Home > Development 2.0, Digital Development, e-Agriculture > Crowdfarming: Platform-Enabled Investment in Nigerian Agriculture

Crowdfarming: Platform-Enabled Investment in Nigerian Agriculture

Crowdfarming is fast becoming the easiest means of investing in agriculture in Nigeria. On one hand, we have smallholder farmers who have agricultural skills and farmland but lack sufficient finance.  On the other hand, there are individuals who have money to invest but lack agricultural skills and access to farmland. Intermediated by digital platforms (Figure 1), crowdfarming entails sourcing funds from several individuals (the crowd) to invest in smallholder agricultural enterprises. In some cases, investors receive returns in the form of agricultural produce, while in other cases returns are financial – that is, investors receive their initial investments plus profits [1].

Figure 1: Snapshot of a Nigerian digital platform-enabled crowdfarming webpage (source: Thrive Agric, 2018)

There are currently at least seven active (indigenous) digital platform-enabled crowdfarming agribusinesses in Nigeria. These are: Thrive Agric, Farmcrowdy, Growcropsonline, Growsel, Farmkart, eFarms and Agropartnerships. Drawing from research carried out with Thrive Agric, it is understood that investors (also called ‘farm subscribers’) are considered part-owners of farms they invest in. The contractual agreement between the crowdfarming platforms and farm subscribers provides details on the returns on investment per farm enterprise, length of the production/investment cycle (e.g. see Figure 1), insurance cover on funds invested, and secure online payments. Farm subscribers also receive regular information on the farm’s progress through email alerts and notification of final payments at the end of the production cycle. Subscribers can also apply to visit the farms they invest in.

In Nigeria, crowdfarming platforms are tapping into a large pool of financial investors who are mostly educated individuals, located in urban areas in Nigeria or in the diaspora. Thrive Agric’s model has attracted over 3500 investors, located in 10 countries (Figure 2), who have invested in nine agricultural value chains, directly supporting the livelihoods of over 12,000 farmers (Figure 3), since its inception in 2017.

Figure 2: Geographic spread of Thrive Agric’s crowdfarming subscribers investing in smallholder agricultural production across Nigeria (source: author’s field research, 2018)

Figure 3: Geographic spread of Nigerian states where crowdsourced funds are invested by Thrive Agric (source: author’s field research, 2018)

Despite its growing recognition as a means of investing in agriculture, some factors still constrain the scaling-out of the crowdfarming model beyond its current scope. These factors include:

  • Low level of awareness and trust issues: according to the Chief Technical Officer of Thrive Agric, not many people are aware of crowdfarming and its benefits to both investors and farmers in Nigeria. As such, there is still the potential for more people to invest but getting the word out there, cost effectively, remains a challenge.
  • Currency and bank transaction issues: currently, investing in Nigeria’s agriculture through crowdfarming can only be carried out in Nigeria’s currency (the Naira) due to fluctuations in foreign exchange rates. As a result, investors are required to have a Naira account to participate in this space.

Looking ahead: what does the future hold for Nigeria’s agricultural growth through crowdfarming?

Investing in Nigerian agriculture has been described as key to driving the growth of the sector and Nigeria’s economy in general [2][3]. However, the growth of Nigeria’s agricultural sector has been constrained by a myriad of factors especially those relating to low financial investments in infrastructure, agricultural research, high yielding inputs and information delivery [4]. As agricultural production in Nigeria is still largely rain-fed, the issue of timely access to finance, ahead of the rainy season, remains a reoccurring constraint to the socio-economic growth of farmers (ibid). Figure 2 shows that digital platforms are breaking down barriers to agricultural investments in Nigeria by bridging the gap between investors (both home- and diaspora-based) and smallholder farmers.

However, there is still a lot to understand in terms of the long-term impact of investing in agriculture through digital platform-enabled models like crowdfarming. Research is also needed to ascertain the nature of interaction between these platform models and the existing institutional forms that govern agricultural value chains. This will help broaden our understanding and the broader implications for the distribution of value among stakeholders along agricultural value chains that are platform-enabled.

References

[1] Flynn, P. (2015) What is Crowdfarming, Hazel Blog http://blog.hazeltechnologies.com/article-27-what-is-crowdfarming

[2] Izuchukwu, O. (2011) Analysis of the contribution of agricultural sector on the Nigerian economic development, World Review of Business Research, 1(1): 91-200

[3] Udoh, E. (2011) An examination of public expenditure, private investment and agricultural sector growth in Nigeria: bounds testing approach, International Journal of Business and Social Science, 2(13): 285-292

[4] Phillip, D., Nkonya, E., Pender, J. and Oni, O.A (2009) Constraints to Increasing Agricultural Productivity in Nigeria: A Review (Vol. 6). International Food Policy Research Institute, Washington, DC

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