Access to finance, one of the biggest factors limiting agricultural productivity in Nigeria, is getting some innovative solution through a new breed of mostly technology start-ups that are revolutionising agricultural finance; helping farmers remain productive, and in many cases, scaling up their production.
The best part, perhaps, is that when annualised, investors on these platforms are offered much higher returns than current Fixed Deposit and Fixed Income rates. These platforms offer returns varying from six percent in four months, to as high as 35 percent in 7 months. The returns vary by platform, with some offering better returns than others, which is also a function of the particular farm type being put up for sponsorship.
The platforms have so far offered thousands of Nigerians with disposable income and considerable appetite for risk, an alternative investment vehicle, in this case agriculture, which many people are interested in, but often unable to venture into directly.
There are currently five known platforms offering these services, with varying levels of confidence and trustworthiness; Farmcrowdy, Thrive Agric, Growsel, Agropartneships, and Porkmoney.
All were contacted with questions, but only Farmcrowdy, Thrive Agric, and Growsel responded to validate their businesses.
“I was looking for an investment opportunity as a retired professional, and I found digital farming investment offered good returns over the risk free Fixed Deposits and Treasury Bills,” said Amechi Ebeledike, a retiree in Lagos, who has invested with Farmcrowdy and Thrive Agric.
Ebeledike further said he “had fears and worries because of obvious reasons. Gradually confidence began to grow, but I still have reservations about activities of some outfits (especially those outside Lagos), hence not being able to invest freely but with extreme care and caution. No doubt I had and still have my fears about sustained success, hence I do close monitoring and continuous due diligence.”
BusinessDay’s findings revealed farmers are not necessarily handed cash. Instead, these platforms procure farm inputs such as seeds and fertilisers required for any specific farm project, finance the cost of whatever machinery requirements such as land clearing, and the only cash provided is for labour and other small costs that are a small fraction of the overall sum.
This, it was gathered, is done to prevent farmers from using what should have been capital for their farm, to finance other non-agribusiness related activities. The attraction of such platforms to farmers is not hard to discern.
Commercial bank loans not only come at very high interest rates that are not feasible for most agribusinesses (especially farmers), and even getting the loans at all, comes with great efforts.
Eugene Nwachukwu, an IT professional with a Bank in Lagos, who is also an investor with both Farmcrowdy and Thrive Agric, said his decision to invest in these platforms was borne out of belief in the people behind them, and “an investment opportunity that surpasses the returns on Treasury bills.”
With personal interests in agriculture, Nwachukwu also described it as an opportunity to learn the process of farming successfully. “You can learn only if you have made some commitment,” he said.
Farmcrowdy in an emailed response to BusinessDay’s enquiries stated that more than $6million (N2.1 billion) has been invested into a combined 8,500 acres of farm cultivation across 10 states in Nigeria and in the process raising over 1.2 million chickens, with 8,000 small scale farmers impacted.
The company said this has been achieved through funding for Rice (Two cycles); Maize (Two cycles); Soya beans (One cycle); Cassava (Two cycles); and Poultry/Broilers (13 cycles).
Thrive Agric on its part, said since inception, it has launched six farm cycles, reaching over 10,000 farmers who have received funding of about $2.5 million (N900 million).
Growsel’s response to BusinessDay did not indicate a cumulative sum, but stated it has been able to raise funds ranging from $500 to $1,200 per farm in 5 different farm cycles covering; rice, soybean, maize, tomato and cassava.
“We are working with over 12,000 smallholder farmers, with about 1.2 million registered smallholder farmers undergoing screening and verification across different locations,” read a portion of Growsel’s response.
Even though these platforms appear to be making considerable impact in agric finance, some reservations have been made on the possible need for regulation.
Nwachukwu expressed the view that “I think they are truly offering an alternate option for investors but lack regulation. At least I am not aware of the form of regulation they are subjected to.”
The view resonates concerns of some people, who are wary of committing their funds to these companies. A contrary school of thought however suggests any attempt at regulation could go “the Nigerian way”, which would stifle them out of operations.
Farmcrowdy and Thrive Agric have especially received a boost in public confidence after Yemi Osinbajo, Nigeria’s Vice President visited both businesses at different times, and reported to have made some investments with at least one of the platforms.
BusinessDay also learnt that most of the platforms secure insurance for their farm projects, but in unforeseen events, only covers the principal. Either of Leadway Assurance and the Nigerian Agricultural Insurance Corporation are listed on different platforms as the entity offering insurance. Also, there are options for farm visits for those who want to ascertain the reality of investments made.
“Up till this moment, I could not care less if any farm existed or not as long as my money is returned. But now, I know it is actually real,” said a female banker with one of Nigeria’s old generations banks after going on a farm tour.
Two other platforms; Agropartnerships and Porkmoney also claim to play in this space, but little is known about them, and both were unable to give any insights into their operations like their counterparts when BusinessDay reached out. No verifiable investors could also be found to share experiences.
