How a Nigerian fintech wants to secure 1 billion US dollars for farms

By
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Small farmers often have a hard time getting financing. An app in Nigeria wants to change that: Vetsark fintech has been up and running for five months. A conversation with its founder Blessing Mene about what his app offers - and about the opportunities and limitations of agricultural financing.

Vetsark fintech is looking to target 500,000 to a million farms, just enabling them access to money and being their key partner. © GIZ /Johannes Funk

By Blessing Mene

Blessing Mene is the founder of the Nigerian fintech company Vetsark. Growing up in a family of farmers, he has had an interest in agriculture and veterinary medicine since a young age.

All contributions

By Jan Rübel

Jan Rübel is author at Zeitenspiegel Reportagen, a columnist at Yahoo and writes for national newspapers and magazines. He studied History and Middle Eastern Studies.

All contributions

How important is agriculture for Nigeria?
The Nigerian economy is dependent on agriculture.

 

Agriculture is “it” for Africa. In terms of income generation at the grassroot-level, the most likely option still remains farming.

 

And how did you come up with the idea?
I grew up in a farming family and my dad is a farmer; even nowadays. My mom's also farming, and they have done that next to their own fulltime jobs since I was a child. Initially, my parents started working on the fields, because for livestock more than 80% of the costs will go to feed. So that’s how my interest in agriculture began to grow. I also have a background in chemistry and took some courses in veterinary medicine. But I am mainly passionate about solving problems from a systems change point of view. I did some work on mango seeds, water hyacinths and the black soldier fly – with Ashoka and USAID Nigeria support respectively. After that, I moved on to animal health: How can we digitize animal health? It is a major issue that livestock farmers face and leads them to lose their income. I did some work on that and eventually, our digital operation got adopted by the government. Having done that, I asked myself, okay, what's the next big thing? Financing farms is super important. That’s how I wound up in agri-financing.

 

Why is there a need to have farms fundraise money in Nigeria and why is it difficult to access finance in agriculture?
It is a problem that has been present for decades. One of the reasons why it's difficult to access loans is the question raised by banks and lenders “can I make enough profit from this and possibly fast?”. They want to invest in profitable ventures. Part of the economy is driven by petroleum. Hence, they would rather invest in, for example, crude oil, because the turnaround time is fast, with a big profit. Real estate is another money-spinning industry right now in this part of the world – so they feel like agriculture doesn't make a lot of business sense for them. The second reason would be that they've gotten their fingers burned. They've lost money invested in agriculture. Additionally, I think that there is a cultural issue here. The people feel that getting a loan or getting some form of financing from the government is part of eating the national cake. For them, this is more like grants or donations.

 

So there is a lack of convincing success stories for possible investors?

 

Even though a lot of resources have gone into financing agriculture from the World Bank to even the Central Bank of Nigeria, there's still a lot of darkness and opportunity within the sector.

 

And what are the barriers for farmers to access your app?
You have to be able to read and you have to have some form of digital access to use an app like ours. Thirdly, you need to be within the banking system or at least have some documentation that allows you to be registered in the system. And then number four would be awareness.  By that I mean knowledge about the application and how they can benefit from it.

 

Is it easy for a smallholder farmer to get a bank account in Nigeria?
Getting a bank account might not be too hard, but operating it, that might be the challenge. A lot of the transactions are still cash based, hence, a lot of behaviour change is required. But adoption of technology has really improved over the last decade due to improved customer preferences, increased internet penetration and cheaper costs of smartphones.

 

And what does the app offer them?
Firstly, it offers them a bank account. Thereby it gives them digital identity, which means that they now are within the financial sector and that they're able to run their transactions. And number two would be that they can apply for a bank loan within the app or get access to the type of resources or inputs needed to get to operate their firm.

 

But the most important benefit would be being able to access the resources you need for your farm ten times faster than a bank would offer you.

 

Typically, if you want to get a loan from the bank directly, you have to fill out some forms, submit a business plan… just a lot of documentation. Also, you must probably have operated your bank account for like six months. One of our new customers told us it took him four years to access a loan from the Bank of Agriculture. I think the loan was about 5000 USD. We don't want that to happen. If you're within our system, you should be able to get it as soon as possible.

 

Right now, our goal is to get a loan within three, four weeks. Our top-level customers, they should be able to get it within 24 hours. We don't want them going through the struggle of trying to get money for their business.

 

Is the app already running?
We just got in a collaboration with one of the major Nigerian banks to integrate our backend with their own banking infrastructure three months ago. They've given us access to their backend so that we can issue their bank accounts to our customers. That integration was completed by late April.

 

Do farmers already take loans via the app?So far, we have been putting in place the processes and setting everything up offline, to check what works and what doesn't. We have a separate app called Cleva farm management available via cleva.org. We've been able to help over a number of farms and agribusinesses secure an average of $1500 per customer so far. We're looking to hopefully grow our numbers at over 50% month on month. So far, we've gotten 100% repayments of our money and of the resources we've provided to the farms. That's what we're looking to scale up with our app.

