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LAGOS, (Reuters) – Nigerian start-ups have begun digitizing the food supply chain. They are helping farmers and retailers to manage high food costs.

Vendease and Sabi are two such companies that were founded last year. They have since created digital marketplaces which allow wholesalers and shopkeepers as well as restaurateurs, restaurants, and hotels, to purchase directly from farmers and manufacturers.

Nigeria’s inflation has been double digits since 2016. However, it has seen a decrease in the last six month. COVID disruptions, currency changes and security problems in food production regions all contributed to price rises that reached an all-time high in March.

Start-ups partner with farmers by providing credit, helping them to grow and signing supply agreements. They also collect produce from farms and sell it to buyers at a fixed rate. This allows the buyer to make money through interest as well as a commission, which can be anywhere between 1% and 5%.

Tunde Kara, Vendease’s CEO and cofounder thought that his company of three months was doomed after Nigeria’s capital Lagos was closed down in March 2020. This was to stop the spread the coronavirus. However it proved to be a significant boost for the business.

Kara said to Reuters that the singular act of closing down everything meant that people could not go directly to the markets. However, we were able to do so because we held a license as a procurement firm. This helped change buying patterns of the businesses.

Vendease reports that it saved $480,000 for restaurants and hotels in just nine months.

Michael Williams from Vendease, the general manager at the Ebony Live Place restaurant and hotel in Lagos said that “… the suppliers do exactly what is required of them. That’s to balance the quality and price of actual produce.

This is helping to solve an issue faced by African smallholders: a lack of market access. The main reason for this problem lies in the difficulties of moving goods from the rural areas to cities. Many of these farmers often have their harvests wasted.

According to the United Nations Food Agency, on-farm fruit-and-vegetable losses in sub-Saharan Africa were up to 50% prior and may have increased as there was less movement.

Sabi’s co-founder Anu Adasolum serves as CEO. The platform has 150,000 users from small businesses in five states.

She stated that she aims to make sure that merchants don’t pay more for services and products they access through her company.

Vendease, Sabi, and Vendease work together with lenders to lend credit to companies on the platform. Many small business owners are the driving force behind most African economies, however they lack access to credit that will allow them to grow.

Ogun State’s Farm 360 produces fresh chickens, catfish, and vegetables. It uses Vendease to access financing and Vendease for its largest cost, feed. General manager Mubarak Badamosi stated that this has allowed for an increase in daily chicken production of 20% to 2,500.

Vendease’s Kara, along with his team, plans to grow to 20 African cities from Nigerian three and add 50,000 new businesses to the platform over the next three-years.