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Thrive Agric: “where Is My Money?”. by saninng (m): 11:55am on October 8
Sani Ibrahim
Abubakar Tafawa Balewa,University
Agricultural economics and extension
100Level, Nigeria.
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Fund a farmer, make a profit! Thus, says Thrive Agric, a
popular AgriTech company that crowdsources funds from
investors in exchange for a profit. The business model
appears simple and easy for any basic investor to understand.
When you invest through them, they pool your funds along
with other investors and then invest the collective sums in
farms across the country. When the farmers harvest, they sell
the farm produce at a profit, receive the cash, and split among
investors who contributed to the pool. The company keeps a
commission for itself. It all makes business sense, except for
one thorny challenge – It is highly risky.
Last week, a Twitter user posted a tweet demanding a refund
of his investment in Thrive Agric – almost a million naira. The
company lamented that they could not pay him, because they
had experienced losses due to the COVID-19 pandemic. The
investor was taking none of the excuses, resulting in a name
and shame on twitter that has since gone viral.
AgriTech Investments as they have come to be known has
gained popularity as a viable investment option for Nigerians,
who are still afraid of investing in the stock market. The
largely unregulated sector leverages technology, an easy and
relatable business model, and the promise of a mouth-
watering return to yield-hungry investors. What they however
do not reveal loud enough is just how risky the investment is.
Farming in a country like Nigeria is a highly risky venture that
relies on a value chain that is fragmented, full of middlemen,
and largely inefficient. Nigeria’s average yield per hectare is
one of the lowest in the world, largely due to lack of farming
inputs such as fertilizer, irrigation, and insecurity.
AgriTech firms like Thrive Agric face these risks when they
pool money from investors and pass on to farmers. Though
part of their role in the investment scheme includes monitoring
how the funds are utilized by farmers, they have no control
over several risk factors such as the impact of COVID-19,
which they alluded to as the challenges for not being able to
pay investors.
Perhaps, if they disclose the inherent risks in the business,
investors will be better informed and size up their risk against
the returns. A cursory look at the company’s website reveals
there is nowhere that it is mentioned that there is a risk of not
getting all or part of your money when you invest. It probably
would ruin the pitch if they did.
This is why when you visit their website and that of their
competitors like Farmcrowdy (who pioneered this business)
what you see are testimonials of just how well the
investments are doing. You could argue that they had not
defaulted in any of their previous rounds, so there was no
need to say otherwise.
However, alerting investors about the inherent risks in a
crowdsource investment scheme is not only responsible but a
matter of best practice and compliance. The Security and
Exchange Commission (SEC), noted this in its draft Exposure
on Proposed News Rules guiding crowdfunding. Section 9a
(iv) states that the crowdfunding company is expected to
share a general risk warning on participating in funding
through the company’s platform.
It also requires in Section 14 that they must publish on their
website that “Investing through an online portal is risky and
Issuers raising funds through the portal include new or rapidly
growing ventures,” and that “Investment in the businesses
hosted on the portal is very speculative and carries high risks;
Investors may lose their entire investment and must be in a
position to bear this risk without undue hardship. ” This
proposed compliance requirement is not been done by most
AgriTech firms.
If this had been published on its website and duly
communicated to its potential investors, we may have avoided
the embarrassing and reputation damaging question that any
fund manager wants to avoid – “Where is my money?”,
especially if they don’t have it.

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