Agrikoin: Paving the Way for Agritech Startups and Small Scale Farmers
By Abbas Badmus
A Nigerian Agritech Startup, Agrikoin, recently declared its commitment to end financial challenges confronting small scales farmers throughout agricultural value chain.
Agrikoin, an agriculture-backed Cryptocurrency created to catalyze financial inclusion within the agricultural value chain, is creating a decentralized supply chain that could allow farmers to sell their produce seamlessly to end consumers.
Chief Executive Officer of Agrikoin, Isa Ismail Waziri, told TechDigest at GITEX 2021 that the goal of the startup is to alleviate the financial problems of small-scale farmers through the introduction of a unique digital currency for the entire agricultural ecosystem.
Meanwhile, not many are aware of the potentials of agritech on the economy.
Agritech simply means the use of technological innovations in agriculture to increase its yield, efficiency, and profitability.
These include using technology to achieve faster planting, modified crops that grow well in different environments, and harvesting. It can also be the use of robots, big data, artificial intelligence, and other technologies necessary to solve the challenges confronting the agricultural industry.
Nigeria has seen a rapid growth of agritech startups offering digital solutions aimed at addressing the challenges faced by small-scale farmers and improving their livelihoods.
Nigerian agritech companies such as Farmsponsor, Requid, Farmcrowdy, Thrive Agric, AgroMall, Hello Tractor, and Crop2Cash have been able to harness funding opportunities to achieve social and economic impact across the agriculture ecosystem.
While some agritech startups have transitioned into established companies, there are several barriers that many others have to scale through to break even.
Some of these include a hostile business environment, an ecosystem unable to support long-term growth, low levels of agricultural knowledge and skills, and limited access to awareness of funding opportunities.
Active funders in the Nigerian agritech space include incubators, accelerators, angel investors, and donors, all of which tend to invest during early funding stages.
Despite this, Nigerian agritech startups have to contend with three major funding gaps: limited availability of local capital, a lack of institutional investors investing in agritech and an inability to attract big-ticket investments.
Acknowledging this fact, Isa Ismaila Waziri, the Chief Executive Officer of agrictech startup, Agrikoin, noted that small-scale farmers throughout the country’s agricultural value chain are hampered by various difficulties, especially, the lack of finance and market access.
Therefore, agritech companies need to have a realistic approach to revenue generation. For instance, digital agricultural solutions that require farmers to pay user fees from the onset are less likely to scale rapidly, limiting their investment potential. This is because investors are more likely to work with agritech companies with a clear revenue model and a value proposition that addresses multiple pain points along a value chain.
Agritech companies should patiently engage with investors to further explain the benefits of their digital solution and related business opportunities, while investors may need to think of alternative models for agritech investments.
Also, startups need to educate investors about their unique business proposition and the agritech sector in general, before demonstrating the opportunity for both sides to benefit from the investment.
Such engagements may take time and government support should be available at the state or local levels as extra government intervention may help to increase investment in agritech. For instance, providing tax exemptions for early-stage investments could incentivize additional local investment in the sector and tech as a whole.
Beyond specific support through agriculture or agritech-related policies, the government should encourage the growth of many of such companies in Nigeria that are keen to provide farmers and crop buyers with a digital payments solution.
If truth be told, the current regulatory framework has hindered the growth of mobile money, which is well placed to offer financial services to rural or financially excluded communities.
In addition to revamping the country’s financial and digital infrastructure, improving the country’s physical infrastructure can especially benefit the agricultural and agritech sectors. Many agritech companies have to invest in logistics (i.e. warehousing, transportation) to provide services to farmers, including access to markets.
Infrastructural upgrades will mean a reduction in the cost of moving goods around, improving start-ups’ margins and revenue. This transformation, which will be critical to improving the ease of doing business in Nigeria, has significant potential to attract investment to the agritech sector.
There are numerous growth potentials for farmer organizations to increase productivity only when they can access finance. As such, access to finance is not only a necessity but an urgent quest, a quest that will enable farmer organizations to increase yield and ensure food security.
No farmer organization can be viable when these issues are not addressed and tackled, and this is only possible through profiling the performance of these farmer organizations and assessing their risks management. Doing this will help to identify and create creditworthy farmer organizations with low management risks.
It is therefore not surprising that the AgriKoin CEO appealled to the federal government and other relevant agencies to provide the necessary support to enable Agrikoin to deploy their distinctive agricultural financial services for the benefit of Nigerians and the growth of the country’s economy.
The National Information Technology and Development Agency (NITDA) has been playing a crucial role in supporting and creating a conducive ecosystem for startups to prosper in Nigeria, ranging from the establishment of incubator centres like the National Centre for Artificial Intelligence and Robotics, and the National Digital Innovation and Entrepreneurship Centre.
In conclusion, I call on NITDA and other relevant agencies of government to do more by providing all the necessary support to enable agrictech companies to deploy their innovative financial services for the benefit of Nigerians and the growth of the digital economy.