The availability of funds in this sector have attracted a lot of entrepreneurs, some genuine who want to provide solutions and others, who are not but are financial hawks looking to devour the funds being thrown into the sector. Evidently, it looks like there are more hawks in the sector than there are genuine entrepreneurs who understand the sector and are willing to provide solutions that will lead to growth.
In this article, I have listed five issues with Agritech in Nigeria. These are not exhaustive but what i consider to be the major issues
1. Poor understanding of rural sociology
Many Players in the Nigerian Agritech are usually what we call ‘ internet farmers’, smart investment bankers with the best of education across the globe who only got into agriculture because of the inflow of funds into the Agricultural sector and as smart investors, they are just following the money trail and doing what they need to do to make the money. There is no passion about agriculture neither do they understand the sociology of the rural farmers who constitute 90% of Nigerian farmers. Hence, They develop technology which is out of sync with the immediate needs of the farmers, wrap it with good publicity and boom, investors come calling even when the technology has no real value to farmers. Nigerian farmers are most often laggards- they are resistant to change and see everything from the realm of spirituality. To create any solutions that appeal to them, you must understand how they think and quietly win them over. A good technology which provides a solution might have a low penetration because the developers refuse to get stakeholders buy-in and correct any misinterpretation they have of the solution. Copying solutions that have worked in other climes and dumping it on Nigerian farmers because it has worked somewhere else, without testing to see the reception of local farmers will always lead to a failed project. Few years ago, the Nigerian Agricultural minister, seeing the success of mobile phones in Kenya in offering extension services to farmers, replicated the same in Nigeria and it failed even though Nigeria has more literacy level than Kenya.
2. Profit over value
I did take out my time very recently to read up the resume of many of the promoters of Agritech in Nigeria. One thing was consistent: They mostly have backgrounds in the financial sectors and in the world of finance it is all about profit. In Agriculture, the prominent thing is value- value derived from years of toiling in the field. The promoters of Agritech are always in a hurry for profit and not creating lasting agricultural values, this trade off between lasting values and profit leads to the collapse of the Agritech firms as their businesses do not provide lasting values. I am not sure I can count how many agricultural initiatives that have failed in Nigeria in the last five years with thousands of investor funds trapped. It is possible that many of these promoters did not set out to dupe their investors. They assumed they had it figured in their head and one plus one will always give two on the field. They got their fingers burnt. Agriculture is a risky business and it is one of the most risky businesses in the world. Neither the climatic conditions nor the soil behaviour or effects of pests and diseases can be predicted with great accuracy. Everything can look so good on paper and till something unexpected comes up. Agriculture needs time and patience, investors are always in a hurry for returns and profit, in this race to make investors happy or repay credit facilities, many Agritech firms stumble.
3. Inefficient business model
A close look at many of the solutions which many of the Agritech firms sell shows a lack of understanding of the Nigerian Agricultural sector and its problems.This solutions are most often not sought by the market and appear as luxury to the farmers. But because these businesses are in a hurry to secure funding from investors they sell any business model that appears attractive to secure funding. Years back, I had the idea of setting up a cold storage facility for fruits and vegetables. The more I thought about it, the more I knew that even though the idea provided a solution, it was not sustainable and the market would not wish to spend on the solution. While it is true that it will reduce wastage, it also transfers additional cost to the retailers of fruits and vegetables which they will not be willing to take. Furthermore, these retailers, using their experiences, purchase the amount of produce they were willing to dispose of before the shelf life of the produce comes to an end. Later on, I discovered that a company called CCHUB has developed the product I had thought of but as predicted, the market was not receptive to it and it has fizzled out. This buttresses the problem Agritech promoters encounter when developing a product for the Nigerian market- they misinterpret the needs of the market and assume that their innovation is what the market needs. They do not listen to understand what the farmers want.
4. Media hype over results
Few months ago, I stumbled on a CNN interview by a Nigerian, a promoter of an Agrictech who says he has developed a hardware solution for a certain small scale agro product. I tried to track what this hardware was and all I could find of this solution is a hardware that has been in use for decades by small scale processors. This lad just packaged this hardware in good English and gave it a new name and has used the media to give it a good hype. He has gone ahead to attract good funding from investors. Well, the honeymoon will soon come to an end. The so-called hardware provides no real value to the processors and lacks the capacity to generate enough revenue to match the investment it is taking. This is also true for many of the Agritech firms I have seen, the focus is to invest heavily on the media to court the attention of investors. The game is to secure funding and not to provide solutions and to secure funding, PR and branding is all you need especially when you are dealing with investors who do not understand the psychology of Nigerians and the Nigerian agricultural climate.
5. Lack of inclusive growth in Nigeria
For Agritech to grow in Nigeria, there must be a robust economic growth which will increase the purchasing powers of consumers. Agriculture in Nigeria is run by smallholder farmers whose major focus is to generate enough income for survival. They are among the poorest of poor Nigerians and preoccupied with acquiring food and shelter. Indeed, about 80% of Nigerians are poor and rising inflation keeps wreaking havoc on their purchasing power. Value addition in any agricultural value chain comes with a cost- a cost that will be borne by the farmers and transferred to the consumers. The farmers do have the financial strength to purchase many of the offerings offered to them in the form of technology and when they come as a loan repayment becomes difficult. Those who have the financial abilities to purchase some of these offerings are large farmers with ownership of a large hectares of land and hence can spread cost using the economy of scale. But they are few. Think of it, how many farmers can afford to pay for warehousing or for a smart climate technology that predicts weather conditions? Or for cold storage or for stock keeping softwares? Only the educated and large farmers can. The consumers are not willing to even pay more especially when there are cheaper alternatives. Few years ago, greenhouse farming caught the buzz and organic produce was the catch, these days it seems to have fizzled out. Produce from greenhouse farms came in more expensive than those not produced through greenhouse, the market always looking for something cheaper kept faith with non greenhouse produce ( they could rarely differentiate between both) and many of the greenhouse farms had to close , leaving only a few, serving a small niche of customers to survive.
For Agritech to record tremendous success in Nigeria, the Economy must grow and the purchasing power of Nigerians increase in leaps.