain before it gets to me, how am I going to be able to sell? We need to train people on how to harvest properly, how to clean and how to pack. We don’t have a traceability system; there is no rhyme or reason to how farmers grow crops. If it was properly followed and there is an issue, then it is easy to trace exactly where the problem started. Once you have these problems solved, there’s money to be made.
You have been able to articulate challenges in the agro-business sector well but have you thought about how to go about solving them?
Yes, oh yes. I am a member of the Nigerian Agricultural Business Group (NABG.) We are an association for food suppliers and food logistics. It is something we are looking at to see how we can build packing and storage houses all over the country. You can employ youths, buy them trucks and have an arrangement with them whereby they will deliver food. Employment can be created. There’s supposed to be an emphasis on agriculture. We are doing a lot for production but it is the value chain that we need to invest in. Government is subsidizing fertilizer and everybody is saying that they want to own a farm. No! You don’t have to have a farm. You can put your money in the value chain. Are you building packing houses? Are you getting cold trucks? Are you building the storage? Crops are destroyed by bad harvesting and bad packing. There’s a reason why crops should be properly packed. If you don’t build proper food hubs, there is going to be waste and inefficiencies. NABG was set up by former minister of agriculture, Akinwunmi Adesina. The association is trying to come together to tell government that their policies and our realities are very far apart. Look at the problem we had with tomatoes and how the pest caused a scarcity. Now the price has crashed and everyone is happy. The only reason is because the pest that destroys tomatoes does not like the rains. It is not as if the problem has gone; they have not fixed it. When the dry season comes and the problem is still not fixed, what will happen? Now if we had proper storage, we could have put them in a conditioned environment and if the problem starts again, at least we will have reserves in storage. We need to store and we need to can. What we are trying to do now is to hang in there and join different stakeholders in trying to fix the system. If we are part of that solution, we can also ride on the success. I want to be among those that will be instrumental in fixing. We are trying to talk to government at various levels and also organizations, that having waited for government for so long, with not much happening, what do we think that we can come together to do to find solutions?
At a meeting we had recently, one of the members talked about how emphasis should be on collaboration and not competition. We need to get that from the beginning for us to move forward. It is true. Look at the population of Lagos alone – 20 million. According to a McKinsey report, maybe three million can afford to eat my food. If one million should log onto my site, I cannot cope. That is how huge the market is. The biggest company doing something similar in the UK has about 500,000 customers and they have been running it for twelve years. So when I look at the Lagos market, if we don’t collaborate, we are all going to lose. You will end up not tapping in profitably because we will all be spending money on waste. We cannot continue to do that. Even if you think you’re making profit, you could have made far more than that and also reduced your expenses.
We need to start having the mentality of how we can clean up the system for ourselves. We need to clean up our act. Look at the problem we are having with cattle? Do we think cattle herders just want to come down south? Desert encroachment and climate change are affecting them. There is little water so they have to move where there is water. People are saying, ‘ban them, ban them’ (but) we will starve! We all eat meat every day. Do we think that meat just flies in? Everything is a ripple. If we ban herdsmen, people will starve. These people are feeding us and we have to collectively find a way to help them. We don’t grow hay in Nigeria, so what are we going to feed the cattle?
What is the government doing?
I don’t know. I don’t want to lose hope. We are coming together as individuals to seek solutions. There are some international grants that we can access. You can’t wait for government because the bureaucracy is too much. There are a lot of mouths to be fed. When I started this business, I used to think I was a tech person. I’ve since learnt that if I sit here saying I am a tech person, my food will not move. We need to move food, especially since we decided to backward-integrate and buy from farms. Farmers don’t have trucks so we have to go and get the produce. They are not equipped for so many things, so we end up spending money on a lot. We pay for people to harvest, sort (out the produce) and bring it here. By the time it gets here, costs add up. If for any reason, there’s a price crash during this period, it means losses all round, and that’s bad for everyone. There has to be price control or a guarantee in place. Everyone is looking for cheap food, but somebody somewhere has to suffer for it. Come a day, we might not see the food to eat anymore.
There has been much talk from government about diversifying and they have implemented fertilizer subsidies to assist farmers; hasn’t this been helpful?
The reality is that consumers will only buy goods at a certain price. I am part of those advocating that government should not subsidize fertilizer for anybody so the basic cost of production is the same across board. The truth is that not all the farmers have access to the subsidy and, in any case, it is often not enough. If other farmers buy fertilizer at market price, they cannot compete; people won’t buy. Those using subsidized fertilizer can sell cheaper. We are living in an artificial economy. Look at rice; we don’t have enough rice. The rice growers don’t have enough. Importation has been banned - which is good in principle, but we need to help the farmers. We need to increase the rice that we are growing because we don’t have enough rice in Nigeria. If we don’t increase production locally, the price will not go down. A lot of states are now said to be growing, so I’m hopeful. As for diversifying, how can we if we are not even feeding the nation? Beans export has been banned because it is not properly tested. We are not cleaning it well or storing or packing either. There is no traceability, nothing. We need to educate people when we tell them to move into farming that there is a lot involved. There should be consultants on export, not just that everyone should go and own a farm.
Will the agricultural sector self-support once these things are put in place and there is investment in it now?
Unfortunately I cannot answer that question. All the developed countries support the agricultural sector. Why should ours be different? I see no reason why we should not subsidize the agricultural sector. The private sector makes a lot of noise, goes on TV and all that. Don’t mind them. They will not put money in. I’ve spoken to a number of them about putting packing houses in place but they won’t put any money in it – they are waiting for government. They will give money to some big company - and banks especially are guilty of this - to build some white elephant and, a few years later, those companies owe billions of naira. SMEs won’t owe that much. That’s part of the problem.