 

Do you get kind of a provision or a member fee?
We make a commission, in form of a flat fee, of the deals. If we get you, for example, a loan with the volume of 1000 or 2000 USD, we typically would make a commission of 5%.

 

What else do you offer apart from giving the farmer loans?
We think of it from four different angles.

 

They need to get the right inputs, the right species, the right quality so that the money doesn't go to waste due to wrong seeds.

 

The second part would be in terms of the production itself, like providing training, technical support to make sure that they're doing the right things for their farms and bridging the knowledge gap. Then the third would be around sales by access to markets and to make sure that once there is a harvest, the yields don't go to waste due to inability to sell or distribute.

 

And does that go hand in hand? So if you get a loan and are registered in the app, you also can access the other parts?
The application allows you to access the inputs. So typically, that will be within our own ecosystem: Our farmer is picking up inputs from our wholesaler partner, within the same community. And then selling it through the same community.

 

What is the situation like for women in agriculture? Do they have it even harder when it comes to accessing money?

 

It’s much worse for women. It's hard for them to even get into the business.

 

Then when you now talk about access to financing, it's worse because they need to go through a lot of obstacles. This week I had a meeting with the farm cooperatives. And among the leaders, there's only one woman – I had a meeting with seven people. I had an extensive conversation with her trying to understand the hardships her business is facing. And I think it's the same across the country.

 

Women don't show up, because they are being overshadowed by the men.

 

And can your app address this?
It's one of the pivotal areas we are trying to address.

 

And one of the ways we're addressing it specifically is to be very sensitive on the gender side, and intentionally providing a quota to the women.

 

For example, in an upcoming project of ours, only women are participating.

 

I know that encouraging women in agriculture would have an immense impact in the industry.

 

So that's one way we we're trying to address the problem of unequal gender representation in agriculture and believe that from there we can scale up to reaching more women over the next five years - at least up to 150,000 women.

 

What potential do you see for the app?
By 2030 we're looking to do about 1 billion USD in lending. And by 2035, about 15 billion USD. We want to be able to address between 5 to 10% of the demand in the continent. And we're looking to target 500,000 to a million farms, just enabling them access to money and being their key partner. But beyond the numbers, the biggest impact we see is solving the struggle of fundraising, as that affects small scale farms and producers over the whole continent.

 

What will agriculture in Nigeria look like in 30 years?
 

I think it's going to be better. I see more medium scale farms: A lot of the young people are going to agriculture.

 

Also, we're now having more literate farmers like GenZs, who are coming into the sector and are much more open to the use of technology. Therefore, I see more financing going into the sector.

Back to overview

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And a semicolon in the middle

A contribution by Jan Rübel

After a two-year break due to Corona, the doors of the International Green Week (IGW) in Berlin are opening again. From 20th to 29th January, visitors from all over the world can discover, marvel and taste the produce. But the event is not only feasting and fun. The BMZ stand asks questions about where food comes from & where it goes – and in the process becomes a crash test for many habits.

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How farmers are facing the crisis

A contribution by GIZ

Russia's war against Ukraine and its impact on food, energy and fertiliser prices is worrying farmers all over the world. Young farmers, farmer organisations and politicians from Kenya, Chad and Ukraine tell their stories and what keeps them in agriculture.

 

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Priscilla Impraim and her chocolate business

A contribution by Jan Rübel

Priscilla Impraim is one of the first women in Ghana to enter the chocolate business. Despite some hurdles, she founded the company Ab Ovo Confectionery Limited in 2006 with currently six permanent employees and 25 seasonal employees.

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Five climate-friendly methods in agriculture

A Listicle for climate protection and adaptation

These five management practices can increase agricultural production and contribute to climate change mitigation and adaptation.

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Water may offer the only chance

Interview with Caroline Milow and Ramon Brentführer

Groundwater resources remain dormant in the soil of African regions. Where does it make sense to use them – and where does overexploitation of nature begin? Caroline Milow (GIZ) and Ramon Brentführer (BGR) talk about potentials in the future and lessons from the past.

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“We want to overcome hunger and poverty”

An interview with Fernanda Machiaveli

After four years of the Bolsonaro administration, the new Brazilian government is trying to restart its engagement in agroecology, fighting deforestation in the Amazon and protecting indigenous communities and poor families from hunger. An interview with the Vice-minister for Rural Development and Family Farming, Fernanda Machiaveli.

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“We have to focus on sustainability”

An interview with Karen Mapusua

Karen Mapusua, President of IFOAM Organics International Network, on the danger of the current fuel crises and inflation to loose track in sustainablity, why organic farmers should be heard and how the word “crisis” has a very different meaning where she lives in Fiji.

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Governor's Day with Farmers – For more discussion with local actors

A contribution by William Onura and Larissa Stiem-Bhatia

In agriculture it is important to include political stakeholders in the discourse. To build the bridge between practical application and political action, the think tank TMG launched the Governor's Day with Farmers in Kakamega County, Kenya. Now it took place for the second time. But what are the goals and benefits of the Governor's Day?

