Hello Tractor, a Nigerian tractor-booking platform, has secured $1 million in funding from Heifer International to provide loans for tractor purchases that can be repaid with revenue earned by leasing the tractors to local farmers.
The program, “Pay-As-You-Go (PAYG) Tractor Financing for Increased Agricultural Productivity in Nigeria,” already has enabled tractor purchases in the states of Nasarrawa, Abuja and Enugu.
These purchases could make tractors accessible to thousands of smallholder farmers via the increasingly popular Hello Tractor leasing platform. Sometimes referred to as Uber for tractors, Hello Tractor offers software and tracking devices that allow farmers to book tractor services from local tractor owners via a mobile phone app.
“The pay-as-you go model provides financing for entrepreneurs who want to create jobs by capitalizing on the demand for tractor services on Africa farms, but who lack traditional forms of collateral,” said Adesuwa Ifedi, Senior Vice President of Africa Programs at Heifer International. “It’s a way to unlock capital for youth who have strong business skills that can help transform African agriculture but are often overlooked by private equity investors.”
There are about 200 tractors per 100 square kilometers of agricultural land globally, but only about 27 in SubSaharan Africa.This is an example of a mechanization gap that has a big influence on farm production and local economies in a region where smallholder farming is the main source of income.
Hello Tractor is one of a slew of new agritech startups springing up throughout the continent that are capitalizing on these and other farming issues. While private equity firms and significant impact investors have invested over $5 billion in African tech startups, just a small portion of that revenue goes to young agritech entrepreneurs.
Ifedi noted that Heifer International is stepping into the breach to demonstrate the potential of agritech investments to generate jobs for the ten and twelve million young people enter the workforce every year in Africa– and in an economy that, according to the African Development Bank, generates only three million formal jobs annually.
In 2021, Heifer International created the AYuTe Africa Challenge, which awards cash grants annually to the most promising young agritech innovators across Africa. It also supports Heifer’s goal of helping more than six million African farmers earn a sustainable living income by 2030.
The inaugural AYuTe Africa Challenge awarded a total of $1.5 million USD to two companies, one of which was Hello Tractor. The award allowed Hello Tractor to finance 17 tractors for 17 entrepreneurs in three countries.
Heifer’s new investments announced today for the company’s PAYG product will give more entrepreneurs and smallholder farmers access to tractor services at an affordable rate. And that in turn can boost farm productivity, employment, food security and farmer livelihoods.
“We developed the PAYG program to make tractor ownership—and the reliable income these machines can bring—a reality for entrepreneurs who find it impossible to get credit through normal channels,” said Jehiel Oliver, founder and CEO of Hello Tractor. “We look at the revenue tractor owners can generate, not how much collateral they can pledge.”
Oliver said that partnering with Heifer “enables us to extend innovative financing to people who were previously considered ‘unbankable,’ while increasing access to technology that has the potential to improve the incomes of millions of smallholder farmers across Africa.”