Has the #buynaijatogrowthenaira campaign made a positive impact on the industry?
The thing is that you don’t need to tell people to ‘buy Naija.’ I don’t want to have to order something from abroad and wait for delivery if I could get it here. If the manufacturing companies can offer it, then that’s better. But why are they not doing so? Because for them, too, the environment is not conducive. If we want to buy Naija or we want to ban importation of certain items, we must make sure that there is an alternative for the people. Encourage local SMEs and Foreign Direct Investment will follow. If you don’t make the conditions right for locals, you cannot grow.
Given the chance to influence policy on startups and the SME sector, what are some of the things that you would put in place to help aspiring entrepreneurs and the small business sector as a whole?
I don’t know what SMEDAN (Small and Medium Enterprises Development Agency of Nigeria) is doing but they should be protecting SMEs. Corporate tax for SMEs should be off for ten years. We are SMEs; let us remit PAYE (Pay As You Earn) and VAT. SMEDAN has to fight for us and put strategies in place to encourage SMEs. That will let us know that they want us to be here. Lagos State has different taxes and I have to comply otherwise they will frustrate you. I don’t have a television but I have a TV licence, no radio but a radio license. There are different types of advert licence and all sorts of permits. This has to change.
You have an online portal for consumers. What is your experience, given the challenges that we face in Nigeria surrounding connectivity to the internet and the trend that people will want to touch their foodstuff before purchasing?
There are a lot of offers of free data nowadays, so servers are clogged. But tech has taken care of itself. People order online and we even have an app which is working fine. To an extent, a lot of people still don’t know how to use it optimally. They still call us and some don’t even want to use it. Others refuse to use tech at all and will still call us. There is a demographic that we don’t necessarily factor into the tech angle. But we started this business to seek solutions for working women and they are mostly comfortable with tech.
Running your own business is not always plain sailing; what drives you to keep at it?
Privately, for me now, its value chain. I am talking to stakeholders on how we can sort out the value chain. Even what I read, what I do online is to do with this.
Succession strategy is also a key issue. Most SMEs are usually very much centred on the founder. Have you been able to put anything in place to ensure that your business outlives you rather than the general trend where businesses in Nigeria fade away as soon as the founder retires?
I get bored easily. Part of why I am still here is because I’m not done with what I set out to do. The system is still not working; infrastructure is not there. The moment that clicks, I know that I might move onto something else. In terms of, maybe, my children taking over, I am not doing what my parents did. If my children want to take it on, then that’s fine. I have people on board and I’m trying to put structures in place that will outlive us. While I am here, I want to see the value chain sorted out. I think it can be done and I want to be among those who do it. That’s my focus now. The earlier we build the value chain so that farmers can earn properly, the better for us.
There has been much debate about whether entrepreneurs are born or made. Where do you stand on the topic?
I didn’t set out to be an entrepreneur. I found myself in that space. I don’t like to complain, so when there’s a problem, I say OK, how can we solve this? Then I started thinking, ‘how can I make money solving this?’ So that has always been how I think, not that I set out to run my own business. I just want to solve a problem, whether by myself or in collaboration - just that we should be problem-solvers. Now, are entrepreneurs born? It isn’t everyone that can run a business because it’s not easy. People should not feel under pressure to own their own business. That’s why a lot of businesses collapse. They have no business running a business. If you have the temperament and an idea and the capital, find a unique way to add value. Our driving forces are different. That is the difference between us. We are all born to it somehow but Nigeria can be an artificial environment. Some people are of necessity entrepreneurs and some are traders.
Hindsight, they say, is a wonderful thing. What, if anything, would you do differently knowing what you now know?
If I had my way, I would not have started small. When you are big, there are so many things that you can determine. In the case of my suppliers, there are so many concessions that I cannot get because of my size. There are some things I cannot buy because I don’t have storage. Size is important. When you’re too small, they crush you. For me, the next level is a big step but there must be stakeholders. I can’t do it alone. I would also not offer household items. We went into that because our customers wanted to offload all their shopping to us. We were begging for customers and beggars cannot be choosers, so we started. Now we are slowly eliminating that.
What are some of your future plans for your company?
I’ve been trying to get funding to expand. But no matter how big I am, I have to help the value chain for us to connect what we need to and to be able to say that we are successful. All of us are going to benefit from it. The moment we are able to increase the shelf life of produce, prices will drop.
Yes, we want to build more but I am still looking at the next step for me. My next level is not to build a giant warehouse. It’s still going to be bigger than what I have now, but to have to do it in partnership with others. If I don’t do that, I know the industry; moving food involves a lot more than meets the eye.
We are trying to put in proper safety checks. We want hotels and hospitals, etc., to enforce best practices. This will trickle down to ensure improvement on the farms. Getting our certificate for food safety was expensive but very important. We are looking to build temperature-controlled storage.
I am happy that government wants to focus on agriculture. I hope that it isn’t just on paper. It makes me feel that a lot of problems we are having now might soon be eased, especially as a lot of eyes are on agriculture. I hope that just as I have seen what needs to be done about the value chain, I’m hoping that others too will and will want to invest in it to all of our benefit. Then there is logistics. Once food movement is sorted out, that will also sort itself out. I think the best is yet to come. For instance, there are a lot of residential estates being built everywhere in places without markets. Who is going to feed them? The market is yet to peak. Once we fix the value chain for different produce, we are going to get it right.