Heifer International has announced a $1 billion direct investment into Hello Tractor, a Nigerian online platform that allows farmers to access loans needed to purchase agricultural vehicles. The loans can then be paid back with the revenue made from the use of the tractors.
Hello Tractor, dubbed “Uber for tractors”, provides software and tracking devices that enable farmers to schedule tractor services from local tractor owners using a mobile phone app.
There are about 200 tractors per 100 square kilometres of agricultural land worldwide, but only about 27 in Sub-Saharan Africa. This is an example of a mechanisation gap that has a big influence on farm production and local economies in a region where smallholder farming is the main source of income.
A way to unlock capital
“The pay-as-you go (PAYG) model provides financing for entrepreneurs who want to create jobs by capitalising 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.
“It’s a way to unlock capital for youth who have strong business skills that can help transform African agriculture, but are often overlooked by private equity investors.”
Hello Tractor is one of a slew of new African agritech start-ups that are capitalising on these and other farming issues. While private equity firms and significant impact investors have invested over $5 billion in African tech businesses, just a small portion of that money has gone to young agritech entrepreneurs. Ifedi noted that they are stepping up to demonstrate the potential of agritech investments to create jobs for Africa’s 10 to 12 million young people who enter the workforce each year.
According to the African Development Bank, this economy only generates three million formal jobs annually.
“We developed the PAYG programme to make tractor ownership 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.”
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