Top 10 crowdfunding organisations for African agriculture

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Kenya's Marion Moon's Wanda Organic is a beneficiary of Crowdfunding

Days when farmers would rush to the banks – as the only option – to finance their agri-business are almost over.

Welcome to the world of equity crowdfunding which is today a new option helping farmers gain access to capital and develop strong agriculture value chains.

While crowdfunding is at a relatively nascent phase in Africa pundits say that it has the potential to reach $2.5 billion by 2025, as estimated by the World Bank.

In Kenya, the liken crowdfunding to “Harambee” – used for the last 50 years to raise funds for community, personal and social projects.

For years, many farmers have been struggling to raise small capital and can now turn to what is known as donation-based crowdfunding and thousands of farmers are now able to get support from wellwishers eager to support such farm projects.

“Agriculture is going to be the big thing in the next 20 years,” says Jim Rogers, the founder of the Us-based Quantum Fund.

In crowdfunding, an equity partnership generally consists of a general partner (GP), or an active investor, and limited partners (LP), or passive investors. The GP makes all the decisions on operating an investment while the LPs simply invest money passively and collect returns from harvests or rents. Simply put, the farmers and ranchers are the GP who keeps the operation running however they choose, while the investors are the LPs who have no say in the operation, and help bring capital to the farm and receive returns from harCrowdfunding is one of the latest ways of raising money for innovators and entrepreneurs. Apps like M-changa, allow fund raising for a wide variety of purposes for example, innovators who seek to commercialise their ideas. Others use the platform for charitable purposes.

“Crowdfunding gives the concept owner a larger access to funds unlike the traditional harambee. The fact that it is online means factors such as geographical limits are minimised as the platform is accessible worldwide,” says Nairobi lawyer Cathy Mputhia. “I believe it is also easier to access finance in this way as there is no need for collateral such as security or other rigorous steps required by other lenders. It accords one free marketing due to the fact that the concept is publicly available.”

Crowdfunding is deemed to be a viable and scalable alternative source of funding for startups and small businesses, charities and other project creators in Africa.

For instance, Nigerian startup Thrive Agric is using a crowdfunding platform to provide farmers with the finance they need to grow their businesses and offer ordinary people the chance to invest in agriculture.

Thrive Agric is designed to crowdfund investments for smallholder farmers and provide it to them in the form of inputs, tech-driven advisory and access to markets.

The funded venture range from an acre of rice or start-up poultry business. “Farmers had no access to finance, low yields due to poor agricultural practices, and no access to premium market,” Thrive Agric chief executive officer (CEO) Uka Eje says.

So rather than purchase farmlands and get involved the daily routine of the industry, startups like FarmCrowdy and ThriveAgric enable interested middle-class Nigerians to fund existing farms for between $200 and $750 for a harvest cycle (which can last between five and six months depending on the crop) and earn up a share of profits.

While crowd funded farming or even shareholding farming is a relatively new concept in many African Countries – with majority of farmers practicing small scale/subsistence farming – itsis gaining momentum. According to the World Bank, this is brought about by a rising middle class, rapid adoption of mobile technologies and a need for innovative financing.

With Africa importing U$ 50 billion worth of food every year – yet the continent holds 65% of the world’s arable land – the potential to make business is huge.

Although crowdfunding is yet to significantly impact at farmer-level on a large scale, more donation-based financing platforms are emerging. Initiatives such as KickLoans, Kiva and Thundafund, amongst others, are being used to successfully provide finance for agricultural and development projects.

In Nigeria for example, the Tomato Jos company raised €50,000 through the Kickstarter platform, to support a project enabling local tomato farmers to add value to their crop by making tomato paste. The crowdfunding investment, donated by around 500 people, helped to convince other investors to back the company with a further €211,000.

In Burkina Faso, Marcel Ouedraogo has used BlueBees twice to successfully raise a total of €34,000 in loans for his soybean processing enterprise, which works with a network of 2,500 family farmers to create soybean oil and meal for human consumption and animal feed. Investors were offered an annual interest rate and informed of a planned reimbursement date – the project was financed and all loans repaid in 2013; his second BlueBees campaign in 2015 has also been successful – loans are due to be repaid in December 2015.

