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Farmers on field. Public image.

Looking beyond oil

Agri-tech solutions fight poverty and hunger in Nigeria, by bridging investment gap
Agri-tech solutions fight poverty and hunger in Nigeria, by bridging investment gap

“Agriculture doesn’t equate to poverty. You can build a business in the agricultural space and be successful at doing that.” These were the words of Onyeka Akumah, the Co-founder and CEO of Farmcrowdy, a Nigerian agri-tech platform focused on providing structured finance and insurance, as well as the necessary tools and technology for farmers and agribusinesses to boost food production with better yields, lower costs, and smarter marketing.

He says he founded the organisation with the aim of using technology to provide solutions to the problems that most farmers are facing in Nigeria. He would do this by “not just creating value […] as a business owner” but by “creating impact in the lives of people.”

Despite being oil-rich, Nigeria, the largest economy in Africa, has been unable to translate its oil-wealth to development due to decades of mismanagement and corruption. Currently, about 82.9 million people in Nigeria (40.1% of the population) are living below the poverty line according to the country’s bureau of statistics. The unemployment rate is high, and it is projected to reach 33.5% by the end of 2020 considering the impacts of COVID-19. Also, an estimated 2.6 million people face severe food insecurity in the states of Adamawa, Borno and Yobe, due to frequent terrorist attacks and the subsequent displacement of people.

In 2016, PWC and the Lagos Chamber of Commerce and Industry projected that the country’s economy could rise to the top 10 in the world in 2050 with a projected GDP of US$6.4 trillion, surpassing Germany, the UK, France and Saudi Arabia. To achieve this, however, they said diversification from over-reliance on crude oil was required. 

Considering the fluctuation in oil prices and environmental impacts of fossil fuels, as well as the urgent need to raise the quality of living, Nigeria has to look beyond oil in the long term and focus on diverse sources for revenue generation to build a stronger economy.

Farmers harvesting rice. Photo credit: Farmcrowdy

One of these viable sources for revenue generation and consequently economic growth is the agricultural sector. Prior to the discovery of crude oil in Nigeria, agriculture was the main source of the country’s revenue. It accounted for at least 60% of its GDP. However, since fuel was found, the performance of the sector has dropped greatly, due to a myriad challenges, such as the lack of access to markets and inadequate capital resources.

Speaking on the impact of COVID-19 on small-holder farmers in a live interviewVictoria Madedor, Head of Agribusiness & FMCG, BOI Investment and Trust Company, said farmers need support in the form of inputs and seeds. This assistance, she said, should be readily available and not be seen as palliatives. She added that “over time we have treated farming as charity but we need to understand and treat it as a business.”

Enter agri-tech startups

To solve the challenge of funding, emerging agri-tech startups are now creating platforms to source investment opportunities to support local farmers in the country. With a focus on optimising financial performance while increasing local food production and securing farmers’ jobs, these startups set out to fight hunger and poverty in Nigeria. Two of such startups are Farmcrowdy and Groupfarma.

As a country, “we never should have left agriculture,” Niyi Ogungbade, the Founder and CEO of Groupfarma who left his banking job to start the organisation said as he told his story. He added that “agriculture has the greatest potential to lift a large number of people out of poverty” because unlike the proceeds of oil and gas which have “revolved around the elites…agriculture funding directly impacts rural dwellers.”

According to Ogungbade, Groupfarma is able to minimise wastage because the farmers produce to demand. He added that they work with research institutes as well as keep data on trends of rain and flood to advise and educate the farmers while structured insurance helps to ensure the security of farmers.

Since their launch in 2016, Farmcrowdy has raised $15m USD and currently has a network of 116,000 farmers. One of the farmers who has benefited from their investment program is Abdulbasit Idris (23), a rice farmer in Kwara state.

Idris, who left school after his secondary education because he didn’t have the money to continue, testifies that capital from Farmcrowdy sponsors has helped him to start farming early, which is unusual without sponsorship. He added that, with the money they’re given, they can hire more labourers who can help with tasks such as weeding, while he is able to sponsor his siblings’ schooling through increased production.

Ashindi Boniface (60) is a Benue man living in Imeko, Ogun State, who has been farming for over 30 years. He cultivates beniseed (also known as sesame seed – Nigeria’s current biggest agricultural export), maize, and has recently started farming rice with support from Groupfarma. 

He said they have been selling their farm produce well before Groupfarma came but added that Groupfarma’s support helps to increase their production. “They have assisted and motivated us to make higher than we have been making.”

Farmers on field. Photo: Mike Blyth. Lic: CC BY-NC-SA 2.0

Yusuf Ogunbiyi, a Commodity Trading and Pricing Specialist at Cellulant Nigeria said this model of financing can be leveraged to drive food production and increase farmers’ income if added services like monitoring and extension, insurance and access to market are in place. He, however, urged the companies, especially the ones with “humongous returns,” to be more transparent. “The benefits are clear, the risks are there but people need to be more transparent. You can’t be promising people huge returns that have so many risks and not mention them,” he said.

To Onyeka Akumah and Niyi Ogungbade, the agricultural sector plays a key role in improving Nigeria’s economy. However, as the former noted, more needs to be done to ensure agriculture becomes successful. He noted that all stakeholders across the food value chain have a part to play, adding that the government plays the most crucial role in terms of ensuring ease of doing business and adequate infrastructure among others.