Farmcrowdy – Nigeria's first digital agriculture platform – links small-scale farmers with Nigerian investors and provides major processors and international buyers with the opportunity to purchase commodities directly from farm clusters (see Spore article, Bridging the Gap Between Farmers and Investors).
Spore met up with Kenneth Obiajulu, Farmcrowdy’s managing director, at the 2019 Global Business Forum in Dubai where Farmcrowdy was selected to be a part of the prestigious GBF Mentorship programme.
Crowdfunding is quite new as a form of agricultural investment. What made you feel it could work when you set up Farmcrowdy?
We wanted to find a way to fund smallholder farmers. We looked at structured finance options but the standards were very high. We then looked into how we could create a risk assessment system and break the loan amounts into smaller units so an individual could easily invest a small portion of what is required by a farmer. That was the thought process from Farmcrowdy’s founding members and that was how we felt crowdfunding could work.
There were, of course, several times that we felt like it wouldn’t work because it would take about 6 weeks to raise US$2,000 (€1,800). But today, in 2 days, we can raise over US$1 million (€0.9 million). That is the level of validation that we have seen.
What are some of the challenges that Farmcrowdy has faced, and more importantly, how have you overcome them to become a leader in the field?
We have had many big challenges: how do we scale up? How do we get more farmers to form clusters? And how are we able to cater for the specific needs of small-scale farmers?
Being a tech firm, we want to be able to deploy technology in handling certain things but, as we quickly realised, agri-tech is not 80% tech and 20% agriculture, it is the other way around! It's 80% agriculture and 20% tech. It was really a big problem that we addressed by having more technical field specialists, and by deploying a technical specialist field app that helps us to communicate with farmers and farmers communicate with our agronomic team who provide tailored advice.
Another problem that we have – a good challenge – is that we never have enough investment opportunities on our platform. This comes with a whole lot of complaints from the investors that whenever an opportunity comes on the platform, in 26 minutes, it is maxed out. We have had over-subscriptions. Then these opportunities do not exist anymore until another farm opens up.
What we have seen is that once we open up these farms, it goes out really quick which begs the question, how are we deepening our portfolio and how are we providing more opportunities for people to be able to invest and improve the livelihood of more farmers. To us, the challenge is more around how we can innovate and create more opportunities – ultimately get more farmers into this space – so that we never run out of opportunities on Farmcrowdy.
How is Farmcrowdy looking to deepen its portfolio?
It’s a function of funds and a function of being more innovative and going deeper into the value chain and testing so many other aspects of the value chain including transportation, processing, core production trading from Nigeria to the UAE and so many other activities around that space. Nothing also stops us from taking advantage of the African free trade agreement that was just signed and would be taking effect next year for moving produce from other parts of Africa to the UAE and to the rest of the world. It requires a whole lot of more research, more innovations, more testing to take this.
How should African agri-tech companies be talking to international investors?
We need to tell our stories so that people begin to appreciate that businesses running in Africa have the potential to scale. It’s aid over trade when it should be the other way around: millions of dollars in aid is being poured into Africa when we could invest in growing businesses instead. We only communicate that we need help and don’t speak well enough around what we are doing which is why many international investors think Africa is a country. Africa should treat itself as a brand.
Africans can do more for Africa and we should begin to export Africa to the world. At Farmcrowdy it gives us a sense of pride that Nigerians are solving Nigerian problems. Our model has been able to show that Nigerians can solve Nigeria’s food security problems.
How would you encourage other young agri-tech start-ups?
At Farmcrowdy, we believe that mentorship is critical. If you don't have 10 years of experience the fastest way to move 10 years ahead is to find someone that has 10 years of experience that you can learn from, that can guide and push you – something we have with the GBF Africa Mentorship programme. My advice to young tech firms is that they need to dream big – we're not a lower continent, we are equal to everyone and we should also be able to solve global agricultural challenges.
Can you tell us more about the mentorship from GBF and how it has helped Farmcrowdy grow?
Through our current mentorship programme in partnership the Dubai Chamber of Commerce and Industry, we have been able to identify major buyers who are willing to offtake some of the produce from our farmers, and for at least 40% more in than they would have gotten if they had sold to buyers within Nigeria. So right now, we make margins from the trades that happen across the continents from Africa to the UAE. We are about to create a model that allows to be able to create the volume of trades that take place. Once the volume of trade increases, the margins increase.
Secondly, it has improved the profile of our business: the brand Farmcrowdy is on the lips of lots of businesses. Just by merely showing that we were a part of the programme and with the discussions that took place with the Sheikh that was televised or that was shown everywhere. Personally, I have gotten over 2,000 requests of followership on LinkedIn alone. We have had numerous hits, had people know more about what Farmcrowdy has to offer. During the pitch event, we were able to explain to a diverse group of investors and individuals what Farmcrowdy is all about. We even had the consul-general of the Republic of Ethiopia in the UAE come to have conversations around how we can bring these levels of initiative even to Ethiopia. We had invitations from nationals from Kenya, Sierra-Leone, Ghana, Liberia, saying there is no need to re-inventing the wheel. How can we just replicate this same model and partner with an organization like Farmcrowdy? It’s an African challenge. It’s a big challenge in Africa and as such if it has worked in Nigeria with all of the difficulties in Nigeria, we believe it can also be applied in other parts of Africa.
Do you believe agricultural transformation today is a digital journey?
It’s imperative that we take advantage of technology by digitising agriculture. We need to start taking digitalisation seriously. We saw one of the farms that we worked on where the adoption of tractors for land preparation reduced land clearing from 300 to about 6 man-hours – that is time that can be deployed into something else. It’s not just about hard work, it's about smart work. Technology and digital systems are one of those areas in which we can work smarter.