Heifer International has announced that it is investing $1 million in the tractor booking platform, Hello Tractor will provide loans for tractor purchases-loans that can be repaid from revenues earned by leasing them to local farmers.
This move is a way of seeking innovative ways to generate agribusiness opportunities for young African entrepreneurs.
The program, “Pay-As-You-Go (PAYG) Tractor Financing for Increased Agricultural Productivity in Nigeria,” already has enabled tractor purchases in Nasarrawa, Abuja and Enugu states.
These purchases could make tractors accessible to thousands of smallholder farmers via the increasingly popular Hello Tractor leasing platform.
Hello Tractor offers software and tracking devices that allow farmers to book tractor services from local tractor owners via a mobile phone app.
“The pay-as-you-go model provides financing for entrepreneurs who want to create jobs by capitalizing on the demand for tractor services on Africa farms, but who lack traditional forms of collateral,” said Adesuwa Ifedi, Senior Vice President of Africa Programs at Heifer International.
She said they have worked since 1944 as an organization, but for 40 years in Africa where it has invested over half a billion dollars supporting critical partners, governments and others in partnership to drive support for smallholder farmers.
“We believe in smallholder farmers’ power, and we know that the power that smallholder farmers hold is not just to pull themselves out of poverty, they know exactly what they need which is an enabling environment for them to unleash what they have.
“So, in 2020, we began to take a second look at this, and we realised that technology will be critical to leapfrog all of the challenges that they (smallholder farmers) are facing, but we also realised that young Africans hold power, and they stand in between technology and agriculture.
“What is beautiful about the Hello Tractor model is that they have created what is called Booking Agents, and those Booking Agents know the farmers, they understand where the farmers are, and as a result, they have collateral and the collateral is their history of farmer relationship.
“When we piloted this partnership in the first AYuTe, this year, we are having the second AYuTe, we have used that to learn about the model, so, in 2022 we are going to do a further investment, but we have gone beyond that, we have also set up a program called Tractors for Africa, and our aspiration is to be able to unlock funding for 50,000 tractors”, she noted.
Globally there are roughly 200 tractors per 100 square kilometers of agricultural lands, but in sub-Saharan Africa, there are only about 27. This is illustrative of a mechanisation deficit that has a significant impact on farm productivity and local economies in a region where most people depend on smallholder farming for income.
Hello Tractor is one of many new agritech start-ups emerging across the continent that are finding business opportunities in addressing this and other farming challenges.
Ifedi noted that Heifer International is stepping into the breach to demonstrate the potential of agritech investments to generate jobs for the ten and twelve million young people entering the workforce every year in Africa– and in an economy that, according to the African Development Bank, generates only three million formal jobs annually.
In 2021, Heifer International created the AYuTe Africa Challenge, which awards cash grants annually 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 inaugural AYuTe Africa Challenge awarded a total of $1.5 million to two companies, one of which was Hello Tractor. The award allowed Hello Tractor to finance 17 tractors for 17 entrepreneurs in three countries.
This Heifer’s new investments for the company’s PAYG product will give more entrepreneurs and smallholder farmers access to tractor services at an affordable rate. And that in turn can boost farm productivity, employment, food security and farmer livelihoods.
“We developed the PAYG program to make tractor ownership-and the reliable income these machines can bring-a reality for entrepreneurs who find it impossible to get. credit through normal channels,” said Jehiel Oliver, Founder and CEO of Hello Tractor.
“We look at the revenue tractor owners can generate, not how much collateral they can pledge”, he noted.
Oliver said that partnering with Heifer “enables us to extend innovative financing to people who were previously considered ‘unbankable,’ while increasing access to technology that has the potential to improve the incomes of millions of smallholder farmers across Africa.
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