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How Nigerian FinTech Startups Can Get More Agro-farmers To Sign Up On Their Platforms

Emmanuel Nnaemeka

EOS Intelligence

  There is a new wave of startup operations called agri-fintech. Most developing countries such as Brazil, India, Spain, and Indonesia, among others, where agriculture makes up the majority of their profession, are experiencing the rise of agro-fintech. Agri-fintech is a type of startup that helps farmers gain access to credit and loan facilities and manage their finances.
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A country like Nigeria is well known for its huge agricultural production. More than 70% of the population is engaged in agriculture. In addition, in the past agriculture contributed more than 60% of the nation’s GDP, but today it represents barely 10%. This informs us that there are plenty of opportunities for FinTech startups to look toward the farming population. Despite the apparent opportunities in agriculture, many large and small farmers in Nigeria face many challenges, including poor access to basic services and inadequate capital. Studies have shown that farmers in Nigeria find it difficult to engage in large-scale farming because there is little financial inclusion in these areas. One study called this set of farmers “the unbanked.” Worse yet, Michael Ogundare, CEO of Crop2Cash, noted that due to the fragmentation of agricultural value chains, lack of tracking data, and payment channels, banks have been shying away from lending farmers loans, and only 7% of over 38 million farmers in Nigeria have access to credit. As stated above, countries like India, China, and Brazil have been able to improve their agricultural sector through the provisions of agri-fintech. In this article, I discuss how FinTech founders can develop agri-fintech that can get more farmers to use their platforms. Designing the group of farmers you want to serve is the first step towards developing an agri-fintech that can fuel the growth of adopters.
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When designing your group, you should establish how your startup would operate and the specific people you want to serve. This is when you design and develop an agri-fintech that is tailored to specific types of farmers. Your agri-fintech can be binary or multipurpose. For example, you may choose to design your startup to serve grain farmers only. Additionally, when you design your customer pool, you can, with the use of your digital sales enablement platform, help retailers, grain companies, input manufacturers, and farmers manage their business processes efficiently. Secondly, another way to get more grain farmers, for instance, on your agri-fintech platform is to help farmers gain access to ready markets. Successful agri-fintechs provide financing via a full-stack B2B grain marketplace. With the use of algorithms not only can you help farmers and grain companies find the best match of supply and demand, but also you can help in the areas of quality control of the grain, know-your-customer documentation, logistics, and financing of the transactions.  Developing an agri-fintech is not all about providing loans and credit facilities for farmers. Studies have shown that providing only vendor financing can put a strain on your startup.
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Successful agri-fintechs provide financing along with agricultural inputs. To build a successful agri-fintech that will get more farmers on board, you must provide an alternative to vendor financing by providing agro-dealers, and small and mid-sized farmers with seedlings, fertilizers, and even machinery. Leading agri-fintech startups in developing countries employ the use of artificial intelligence and machine learning-based risk scoring models that are based on agricultural data and credit history to assess the credit worthiness of farmers. With these models, Agri-fintechs can arm themselves with farmers’ data and provide them with agricultural inputs with fairer credit conditions and the opportunity to pay at harvest. Furthermore, the subscription of your agri-fintech startup must be automatic so that your company can revert with instant approval. This will also help in the perfect integration of the financing solution together with the sale of agricultural inputs. Additionally, with machine learning models, farmers are also informed in advance of the payment amount due at harvest, with no origination fees, service fees, or deferred payment fees. With more and more data available on agriculture and farms to determine risk and train their algorithms, Agri-fintechs can grow tremendously. Featured Image Source: EOS Intelligence
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