There’s a new crop of agritech ventures in Nigeria offering insane returns over unbelievably short periods. A rule of thumb to follow is to always have in mind that any offer that sounds too good to be true is most likely not wholly true. Abnormally-high returns are almost always a red flag.
Numbering over sixty, most agritech startups in Nigeria are essentially crowdfunding platforms offering funders the freedom of putting their money to work without actually doing the work.
As there are good examples in Farmcrowdy, ThriveAgric, Agropartnerships, and few others, there are also more than a few bad eggs toxifying the sector and soiling its name.
Lately, there has been an upsurge in reports of platforms masquerading as agritech startups, failing to keep their end of the bargain and, in some cases, disappearing entirely with people’s funds.
A common theme among such unstructured crowdfunding agro investment platforms is the improbable returns they offer; some offering ROI of up to 40 percent per annum.
In the past few months, names like Farmkart, Growcropsonline, Madaki Agro, and Menorah Farms, among others, are all so-called “agritech” platforms that have been implicated in various misdealings, leaving investors stranded.
Like Green Partners which claims to cover investments on the platform with insurance from Prestige Assurance Plc, most of these mushroom ventures lure people in with sweet talk that suggests all farm projects have insurance to mitigate any unforeseen risks that could lead to the loss of the sponsor’s capital.
But in reality, this is hardly the case. The onus is, therefore, on the potential investor to do adequate due diligence to confirm proof of insurance documentation and scope of the cover.
There is also the need to ascertain the identity of the company and its leaders, financial statements, evidence of track record, and even visit the project site, if possible. In all, with agric investments especially, it shouldn’t be as laissez-faire and straightforward as shady companies like to paint it.
As the Securities and Exchange Commission (SEC) finally goes about the task of proposing the regulatory framework for crowdfunding platforms in Nigeria after years of just talk, the general public would want to tread the agritech path cautiously.
