In a recent interview with How we made it in Africa, Kevin Conroy, co-founder and CEO of Lagos-based Bature Brewery, discussed the challenges posed by Nigeria’s high-cost operating environment for startups.

He explained that launching a business like a craft brewery requires substantial capital. For example, Nigeria’s inadequate grid-connected electricity forces companies like Bature to rely on diesel generators, which can cost around $50,000 – an amount that could represent the entire startup capital of craft beer makers in other countries. Additionally, Bature had to dig its own borehole for water, and navigating the permits, licensing, and regulatory environment is both complex and costly.

One of the business’s early obstacles was finding bottles to package the beer. As the bottling company in Lagos dealt mainly with large multinational beer makers, it had a minimum production quantity of 300,000 bottles, while Bature needed only a fraction of this. Conroy flew to Lagos and met with the owner of the bottling company, convincing him with the promise of significantly more future business should Bature succeed. The owner agreed to a smaller production run.

In addition to the minimum order quantities for packaging, other manufacturers, too, demand large minimum orders for their products. This includes raw materials like sorghum and even cleaning supplies, adding another layer of financial burden.

Conroy also highlighted the significant challenges posed by Nigeria’s ports, where goods can be stuck for months, incurring substantial costs. While Bature uses a lot of locally-grown sorghum in its brewing process, it cannot rely solely on sorghum and must import barley from the UK. To manage these imports, Bature has outsourced the handling to a Nigerian entity.

In early 2023, a cash shortage in Nigeria caused additional problems. The government announced the introduction of new banknotes, but as the deadline for the old notes to remain legal tender approached, there were insufficient new notes available. This left many without cash to purchase essential items, throwing the business community and economy into chaos.

Conroy added that, despite media reports of Nigeria’s booming e-commerce market, online sales have been a challenge for the company. “There is not as much e-commerce [in Nigeria] as people think,” he said, adding that many local shoppers are frustrated with e-commerce platforms due to frequent payment failures, out-of-stock products, and long delivery times. “I don’t think there is a huge trust in e-commerce and most people will order by phone or by WhatsApp to our sales reps when they’re looking to buy directly … A lot of our assumptions about e-commerce taking off proved not to work out.”

Read our full interview with Kevin Conroy: Nigeria’s craft beer pioneer eyes $65m empire

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