INTERVIEW (Obinna Ukwuani, Founder & CEO, Bruk Oil Mills)
Fundamentals of A Successful Fundraising For A Venture In The Agribusiness Chain
The Fidelity SME Forum is a weekly radio programme organized by Fidelity Bank Plc to educate, inform, advise and inspire budding entrepreneurs in Nigeria with knowledge and expertise that will enable them build sustainable and successful businesses. The interactive radio programme features subject matter experts and model entrepreneurs as guests on a weekly basis to share their insight and unique success stories. In this interview, Obinna Ukwuani, CEO, Bruk Oil Mills gives valuable insights on “Fundamentals Of A Successful Fundraising For A Venture In The Agribusiness Chain”.
Q: TELL US A LITTLE ABOUT YOU AS A PERSON?
Obinna: I moved back to Nigeria three and a half years ago from New York where I was born and raised. I came back with the notion to participate in my own little way, nation building of the country. The first thing I thought to do when I came back was to get into education, by starting of a school; also toyed with the idea of starting other philanthropic ventures. However, I decided to go into a venture whereby I can create wealth for others while also having a direct social impact and Agriculture made the most sense.
Q: WHY DID YOU WANT TO COME BACK TO NIGERIA AFTER HAVING BEEN BORN AND RAISED IN USA WHERE THE PROBABILITY OF THRIVING IS HIGHER?
Obinna: Yes that’s true and maybe I am just a crazy person. But in reality, I just had a longing to participate and make a difference. I felt some kind of responsibility to give back because I had a little privilege, and wanted to create something that will give others the same type of opportunity. My major core driver was seeing my peers who are just as intelligent if not more, not being able to maximize their potential because they lack the opportunity to do so. The reason why I went into education in the first place is because Education is the way to enable people maximize their potential and that is all I wanted to achieve.
Q: HOW MANY YEARS DOWN THE LINE, DO YOU STILL THINK IT’S A GOOD CHOICE?
Obinna: So far, yes it is good. There are those days when I wonder if I am going to regret my choice, but for now still good. One of the things that drive me is to prove to myself that I made the right choice – that two or three years down the line, I would look back and say it was worth it and I did not do too badly.
Q: YOU ARE A SERIAL AND SOCIAL ENTREPRENEUR, WHAT DOES THAT MEAN?
Obinna: Serial as the name implies means I bounce from venture to venture – having a multiple of ideas and executing them simultaneously, so there are a number of business ventures attached to my name at a singular point in time. As a social entrepreneur I approach all that I do from the angle of the kind of impact the business will create on the people who are benefiting from what I am doing. Doing a business for the social impact it makes, that’s what makes me a social entrepreneur.
Q: WHY DID YOU VENTURE INTO ENTREPRENEURSHIP, SERIAL & SOCIAL?
Obinna: Depending on what career one chooses, they may or may not be able to capture a large portion of the value of the job creates. For example, a senior banker working with large clients, at the end of the year, there is a chance that the compensation received as bonuses may reflect the value gotten for both the bank and the clients. While some other careers where you do a lot of work and create a lot of value for the beneficiaries of that work, but at the end year compensation does not reflect the amount of value created. Entrepreneurship is one way where you can capture a lot of the value you create. If and when that business succeeds, as it doesn’t always work out that way, as an entrepreneur because I own a lot of the portion of the business I am starting, I personally get to keep a lot of that value that is created; that is what motivates me and most other entrepreneurs. Also as an entrepreneur, you most likely would have created something that was not available before or made something that was available, more accessible, faster, and cheaper thereby creating some value to the public – they are the curious people driven by innovation, always creating things, making things, or looking for ways to make some products and services more accessible, yes, I am one of those people.
Q: TELL US A LITTLE ABOUT BRUK OIL MILLS AS A BUSINESS AS THE FOUNDER AND CEO?
Obinna: Bruk Oil Mills is a business that operates along the Palm Kernel value chain. Specifically, right now we crush and produce crude palm oil that is used in edible products as well as the cosmetic industry.
Q: WHAT MADE YOU CONCENTRATE ALONG THESE LINES AS A BUSINESS?
