Seek innovative ways to generate agribusiness opportunities for young African entrepreneurs, International Heifer announced today that it is investing US$1 million in the tractor reservation platform, Hello Tractor, to provide loans for the purchase of tractors, which can be repaid from the income generated by renting them to local farmers.
The “Tractor Pay-as-You-Go Financing (PAYG) for Increased Agricultural Productivity in Nigeria” program has already enabled the purchase of tractors in Nasarrawa, Abuja and Enugu states. These purchases could make the tractors accessible to thousands of small-scale farmers through the increasingly popular Hello Tractor leasing platform. Sometimes called Uber for tractors, Hello Tractor offers software and tracking devices that allow farmers to book tractor services from local tractor owners through a mobile phone app.
“The pay-as-you-go model offers financing to entrepreneurs who want to create jobs by capitalizing on the demand for tractor services on African farms, but who lack traditional collateral,” said Adesuwa Ifedi, Senior Vice President of Programs for Africa at Génisse Internationale. “It’s a way to unlock capital for young people who have strong business skills that can help transform African agriculture, but who are often overlooked by private equity investors.”
Globally, there are about 200 tractors per 100 square kilometers of agricultural land, but in sub-Saharan Africa there are only about 27. This illustrates a mechanization deficit that has a significant impact on productivity agriculture and local economies in a region where most people depend on small-scale agriculture for their income. Hello Tractor is one of many new emerging agritech start-ups across the continent that are finding business opportunities to tackle this and other agricultural challenges. However, while private equity groups and large impact investors have provided over $5 billion to tech startups in Africa, very little of that funding has gone to young agritech entrepreneurs.
Ifedi noted that Heifer International is stepping into the breach to demonstrate the potential of investments in agritech to generate jobs for the ten and twelve million young people who enter the labor market every year in Africa – and in an economy that, according to the African Development Bank, generates only three million formal jobs per year.
In 2021, Heifer International created the AYuTe Africa Challenge, which annually awards cash grants 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 first AYuTe Africa Challenge awarded a total of US$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. Heifer’s new investments announced today for the company’s PAYG product will allow more entrepreneurs and smallholder farmers to access tractor services at an affordable rate. And this in turn can boost agricultural 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 cannot obtain credit through normal channels,” said Jehiel Oliver, Founder and CEO of Hello Tractor. “We look at the revenue tractor owners can generate, not the amount of warranty they can pledge.”
Oliver said the partnership with Heifer “allows 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. smallholder farmers across Africa”.
Ifedi and Oliver will be joined on Thursday, April 28 by leaders from the country’s Federal Ministry of Agriculture and Rural Development, state ministries of agriculture, key government officials, private sector leaders and senior government officials. media at the Abuja International Conference Center to showcase agripreneurs. participating in the PAYG program. The event will also highlight the progress of smallholder farmers who have benefited from increased access to tractor services.