Two fast-growing Nigerian digital marketplace startups, Sabi and Vendease, are reportedly digitizing the local food supply network, assisting merchants in navigating high food prices and farmers in selling their produce.
Sabi, a category agnostic B2B informal trade network, and Vendease, an online marketplace that makes procurement smoother and more transparent for Africa's food businesses, were both formed last year. In such a short time span, these two startups have developed sophisticated digital marketplaces that allow restaurateurs, wholesalers, retailers, hotels to buy directly from farmers and manufacturers.
While Nigeria's inflation has growth in double digits since 2016, it has slowed in the last six months. Despite this, COVID-19 disruptions, currency devaluations, and security concerns in food-producing countries, caused price rises to peaked in March.
The two startups collaborate with producers through means like providing financial backing to help farms grow, negotiating supply agreements, collecting the produce, and selling it at a set price to buyers, effectively making money through interest and commission of roughly 1%–5%.
Tunde Kara, CEO and co-founder, Vendease, stated that when Nigeria's commercial hub Lagos was locked down in March 2020 to prevent the transmission of the COVID-19, Vendease, just three months old then, was almost on the brink of shutting down, but the situation turned into a boon for the firm.
Kara added that because the lockdowns prevented people from going to the market, the company was able to thrive as it had the correct license as a procurement firm, which eventually helped it change peoples’ and businesses’ buying habits.
Vendease claims that it has helped more than 100 restaurants and hotels in saving $480,000 in food procurement expenditures over the last nine months.
Both Vendease and Sabi also work alongside lenders to offer credit to food businesses through their platforms. For the uninitiated, most of Africa’s economies are driven by small businesses, which often lack the credit they need to grow.