At the end of 2019, one of the resolutions Muhammed Akinyemi, a University of Ilorin graduate, made for the new year was to grow his finances.
Akinyemi invested N710,000 in farms under Thrive Agric, an agric-tech company, in March and April with the promise of recouping over N800,000 in September. Weeks after he was due to receive his money, the company said investors will have to wait for up to two years before repayment can be made.
“Afraid of putting my money where it’ll end in tears, I carefully selected all the platforms where I was going to put money,” he wrote on Twitter.
“I took advice from people who either had money on those platforms, had used those platforms, or knew someone who is a part of the platforms.
“Asides the referrals, I also checked if the businesses had insurance policies that will guarantee protection in case things go sour. I did everything right.”
THRIVE AGRIC: ANOTHER PONZI SCHEME OR BAD BUSINESS?
1 Thrive Agric is owing me almost a million naira
2 They are owing other investors millions
3 Thrive Agric is telling me to wait till 2021 to get my investment that was due in Sept 2020
— #ThriveAgricPayUp (@theprincelyx) October 2, 2020
‘REPAYMENT MAY TAKE UP TO TWO YEARS’
Checks by TheCable showed that the company has been owing investors from as far back as April.
In a recent email signed by Uka Eje, its chief executive officer, Thrive Agric informed investors that repayment will be on a first-come-first-served basis.
Eje and Ayo Arikawe, co-founders of the company, said the business was not fully prepared for the impact of the COVID-19 pandemic.
“Thrive Agric primary revenue source is based on a successful harvest (inclusive of crops and poultry),” the email read.
“When a planting season or harvest is lost, like we did this year, Thrive Agric can only hope to earn such lost revenues from subsequent harvests.
“In our case, we have previously communicated to subscribers that we would meet our obligations based on overdue payments from off-takers. Some of those payments have come in, but not nearly enough to meet our obligations to subscribers.
“In the last week, we have communicated timelines for repayment to our subscribers of up to 24 months depending on the specifics of their subscription.
“We expect to payout before the committed due date, but in the past, we have been aggressive in our expectations and not met them. We do not want to continue to disappoint our customers so we have given a timeline that we can more confidently keep.”
WHAT ABOUT INSURANCE?
In response to the payment delay, many investors have called on Thrive Agric to source for funds from Leadway Assurance, its insurer.
When TheCable contacted Ayoola Fatona, Leadway’s head of agric insurance, he explained that the insurance company provides cover for the farms and not for funds invested by the public.
“What we do is that we insure all the farm products. We are concerned about the financial investment of Thrive Agric on the farms. If the farm is disrupted by lightning, rainfall, erosion, then we will compensate them,” he said.
“What concerns us is the value that the crowdfunding platform has placed on the project. So if anything happens, Leadway will compensate the platform up to the tune of investment on the farm.
“Our contract is only between Leadway and the agric-tech platform and not Leadway and investors. We are not responsible to the investors, we are responsible to Thrive Agric who is our customer. We are no insuring the investors’ funds, we are only insuring the farm. Our liability starts and stops with Thrive Agric, not investors.
“What we cover are natural occurrences such as fire, lightning, pest and diseases or issues beyond the control of the farmer. So we insure the farm and not the money crowdfunded by the investing public.”
According to Fatona, this is the first time Thrive Agric will encounter challenges with its investors in the past four years.
“The particular challenge is that they have issues with offload, sorting of goods output from the products they cultivated during the last season as a result of COVID-19. Some of those products ought to be exported but they got stuck at the seaports, they couldn’t get exported,” he said.
“Some of the off-takers were unable to pay because of a downturn in the sector they operate. Sales could not be made so the company could not get money to pay investors. Due to COVID-19, they couldn’t generate the expected sales.
“We have been doing business with Thrive Agric for over four years. They are the biggest agric-tech company in Nigeria after FarmCrowdy. This is the first time in our four years relationship that they are actually having issues with investors.”
Given Thrive Agric’s mission to enable agriculture, combat food scarcity, and build local wealth in Nigeria, the company now finds itself knee-deep in a credibility crisis.
COVID-19 AND ITS IMPACT ON BUSINESSES
The coronavirus pandemic dealt a heavy blow on many businesses in the country as varying degrees of lockdown were imposed to curb the spread of the virus.
This is in addition to the closure of Nigeria’s land borders which made the movement of some goods difficult.
Farmers were unable to visit their farms, off-takers could not deliver farm produce and consequently, sales were affected.