Episode 007: Aboubakar Diaby: King of Cashews
TODAY’S GUEST IS ABOUBAKAR DIABY, FOUNDER OF PERFORM WORLD, CÔTE D’IVOIRE’S LEADING LOCAL CASHEW EXPORTER.
Today’s episode is a little different from my past conversations. Whereas most of my past chats have been with African technology entrepreneurs, Diaby -- Ivorians tend to call each another by their last names -- is archetypal of an old school entrepreneur.
He’s a raw cashew nut trader.
Côte d’Ivoire is best known for being the world’s largest cocoa producer. Less well known is the fact that over the last 20 years, Côte d’Ivoire came out of nowhere to become the world’s biggest cashew producer. The cashew crop is enormous at 800,000mt.
Diaby was at the forefront of that explosive growth in the raw cashew nut trade.
You might be thinking: why should I care about cashews? As much as African technology startups are dominating the conversation, old school businesses like commodity trading is still hugely important in African economies. Commodities generate a huge share of foreign currency as well represent the major source of cash in rural communities.
Traders like Diaby are key piece of the puzzle because they’re supplying the cash to pay for the cashew. It’s a risky and incredibly volatile business.
I’m definitely going to geek out this episode since I started cashew trading last season.
It was great chatting with Diaby. He has a really neat story. We talked about how he immigrated to the US and worked as a truck driver, why cashew is rife with contract defaults, and how he hedges against risk in trading.
He also offered some excellent tips on high stakes negotiating.
Without further ado, here’s my conversation with Aboubakar Diaby.
SHOW NOTES
Diaby grew up in Daloa, Côte d’Ivoire before going to Belgium for his college education. He immigrated to the US when he was 22. [2:50]
In the US, he drove a truck for five years to save up money for school. [3:57] •
Diaby loved driving trucks since he got to discover the US and see how people live in the country and big cities. [5:23]
What Diaby learned from truck driving. [6:22 ]
“There’s a different mentality. In Africa, Here, in Africa, the higher position you have, the less work you do. Seeing the other way in the US it made me understand that no matter what position you have if you keep working hard your business will grow.” [7:08]
How did Diaby stumble into the world of cashew trading. [10:24]
The differences t in the cashew sector since Diaby started trading. [10:03]
In the early days of cashew trading, only the market, supply and demand, set prices. Lower prices meant that you needed less capital to trade. [13:44]
How does he manages his cash to buy raw cashew in rural Côte d’Ivoire. [14:58]
How Diaby hedges against risks with buyers in India and Vietnam. [18:45]
Why he says that cashew is all about ensuring you have good suppliers. [21:04]
How he spreads risk on the volumes that he’s purchasing. [24:39]
Why is the 2017/18 cashew season off to a slow start. [27:27]
Diaby explains the role of Vinacas (Vietnam’s cashew processing association) in setting prices this year. [28:40]
Three red flags to watch out for when financing a supplier. [31:14]
What was his biggest shock coming back to Côte d’Ivoire to work [34:18]
Diaby began as president of the Cashew Exporters Association, the industry lobby, a couple years ago. [35:23]
He gives an inside look into high-stakes negotiations between the association and the government. [36:43]
His biggest failure and what he learned from it. [43:08]
His most influential mentor [44:04]
Diaby’s one piece of actionable advice for young aspiring African entrepreneurs. [46:04]