Obinna: First I wanted to concentrate along the lines of agriculture because I felt that the way things currently are in this country is not the most encouraging at times. However, the one thing is constant is that regardless of direction, people are going to eat and the more we grow in population, the more mouths to feed. So I figured agriculture is the most logical to venture in especially if you want an edge in the business landscape and also in terms of longevity. More specifically, I am from Enugu and there is a long historical heritage of palm kernel processing. Some of the wealth observed today can be most likely traced back to someone’s grandfather or ancestor crushing palm kernels, so I wanted to preserve that. Also there is also a functional eco-system of like-minded business in that same value chain space right there in Enugu that helps the business processes – you have available your off-takers about 15 minutes away from the factory, technicians, consultants all working for various companies in this business. Hence, the tools, machines, resources, inventory, even capital are available so it was pretty straight forward. So among all the other ventures I considered, Fishery, livestock, palm kernel processing was a business venture whereby I kind of understood most of the risks and some of the resources needed to launch were available to me.
Q: WHAT WOULD YOU SAY ABOUT THE VIABILITY OF THE NIGERIAN AGRICULTURAL SECTOR AS SOMEONE WHO HAS DONE THE RESEARCH?
Obinna: I would say it is an extremely viable sector and some would say it is the most viable sector. As mentioned earlier, everyone has to eat and whatever someone is eating, someone is selling the product that the consumers eat. Nigeria is not yet food secure; a lot of food even perishables are still imported. We spend billions of dollars every year on importation of a lot of food consumed in Nigeria even palm oil, so we still have not scratched the surface of our export potential for the food industry. For example, we are the 3rd largest producer of cashews in the world, but the 13th in exportation to other countries. So in terms of what we can do with the food business and how we can make money from the food sector in Nigeria, we have not even started. So it goes without saying that the sector is very viable, although we are faced with so many limitations that is challenging the viability, such as; land security, energy & power supply.
Q: ARE THERE VALUE-CHAIN OPPORTUNITIES EXISTING IN THE PALM KERNEL PROCESSING SPACE?
Obinna: Absolutely, yes there are. The value chain begins all the way from the plantation – the trees till the products of soaps, detergents, and vegetable oils. There are over 100,000 hectares of palm kernel trees all over Nigeria, so there are the aggregators who are needed to aggregate the palm kernel produce from small time farmers, logistics & transportation, the processed kernel, and in between are all sources of income creation for those who want to venture into the space.
Q: WHAT WAS CAPITAL INTENSIVE IN STARTING YOUR PALM KERNEL PROCESSING BUSINESS?
Obinna: The machinery – machines to process the kernel and machines to serve as a power source for the factory. Also if you start off big immediately, you will to acquire land and also build a warehouse or acquire a property with an existing warehouse. These, machines, land, power supply, are the major capital intensive challenges one must surmount when starting out this business.
Q: HOW DID YOU RAISE FUNDS TO START?
Obinna: It is important to mention that this business can be started off on different scales. You can start with ten million Naira, another one hundred million Naira while some will need as much as one billion Naira to start. So the first thing is to pick your scale. Also ask yourself the question, will the investor make money, because ultimately, the investor wants to make money with you.
Q: HOW WERE YOU ABLE TO PENETRATE THE NIGERIAN MARKET?
Obinna: That question can mean a lot of things, so I will answer at face value of the Nigerian market where buying and selling occurs. People buy palm kernels to eat, and there are a lot of companies who produce soaps and detergents that stated where I currently am starting by crushing palm kernels. But because the margins are very slim, they move forward down the value chain, but still have huge demand for the oil. So for entrepreneurs like myself with Bruks Oil Limited who venture into the business, we now primarily supply their needs. Penetration into these big markets happens naturally when you have big enough supply to meet their demands. A lot of these big companies still import palm oil to meet the demands of their produce, but if they can source it locally, yes they would and that will give local entrepreneurs opportunities to penetrate the market.
Q: WHAT ARE YOU LOOKING FOR AS AN INVESTOR IN THE PALM KERNEL PROCESING BUSINESS?
Obinna: Knowledge is probably the first thing I will look for to know how well the entrepreneur understand the market they want to venture into. Every are of agriculture is different and presents its own sets of nuances that will affect the business, so attention to detail is important especially when the entrepreneur wants to avoid losses. Secondly, an understanding of business processes is very important, writing of business plan, making financial projection, the structure of the business and how to make revenue, are some of the things I would look out for to make sure whom I am investing in is worth it.
Q: DO YOU MENTOR OR TRAIN PEOPLE IN THIS FIELD?
Obinna: I mentor people informally, but no I do not train anyone formally yet.