With over 84 million hectares of arable land, of which only 40% is cultivated1, Nigeria is primed for agricultural growth. However, major constraints stand in the way of Nigeria’s primarily smallholder farmer base. In order for Nigeria to catalyze its agricultural prospects, it must resolve challenges prevalent in the country’s agriculture sector. These issues include a lack of information, and limited access to modern technology and credit for farmers.
The dissemination of information is critical to farming. Farmers rely on knowledge of new innovation, modern farming techniques and weather patterns to increase productivity. Consequently, agricultural extension agents – institutions that utilize knowledge gained through research and education to provide non-formal education and learning activities to help farmers – play a crucial role in the agricultural supply chain. In Nigeria, there is a gap between farmers and the vital information that they require. This is mainly due to weak interagency cooperation in both program planning and implementation2.
In addition, Nigerian farmers suffer from a lack of modern agricultural technologies. These technologies could help ease the burden of laborious farming duties as well as increase productivity for farmers. To date, Nigerian smallholder farmers use traditional manual-farming-methods. Because of this, their crop yields suffer and they remain vulnerable to externalities, such as climate change, that will inevitably lead to a scarcity in food supply. With an increase in productivity, farmers can tackle problems such as food scarcity, which is expected to affect 35 million Nigerians3.
Although the gap between Nigerian farmers and the information they require is wide, the financing gap between Nigerian farmers and Nigerian banks may be even wider. Due to the relatively less riskiness of industries like real estate, construction, telecommunications, and oil and gas, Nigerian banks have a tendency to neglect the agricultural sector. This is so prevalent that according to the Core Welfare Indicators Questionnaire Survey, it is estimated that only 18 percent of farm households (mainly small- scale farmers) have access to financial services4. Subsequently, Nigerian farmers cannot afford to acquire the technology necessary to optimize their productivity.
An Answer at Abuja
In response to these challenges, an agriculture technology company in Abuja, Nigeria, Hello Tractor, is using digitization to revolutionize a staple of the farming industry. Hello Tractor is attempting to combat the issues plaguing Nigerian farmers by introducing Nigeria’s first “smart” tractor. Priced at $4,000 (roughly $36,000 below the price of a typical entry level tractor), Hello Tractor’s flagship product offers a low-cost option for farmers to meet consumer demand. Each smart tractor boasts a GPS antenna, notifying users on when the tractor needs maintenance. The company can also identify each tractor’s location and connect farmers who need tractor services with tractor owners, and cloud capability enables the tractor owner’s to receive key insights, including weather data, directly to the tractor. Yet, even with all these added benefits, the smart tractor’s most impressive trait is that it cuts labor costs by two-thirds5, further giving farmers the edge to push up profitability.
Despite Hello Tractor’s sector-disrupting impact and success, there is always room for improvement. Specifically, there is an opportunity for Hello Tractor to reduce the financing gap that is inhibiting Nigerian farmers. Hello Tractor can strategically partner with banks and farmers within its network to fund the sale of smart tractors to farmers, using the tractors as collateral. In Addition, farmer payment data can be distributed to Nigerian banks to show payment history of farmers. Banks can use this information to help underwrite loans to qualified farmers. With these developments, farmers can begin to assume the vital role that they are destined to play in Nigeria’s economy.
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