July 28, 2022

Crowdfunding: Pooling resources for the sustainability of agribusiness enterprises

Kenya

Mali

Nigeria

The contribution of smallholder farmer groups and micro, small and medium-sized enterprises (MSMEs) is essential in agribusiness value chains. However, they often struggle to sustain business operations due to a lack of access to startup and working capital. With the COVID-19 pandemic bringing the world to a standstill, the conditions created were a major blow to their businesses, which did not make staying on their feet, financially, any easier.

To help them meet their capital needs, 2SCALE set out to garner support for these MSMEs in Nigeria, Kenya and Mali whose agribusiness projects were not progressing due to financial difficulties. Following the success of the two previous cohorts of crowdfunding campaigns in empowering smallholder farmers and entrepreneurs, 2SCALE launched the third cohort of crowdfunding campaigns in July 2022. This third cohort has seen 60 campaigns successfully attract immense support, raising over $26,503 in just six weeks!

For this year’s campaign, a more innovative approach was incorporated. Not only was the campaign focused on acquiring financial contributions, but also included a crowdsourcing tool that would serve as a source of solutions to some of the challenges participating MSMEs face in their enterprises. Through crowdsourcing, MSMEs could easily start an initiative on the platform and add activities to their initiatives. This meant that all 2SCALE connections could, for example, set out coaching questions or business-specific questions on the platform and get feedback from other MSMEs, local partners and international coaches and stakeholders from all over the world. Participating entrepreneurs could mobilise their network, create a community and gain support for their ventures.

The value of crowdfunding

Shamba Records in Kenya

For the second time in a row, Shamba Records took part in 2SCALE’s crowdfunding campaign. This Kenyan agritech company leverages on technology and Artificial intelligence to develop tools that help farmers to increase yields, make a profits, track/trace crops and unlock new market opportunities. They collect farmers’ production data and link it to aggregation centres and the market. Throughout that process, the company automates farmers' payments, credit scoring and credit issuance. They also provide medical insurance cover for farmers, livestock insurance, market linkage and agriculture remote extension services. The CEO, George Maina elaborates:

In order to ensure growth and sustainability, through talent acquisition, maintaining operations and creating strategic partnerships, access to sufficient finance is required. We were able to garner support during the campaign by promoting the impact of our services in increasing the productivity of over 14,000 farmers and improving their livelihoods. Given the opportunity, we would take part in yet another campaign because it presents an avenue for us to acquire the financial aid necessary for business operations.

Rainmaker Agro-Nigeria

Rainmaker Agro Innovations provides agricultural consultancy services to farmers through farm management services, agricultural training, and business development services in Nigeria. When the COVID-19 control measures were implemented, their business took a big hit. This led to poor cash flow which meant they had to shut down most operations. The company joined the crowdfunding campaign to raise finance in order to better help them serve smallholder farmers. The CEO, Valentine Eleta, explains:

The 2SCALE crowdfunding opportunity is a welcome initiative for helping individuals and businesses finance their projects. Thanks to the initiative, my business has gained better visibility and I was able to raise money for the purchase of agricultural machinery to provide mini-tractorization services to smallholder farmers in my community. The training was also very helpful and the platform was easy to use. I give it a five star rating!

Forêt Forte-Mali

Like Kenya and Nigeria, Malian entrepreneurs also achieved great success in this cohort; however, there are some exceptions. Indeed, this third crowdfunding campaign started in a particularly tense context in Mali. With the country under an ECOWAS economic embargo, many of the participants were initially pessimistic. However, the final result demonstrated the commitment of Malian small businesses that remain motivated even in difficult times.

Mr. Dembélé Ichiaka is a young business promoter in Mali. It was his first time participating in a crowdfunding campaign. Even though his expectations were not 100% fulfilled, it was a great experience for him, he says:

My needs were to get funding to buy equipment and recruit a few more youth. But mobilizing contributors was not so easy. I just thought I didn't use the right formula to convince people. The amount I garnered is however a good starting point and should there be another cohort, I will ensure I use better strategies to raise more funds and achieve my objectives..

Crowdsourcing: Unlocking access to diverse resources and perspectives

Participating SMEs also benefitted from in-kind contributions to further augment the cash contributions. 52-year-old Mather Ojo, an agro-input dealer from Ekiti state, Nigeria was one of the participants who benefitted from crowdsourcing.

He states that one of the major challenges his business is facing is linked to the rising inflation rate in Nigeria and the prevalent state of insecurities. These unfortunate circumstances have thus made it difficult for him to restock products due to poor sales and continually increasing prices of inputs each day. Through the crowdsourcing campaign, he was able to solve a percentage of his financial woes as he was able to restock agro-input. He narrates:

I received a lot of in-kind support from bigger businesses I approached through the platform. I was given agro-Chemicals worth N800,000 (USD 1891) and NPK fertilizer worth N100,000 (USD 236). I have invested these into my business to boost capital and sales. We were also trained by an expert on how to source funds to help grow the business from my immediate environment, using social media platforms, especially WhatsApp. Now, I can approach people without reservations and talk openly and confidently about my business and what they might stand to gain from investing. This is not just an introduction to how to raise money for my business, but on how to get my business to the level I envision. 2SCALE crowdsourcing has allowed me to see possibilities everywhere!

It is evident that 2SCALE’s crowdfunding and crowdsourcing initiatives have contributed to addressing the challenges that agribusinesses face every day.

According to Salome Ng’ang’a, 2SCALE’s Financial Inclusion Officer, the campaign has been a transformative opportunity for the MSMEs working in different value chains. She explains:

Unlike previous campaigns, the third cohort of the 2SCALE crowdfunding campaign did not have a match fund. However, it was mind-blowing to have the number of MSMEs on the crowdfunding platform surpass that of the first two cohorts and to see the level of support that came from the communities, supporting MSMEs with their financing needs, both in kind through crowdsourcing and financial support.

Through initiatives such as crowdfunding, we are a step ahead in spearheading access to finance for agribusiness SMEs in our communities. We thank every donor who supported this campaign!

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