In a presentation at the World Economic Forum in June 2016, Kenyan-born Calestous Juma, a professor at Harvard University, explained the world’s perception of African agriculture. “From newspaper editors to TV anchors to bloggers, the default symbol of African agriculture is an African woman holding a hand hoe. This imagery highlights the drudgery African women face in farming,” he stated.
Mechanization is an important input for agricultural crop production, but now, mechanization levels on farms across Africa remain low. There are an estimated 33 million smallholder farms in Africa, and the farmers who work on them contribute up to 70 per cent of the continent’s food supply. A significant number of these farmers do not engage in mechanized farming, resulting in lower productivity and income.
To help mechanize the continent and provide farmers with essentials such as tractors at a low cost, Jehiel Oliver founded Hello Tractor in 2014. Through a tractor sharing application, Hello Tractor aims to connect tractor owners and smallholder farmers in need of tractors. The application collects tractor service requests to assist farmers with limited access to resources in obtaining convenient and affordable tractor services while also providing additional income and enhanced security for tractor owners.
Last year, the company suffered as a result of the COVID-19 pandemic. However, the new investment Oliver has received as a co-winner of the US$1.5 million Heifer International AYuTe Africa Challenge served as a silver lining in the business’s dark cloud. Jehiel discusses these ups and downs with Ventures Africa, as well as his plans for the future.
Kindly introduce yourself.
My name is Jehiel Oliver. I am the founder and CEO of Hello Tractor. I founded the company six years ago in Nigeria, which was our first country of operation. My background is finance and investment banking, and I wanted to do something more impactful, so I chose agriculture. I am passionate about agriculture and the emerging market, particularly in Africa, which led to the creation of Hello Tractor.
How does it feel to be one of the winners of the AYuTe Africa challenge?
I am excited. As entrepreneurs, we are frequently attempting to achieve a goal, and it is beneficial to have the support of an organization that believes in your work and is willing to assist you.
What prompted you to establish Hello Tractor?
Genuinely, it is to do something that will have a significant impact and to apply my skills in a market that will benefit from it. This is what drew me to farming. What excites me about the business is that farmers need tractors to increase their yield and income, and you can build a sustainable business around it. Agriculture is important in Africa because it employs 70 per cent of the labour force and accounts for 40 per cent of the continent’s GDP, so that is an important aspect to consider.
How did the pandemic affect your business, and how did you deal with it?
The COVID-19 pandemic caused significant disruption to the global economy, and in general, agriculture suffers the most during economic downturns. As a company, we saw some of the negative consequences, such as a decrease in business activity. Because of the COVID-19 restrictions, many tractor and farm equipment owners became cautious, which slowed the business.
This decline prompted us to respond immediately by cutting down on costs to ensure solvency. We also executed a very aggressive digital transformation within both sides of our marketplace. This transformation included a focus on digital sales and marketing to increase the supply of farm equipment on our platform while onboarding more smallholder farmers who booked services via targeted digital campaigns. This was made possible using digital tools such as WhatsApp for business, SMS, Facebook ads, Google ads, and direct calling. We have been able to keep the company running by responding proactively, even as we continue to execute on new growth opportunities.
We also launched the Pay-As-You-Go (PAYG) model, which aims to significantly increase the number of tractors available to service farmers across Sub-Saharan Africa by providing flexible financing to entrepreneurial youth and women who want to buy equipment to provide mechanization services to farmers in their network. We anticipate that the initial pilot of this model in Nigeria and Kenya will finance 80 youth and women entrepreneurs, provide service to 40,000 farmers, impact 320,000 livelihoods, and produce an additional 132,000 metric tonnes of food worth $112 million.
Aside from the pandemic effect, what other challenges do you face while providing your service?
Tractor owners in emerging markets struggle to find customers – an organized marketplace – in rural, fragmented markets. Traditionally, tractor services are obtained through word of mouth and poorly coordinated referrals. For example, a friend of a friend knows a farmer in need of ploughing and refers her to a tractor owner, cooperative, or hiring association that may or may not be able to provide service.
Average farm sizes for the majority of smallholder farmers are under one hectare and plots span large geographies, making the coordination of tractor deployment quite a challenge. Scheduling and record keeping are done by memory or by hand, if at all. This results in an inefficient smallholder marketplace that lacks economies of scale and is costly to service. This is why we introduced the collaborative consumption model for tractors that connects fragmented farm plots to a sharing economy to drive more equitable access to mechanization for farmers and make serving the farm area profitable for tractor owners.
How much do farmers pay to use your service?
Tractor owners on our platform set prices for their services based on average market rates. They get paid a deposit to deploy their tractors and then receive their balance payment following the completion of the service. They earn 90 per cent of the revenue from all services provided. The remaining 10 per cent go to the booking agent who requested the booking on behalf of the farmer.
Besides expansion, how else do you intend to allocate the investment from the AYuTe Challenge in your business?
We are testing the finance model. We will use the prize money from Heifer International to pilot our PAYG tractor-financing product. This will provide low-risk, low-cost tractor loans to rural entrepreneurs who will provide mechanization services to smallholder farmers within their networks, allowing these farmers to plant on time and increase their yields to promote global food security.
How many people are in your workforce, and how would you describe your impact so far?
Since our business model pivot in 2017, Hello Tractor has captured 80 per cent of all commercial tractors sold into Nigeria and scaled into 12 additional markets. We have over 3,000 tractors and 1,220 booking agents on our platform. Our impact has reached over 500,000 smallholder farmers to date through these tractor services. And we continue to work hard to see that these numbers significantly shoot up in the coming years even as we continue to double down on our efforts to bring in more tractors into the market through innovative models like our PAYG model for tractor ownership.
Africa sees about 15,000 new tractors yearly, while India approached one million tractor sales last year. What do you think is the reason for this huge gap?
Because we lack local manufacturers and builders, tractors are significantly more expensive in Africa because we import them. The cost of capital for financing the tractor is also higher. Because the naira is such a volatile currency, the cost of capital, interest rates, and foreign exchange are all higher. This means it is significantly less profitable to own a tractor in Nigeria.
An 11-country survey shows that only 23 per cent of African youth who work in agriculture use any form of agricultural technology. What can you say about the future of agriculture in Africa?
I think we are moving in the right direction. The availability of the internet in business is increasing. The cost of data is decreasing and there is a slew of young, dynamic entrepreneurs emerging with ideas to solve various problems. The beauty is that many of these solutions are homegrown and born out of a personal experience. So it is exciting to think about the potential. Ensuring that these entrepreneurs are supported would mean more innovations for farmers and more productivity in the industry. It also means making income more secure.
Youths in Nigeria find agriculture unattractive. What do you have to say about this?
I would say some of the biggest companies on earth are agriculture companies. Cargill is the world’s largest private company, owned by two families, and focuses solely on agriculture. If you want to get involved in an industry that transforms a nation, brings stability to an economy, and makes you incredibly wealthy, agriculture is that industry. But, it does not come on a platter. You have to put in the work. You have to make sure you are adding value, and for a place like Nigeria, it is important to take advantage of these opportunities.
What are your plans for the future?
For business, we want to mechanize the continent and do it in a climate-smart way. So continuing to strengthen the business case for machine ownership improves farmers yield while protecting the soil.
Written by Adekunle Agbetiloye