Companies offer smallholder farmers loans to purchase tractors
By Adedapo Adesanya
Heifer International, in partnership with the tractor reservation platform, Hello Tractor, announced a $1 million investment to provide loans for the purchase of tractors, which can then be repaid from the income generated by renting them to local farmers.
This is part of the company’s efforts to find innovative ways to generate agribusiness opportunities for young African entrepreneurs.
Globally, there are about 200 tractors per 100 square kilometers of farmland, but in sub-Saharan Africa there are only about 27 and the Pay-As-You-Go (PAYG) partnership program Tractor Financing for Augmented Agricultural Productivity in Nigeria, it has enabled the purchase of tractors in the states of Nasarrawa, Abuja and Enugu.
Loans for the purchase of tractors could make agricultural inputs accessible to thousands of smallholder farmers through the increasingly popular rental platform Hello Tractor. Sometimes called Uber for tractors, Hello Tractor offers software and tracking devices that allow farmers to book tractor services from local tractor owners through a mobile phone app.
Speaking on the subject, Ms. Adesuwa Ifedi, Senior Vice President of Africa Programs at Heifer International, said, “The Pay-As-You-Go model provides financing to entrepreneurs who want to create jobs by capitalizing on the demand for tractor services on African farms, but which lack traditional forms of guarantee.
“It’s a way to unlock capital for young people who have strong business skills that can help transform African agriculture, but who are often overlooked by private equity investors.”
Ms. Ifedi noted that Heifer International is stepping into the breach to demonstrate the potential of investing in agritech to generate jobs for the ten to twelve million young people who enter the labor market every year in Africa.
This is a continuation of what the company has done. In 2021, Heifer International created the AYuTe Africa Challenge, which annually awards cash grants to the most promising young agritech innovators across Africa.
It also supports Heifer’s goal of helping more than six million African farmers earn a sustainable living income by 2030.
The first AYuTe Africa Challenge awarded a total of US$1.5 million to two companies, one of which was Hello Tractor. The prize allowed Hello Tractor to finance 17 tractors for 17 entrepreneurs in three countries.
Adding his contribution, Mr. Jehiel Oliver, Founder and CEO of Hello Tractor, said that Heifer’s new investments for the company’s PAYG product will give more entrepreneurs and smallholder farmers access to tractor services at an affordable tariff, which in turn can boost agricultural productivity, employment, food security and farmers’ livelihoods.
“We developed the PAYG program to make tractor ownership – and the reliable income these machines can bring – a reality for entrepreneurs who cannot obtain credit through normal channels.
“We look at the revenue tractor owners can generate, not the amount of warranty they can pledge.”
Mr Oliver said the partnership with Heifer “allows us to extend innovative financing to people who were previously considered ‘unbankable’, while increasing access to technology that has the potential to improve incomes. of millions of smallholder farmers across Africa”.
Hello Tractor is one of many new emerging agritech start-ups across the continent that are finding business opportunities to tackle this and other agricultural challenges. However, while private equity groups and large impact investors have provided over $5 billion to tech startups in Africa, very little of that funding has gone to young agritech entrepreneurs.