Coldhubs

Nigerian company installs cold storage facilities to prevent food waste

“A farmer who wishes to grow tomatoes invests a lot of energy and money. If and when they rot, it’s because he can’t store them properly and all his effort is wasted.”  For years, agricultural expert Nnaemeka Ikegwuonu observed how much food was wasted in Nigeria. Now, he builds cold stores that function on solar energy, in which farmers can rent a space to store the goods they harvest. Yes, sometimes the very simplest ideas are still the best…

The Coldhubs story is one of step-by-step growth. Having an idea, improving it, finding partners and implementation. Coldhubs still has a lot of work to do, but the initial results are promising. And this is why the company has already benefitted from support through a commercial partnership mechanism of the King Baudouin Foundation.

“I travelled around Nigeria for over ten years. I had a radio station that specialised in agricultural news and I made more than 3,000 programmes designed to teach things to our farmers. It was during my trips that I noticed how much food we throw away. Farmers can’t preserve the things they produce either on their farms or at the local markets. What they don’t manage to sell straight away is often lost. Food waste is a major problem in Nigeria and this leads to hunger and a loss of income.’ says Nnaemeka Ikegwuonu. The founder and head of Coldhubs decided to try something…

“In 2003, I built a rather primitive cold store with a small team. It had air conditioning, a battery and a solar panel. We didn’t have much scientific or technical knowledge, but we nevertheless managed to make it work.” Nnaemeka went to talk with the Nigerian government, which awarded him a small grant to develop his idea. “In 2013 and 2014, we began to test our first cold store among vegetable producers and sellers. They were all very enthusiastic, but at the same time, we realized that these people would never have the means to buy a cold store themselves. Renting some space to take care of their harvest, however, was a possibility. And that’s how we came to propose ‘Pay as you store’. ‘Pay to save money’. And that’s how Coldhubs still works today.”

Nevertheless, Nnaemeka Ikegwuonu still had a problem. “I wasn’t very proud of our refrigerated warehouse. It was rather artisanal.” He found the solution in Germany, at the ILK (Institut für Luft- und Kältetechnik – the institute for air and cold technology), in Dresden. “They helped us to develop the cold store that we have now. The engineers worked out the capacity of our solar panels. They helped us with the battery technology and the energy efficiency of the cooling system. They even thought about the correct size for the cold stores. In short, they completely refined our concept, the entire technical operation. And they helped us to build the first cold store.”

Women

Coldhubs was established in July 2015 as a Nigerian ‘social enterprise’, a business with a social vocation. One month later, the first refrigerated warehouse was ready. “Factor (e) Ventures, an American investment fund then helped us to build another five. This additional effort was needed to really get started. And in December 2016, our first commercially operated refrigerated warehouse was up and running. Since then, we have launched a further 17 and between now and the end of this year, 18 others will be added. We are trying to speed things up, step by step…”

The results are promising. “Last year, we managed to save around 11,400 tonnes of food from being wasted. The income of the 315 farmers who participated doubled on average, representing an increase from 60 to 120 US dollars per month. And we also created 18 jobs for women.” Each Coldhub has at least one member of staff who manages the unit, stocks the foods, collects the rent and transfers the money to the company. “It is always a woman. In some places we have two members of staff because a bit of marketing is needed too. The farmers need to understand that it makes sense to use Coldhubs.”

Scale

There is no doubting the strength of the idea, but the mountain of work involved is enormous. “A cold store cost roughly 27,000 US dollars. If they can be filled from the first day, it means waiting around two years before they make a profit and that’s when we can begin to generate the money we can invest in a new installation. So, we can only grow slowly. I think we could speed up to 40 or 50 per year. In five years, I hope to have 200 cold stores. That’s great, but of course it’s too few. There are roughly 200 million people in Nigeria. We have 5,000 local markets and 20,000 agricultural communities which would benefit from having a refrigerated warehouse.”

Scale is thus the greatest problem. Today, as head of the company, Nnaemeka Ikegwuonu has 70% of the shares and his American partner Factor (e) Ventures has 20%. The latter supports start-up businesses around the world that want to improve their access to electricity. “For the time being, we are too small to work with commercial investors. You need to have a solid financial base for that. We rely at the moment on organisations such as the King Baudouin Foundation to finance our growth.”

“I think that Coldhubs will go in two directions. We will, of course, continue to construct and operate cold stores ourselves. But we are also working on a model of ‘social franchising’. In a few months, I hope that a standard contract will be ready. I think there’s an interest in this type of contract in Nigeria, to work as a cold store franchisee or independent operator.”

The contribution to sustainable development is quite varied. “More food means less hunger. And we are creating jobs for women. But the most important aspect is the security of income for the farmer. At present, there is an important lack of small-scale investment in agriculture that would considerably improve productivity. Working on the land, harvesting and storing the harvest could be much more efficient. A farmer who is sure of being able to sell his harvest makes great progress. Long term, it means more profit.