Jumpstart Africa

Jumpstart Africa is a US-based crowdfunding portal that seeks to help African Entrepreneurs access startup funds. It aims to link African entrepreneurs with good business ideas, to people that see how these ideas can succeed and revolutionize the way the rest of the world supports Africa by backing innovative projects developed by African entrepreneurs. It is a rewards-based platform, which hopes in the long term to eventually add an equity component to its business and develop into an incubator with a co-working spaces in across Africa.

Thundafund

Thundafund was created in 2013 by two South African social entrepreneurs, with the intention of driving innovation and entrepreneurship in Africa, by encouraging the public to back individuals with great ideas. As much as $350,000 was raise by entrepreneurs on the platform in its first 18 months. Thundafund supports its entrepreneurs, allows only financially viable ideas to go live on the site. This explains why over 70 percent of the 150 projects (10 percent of the applications) listed on the site got funded.

LelapaFund

LelapaFund is a French-based platform targeting Africans living abroad, who want to invest in or support projects on the continent. The platform seek to encourage Africans to invest in African projects through crowd-investing that enables the African Diaspora to invest their capital and skills back home. Co-founder Elizabeth Howard says it is viewed by investors as a cost-efficient and less risky way of getting involved in African projects.

M-Changa

M-Changa is a crowdfunding platform for mobiles developed by a Kenyan entrepreneur. It allows users to create crowdfunding campaigns and collects donations via SMS or online. The platform is committed to social impact and personal fundraising.

SliceBiz

It is a Ghanaian startup that targets accredited angel investors with micro-investments from wider the community to give projects credibility. It also partners with global impact investors to help start-ups achieve funding to scale-up across Africa. Investors can fund via mobile payments, bank accounts, or credit cards.

Shekra

Shekra, derived from the Arabic phrase “Sharek Fekra” that means “share an idea”,  is a private investor network in Egypt. The platform works by asking its network of investors to offer small amounts of capital in order to fund a startup or a specific project, thus mitigating investment risk. Unlike other crowdfunding platforms, which ask the public to fund projects, Shekra relies on a closed network of wealthy investors.

Funda Solva

Nigerian-based Funda Solva uses online payment paltform PayPal as its sole payment gateway. This, it says, opens up funding to the whole world, and taps into PayPal’s trustworthy reputation, building credibility for the site and each project. It accepts contributions as small as $1.

Crowd Farm Africa Ltd

This is a premier crowd-funding platform that aims to transform African Agriculture by promoting crowd funded farming/shareholding farming and addressing value chain gaps in the continent. Our platform connects both large and small scale investors to African agriculture while ensuring reliable supplies of farm produce to buyers.

Growsel

This is an AgTech company in Nigeria has reaffirmed its commitment to increased food production and improved employment opportunities in the agriculture sector by disbursing the initial tranche of farm loans to the first set of farmers.

The crowd-funded loans which would be repaid after sales of the planted crops are meant to help smallholder farmers in the country upgrade from subsistence farming to commercial farming. Headed by Jerry Oche, the Chief Executive Officer, he says that Growsel Gconnects Africa smallholder farmers to investors across the Globe, giving them access to capital via crowdfunding, access to global best practices through mobile devices and Technology driven farm management solutions.

The Kenya Climate Innovation Centre

This Kenyan-based crowdfund organisation sees the crowdfunding concept as similar to ‘harambee’ (public fundraising for a charitable purpose) and ‘chama’ (a Swahili word meaning group voluntary investment or lending to fellow group members). The centre has so far supported the launch of several crowdfunding campaigns. In Kenya, Marion Moon’s Wanda Organic was helped by Kenya CIC to upscale business.

Thus, Crowdfunding can be particularly attractive for beginning farmers who are growing products that take several years to produce revenue; eg coffee.

So what are you waiting for?

 

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