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From field to fan shop: how to increase supply

A contribution by Jan Rübel

Organic cotton is extremely popular – but farmers still find it difficult to change their conventional cultivation methods. A new project addresses this dilemma: Bundesliga football teams in Germany are promoting the switch to organic cotton in India. And thereby setting an example.

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BMZ releases video on the transformation of agricultural and food systems

A contribution by GIZ

The Federal Ministry for Economic Cooperation and Development (BMZ) has released a video on the transformation of agricultural and food systems. In the video, Federal Minister Svenja Schulze also speaks about the urgent need to combat global hunger and contribute to resilient agricultural and food systems.

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The rush for green energy shouldn’t undermine rights of pastoralist communities

A contribution by Hussein Tadicha Wario

Africa’s drylands seem to be predestined for generating solar and wind power – especially given the current hype over green hydrogen. However, pastoral communities are often put at a disadvantage in this respect. Our author describes the arising conflicts and what successful coexistence of green energy projects and the communities could look like.

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CompensACTION aims to reward farmers for climate performance

A Contribution of the Initiative

The CompensACTION Initiative for food security and a healthy planet, launched by the German Federal Ministry for Economic Cooperation and Development (BMZ) in 2022, is gaining momentum. It aims to financially compensate smallholder farmers for their contribution to preserving ecosystems. Initial successes have been achieved in Ethiopia, Lesotho and Brazil.

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The Agri-Food Map: An interactive map to explore sustainable agri-food systems

A Contribution by GIZ

The complex interrelationships of the sustainable transformation of agricultural and food systems are not always easy to understand - the Agri-Food Map, an interactive online app, makes the comprehensive relations accessible by providing a wide range of comprehensibly prepared information.

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Climate change mitigation and adaptation strategies for the African livestock sector

A Contribution by ILRI and GIZ

The production of animal-source foods is becoming increasingly difficult due to the impact of climate change on the livestock sector in Africa. Though, Livestock make a crucial contribution to food security in Africa. Three papers by the Federal Ministry for Economic Cooperation and Development (BMZ), GIZ, ILRI and World Bank analyze, how Africas future livestock sector can look like.

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“It created hope. It created a life”

An interview with Ally-Raza Qureshi, WFP

Iraq suffered many years of war, sanctions and economic crises. However, Ally-Raza Qureshi from the World Food Programme in Iraq sees progress. But now the effects of climate change are becoming apparent in the country. What is to be done?

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New Podcast – Out now!

A Podcast by Food4Transformation

In a world facing crises – from pandemics, armed conflicts, and climate change – how do we ensure everyone has enough food within planetary boundaries? A new podcast by Food4Transformation discover solutions talking to government officials, scientists, NGOs and farmers around the world.

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Earth’s well, all’s well!

A Contribution by Fairtrade Germany

With the annual topic "Earth’s well, all’s well!", Fairtrade Germany is focusing on the concept of agroecology at all levels - and is thus taking the next step towards achieving greater global sustainability. At the Green Week trade fair, Fairtrade Germany will show how this can be achieved taking the cocoa supply chain as an example.

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Blooming landscapes? Only with biodiversity!

A Contribution by Arne Loth

What do chocolate, carrots and tequila have in common? What sounds like the ingredients for an experimental cocktail are foods that would not exist without certain animal species. They are examples of how nature works for us every day, often behind the scenes.

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Together for food security in Zambia

A Contribution by Claudia Jordan (GIZ)

The Agriculture and Food Security Cluster of the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in Zambia shows how synergies among different projects and partner organisations can help people to eat healthier, diversified food. A delegation of the Bonn based Division of Agriculture and Rural Development learned this in a field visit in the Eastern Province of the Southern African country.

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Reforming agricultural policies to sustainably transform food systems

A Contribution by IFPRI

Global food systems are confronted with multiple stresses. It is more urgent than ever to make them more resilient, healthier and more sustainable. A key tool in such a transformation is reforming agricultural policies and repurposing agricultural support, as discussed in an online seminar co-organised by the International Food Policy Research Institute (IFPRI).

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A framework for sustainable and fair agriculture and food systems

A Contribution by Gideon Tups

The guiding orientation framework developed by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) summarizes the requirements for the transformation of agriculture and food systems – and identifies principles and approaches for transformative change.

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A Call to Action against Desertification

A contribution by GIZ

Every second, worldwide, we lose valuable and healthy soil with the size of four football fields. This was only one of the many facts being presented to a wide audience in Bonn and worldwide via livestream at the World Desertification and Drought Day on 17th June 2024. This was the 30th anniversary of the United Nations Convention on Combatting Desertification (UNCCD), which was celebrated at the Bundeskunsthalle in Bonn.

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Climate Resilience in the Apple Value Chain

A Contribution by Puneet Bansal

In Himachal Pradesh, India, natural disasters are becoming more frequent and climatic conditions are changing – with negative consequences for apple production and farmers' livelihoods. Holistic and multidimensional innovation bundles are required for the entire value chain in order to make the food system more resilient in the future.

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