January 9, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Samurai Incubate Africa, Future Africa, and Consonance Investment Managers have led a $2.7 million Seed round, with participation from Stephen Pagliuca, chairman of Bain Capital, and Justin Kan of Twitch, for Releaf, a Nigerian agtech startup developing proprietary hardware and software solutions to advance the country’s oil palm sector.

The startup stated that it also secured an additional $1.5 million in grant funding from The Challenge Fund for Youth Empowerment (CFYE) and USAID. 

Palm oil has historically been key to Nigeria’s economy. In the 1960s, the country was the top producer in the world, holding 43 percent of the global market. Today, the country accounts for just 2 percent, having been overtaken by Malaysia and Indonesia, which together now account for 80 percent of global production. 

Had Nigeria been successful in maintaining its palm oil market presence of the early 60s, the country would be seeing revenue of about $20 billion per year, according to PwC. However, eighty percent of the country’s current oil palm industry is dominated by more than 4 million smallholders that lack access to modern, efficient processing systems, often using rocks or inappropriate hardware for de-shelling, etc. 

This lack of modern production and processing capabilities often leads to low-quality palm kernels that are not suitable for the manufacturing of high-quality vegetable oil. This in turn, leads to factories being unable to acquire the proper volumes of raw materials, leaving them to operate significantly below capacity with facilities averaging 3 times more installed capacity than utilization. As the cycle continues, these conditions affect food prices, and dampen interest in further investment in processing.

Here is where Releaf steps in with its proprietary hardware platform, Kraken.

Acting as a bridge between Nigeria’s smallholders and food manufacturing companies, Kraken can process any quantity of palm nut into premium quality inputs with 95 percent purity for food producers. Designed by Releaf to drive efficiency and profitability, Kraken is 85 percent more efficient than industry standards, 25 times faster than local cracking equipment, and 240 times faster than de-shelling by hand.

Releaf’s software then connects the company to more than 2,000 smallholder farmers, ensuring reliable, large-scale supply, while also allowing the company to receive inbound supply requests from farmers via USSD (a global texting communication system). It also provides working capital financing, and collects proprietary data on supply availability. 

“More than 50 percent of the goods in supermarkets globally contain glycerine — an extract made from palm oil — a cash crop that is passed down from generation to generation,” said Iyin Aboyeji, general partner, Future Africa.

“The team at Releaf is building the agro-allied industry of the future from the ground up starting with palm oil which they have developed novel technology to aggregate, de-shell, and process into critical ingredients like vegetable oil and glycerine. Future Africa is delighted to back Releaf to build the future of modern agriculture”

The company stated that this fresh capital will enable it to pursue the development of industrial food processing technology in Nigeria’s smallholder-dominated $3 billion vegetable oil market, while the grant funding will enable the provision of working capital and other value-added services to smallholders and small-scale processors. It will also support the training, recruitment, and retention of more women and young workers in the country’s oil palm sector through the creation of digital and technical jobs.

“This round of funding enables us to develop and prove our technology with smallholder farmers in the oil palm sector,” said Ikenna Nzewi, CEO and co-founder, Releaf.

“Given Nigerians spend about 60 percent of their income on food and Africa’s population is set to increase by 100,000 people per day over the next three decades, we’re presented with an incredible opportunity to feed more people, reduce consumer costs, and supply the fastest-growing food market in the world,” Nzewi explained.

“Releaf is committed to harnessing technology to accelerate the economic wealth of rural, agrarian societies throughout the continent. We firmly believe that a robust real economy is the foundation for long-lasting and shared prosperity for Africans and are excited to deepen partnerships with like-minded organizations, governments, and firms.”

This new funding will also mean greater productivity, and the acceleration of the elimination of the menial and archaic processes currently being employed across Nigeria’s oil palm industry and wider agricultural sector. It will also enable Releaf to create greater value and drive profitability within the value chain while creating ancillary jobs in farming communities in South and Eastern Nigeria. 

“We are thrilled to partner with Releaf on their mission to improve efficiency and profitability for farmers and food factories in Africa,” commented Dr. Nneka Enwonwu, country relationship manager, The Challenge Fund for Youth Employment.

“The founders’ vision and the team’s enthusiasm gave us confidence that Releaf will deliver real value for rural communities and create digital/technical jobs for women and youth. We are looking forward to their results and success over the coming years and continuing to support their work.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

*The content put forth by Global AgInvesting News and its parent company HighQuest Partners is intended to be used and must be used for informational purposes only. All information or other material herein is not to be construed as legal, tax, investment, financial, or other advice. Global AgInvesting and HighQuest Partners are not a fiduciary in any manner, and the reader assumes the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on this site.