Ezekiel Okoronkwo works as a sales representative for a beverage firm in Enugu, southeastern Nigeria. He earns above N200, 000 monthly, which, by Nigeria’s standards, can take a young man home. The 27-year-old Okoronkwo lives a Spartan lifestyle—no beer, no parties, no hangouts. This enables him to save up a lot more money than his peers and colleagues at his level. He was employed by the beverage firm in January 2013 and, by February 2016, he had saved up over N3 million. This meant he was already buoyant enough to start a small-scale farm.
By March 2016, Nigeria had already gone into an economic slump. The dollar was scarce and importation was unpopular. Prices of food items were high because they were still being imported from other countries. Significantly, government officials were trumpeting the importance of agriculture, encouraging young Nigerians to delve into the business. Funds were being channelled to agriculture as federal and state governments said their main target was to diversify the economy and stop the importation of food items.
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Okoronkwo started considering leaving his job to become a full-fledged farmer around March. A new government of Muhammadu Buhari had come and this could signal a new dawn. However, a colleague dissuaded him from leaving his job. “Just work for another year and see how the business goes,” the colleague advised. In April 2016, Okoronkwo met an old friend in Nsugbe, a town bordering Aguleri and Onitsha in Anambra State, who said he had been in the poultry business for four years. For Okoronkwo, that was a match made in heaven. He was looking for someone experienced in poultry farm as a partner, and here was he with an old friend with suitable qualifications.
After completing the registration processes at the Corporate Affairs Commission (CAC), the duo started the business in June last year. The business began in Nsugbe. Okoronkwo was the faraway chief executive officer while his friend was a managing partner and executive director. For some reason, Okonkwo’s friend did not contribute money to the business. He contributed expertise. The sharing arrangement was 60 percent to the financier and 40 per cent to the managing partner. The business started on June 24th after the erection of the ‘poultry house’, which cost Okoronkwo N900, 000. The building was meant to contain 2,500 layers, but the duo decided to start with 1,000 birds first. The choice of layers was not surprising. They wanted to make money from both eggs and the birds. The cost of the 1,000 birds, which was procured from a poultry farm in Ibadan, was N330, 000.
Under normal circumstances, 1,000 layers can produce 20 or more crates of eggs for the owner every day. Each crate of egg cost between N700 and N850 in Anambra State last year. So using the minimum of N700 per crate and 20 crates per day, the poultry farmer can make N14, 000 or more each day. This can go as long as eight to twelve months depending on the health of the birds. This was what attracted Okoronkwo to the business, and his friend assured him they would even make more, based on his experience and expertise. The business started with Okoronkwo buying 100 bags of starter feeds at the rate of N3, 600 per bag. This means N360, 000 had gone into the feed. Okoronkwo’s friend started by giving the birds two bags a day. The 100 bags finished after 50 days. Okoronkwo made another set of investments, buying 100 bags again. This continued for four months. One, two, three months, the duo were lucky as there were only 20 birds that ‘dropped’ (died).
However, the birds were still being fed with starter feeds. Incidentally, Okoronkwo, who knew next to nothing about poultry farming, and his friend, were technical advisers to the business. But Okoronkwo’s friend had only managed birds four years before. In poultry farming, feeding four-month-old layers with starters is advisable. The birds are expected to be fed with ‘growers’ or ‘finisher’ at this stage. Again the birds are supposed to be laying eggs or showing signs of it in their fourth month. By the fourth month, Okoronkwo had spent over N3 million, having increased the number of bags of feed fed to the birds to four each day. There were also other miscellaneous expenditures that kept coming. Okoronkwo ran to friends who told him there was no money to lend. Fortunately for him, he got a loan of N1 million from his office, promising to pay back in December when the birds would be laying eggs. On October 26, two dangerous diseases—Newcastle and Coccidiosis—flew into the camp, killing 639 birds in a day.
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It was a nightmare for the financier. His partner contacted a veterinary doctor who told them that it would cost nearly N300, 000 to save the remaining birds and for his services. On October 27, a set of 211 bids died in a day. The poultry farm then became a mortuary. “What happened was that the birds were not properly fed and we didn’t have a veterinary doctor who should visit regularly,” Okoronkwo told me. “Again, we failed to put issues like the source of water supply and staff into consideration. We had to sell off the remaining birds and we only got around N120, 000 for an investment of over N4 million,” he said. Today, the registered firm has joined the list of distressed small businesses. This real-life story captures what happens daily to young Nigerian entrepreneurs who jump into trending businesses without doing due diligence.
Due to naivety, a number of Nigerians have jumped into agribusiness and jumped out, after a series of losses and pains. Agribusiness has the potential to turn a young entrepreneur into a billionaire but the entrepreneur must have enough money to match emergencies, said Ike Ibeabuchi, CEO of Klopp Water Cure, who tried agribusiness and failed.
“Start small to incur losses at very low levels. Make mistakes, understand the processes and don’t be too quick to take loans. Learn not to repeat the same mistakes,” advised 36-year-old Rotimi Williams, founder of Kereksuk Rice Farms located in Tunga, Nasarawa Sta te. Williams has 45,000 hectare-farm in Nasarawa, which is the second-largest commercial rice farm in Nigeria. He says there is so much potential in the business, but nobody must learn from their mistakes.
“On my way to my farm, I have been shut out twice. When on the farm, I have to carry a licenced gun for security reasons. The nearest police station to you in remote areas is two hours away. It is passion that has kept me in business as an entrepreneur, despite the losses I have incurred. As an entrepreneur, you need to understand the right insurance and right financial mix,” he said.
ODINAKA ANUDU
