As the debate rages on how to invest in the Nigerian Agritech businesses in the face current challenges being experienced by the businesses, the FarmKonnect Institute for Data and Agribusiness Studies has released an eBook which reveals 20 rules prospective investors need to consider before investing in products and projects of the businesses.
According to Tiamiyu Ismail, the Research and Development Head of the Institute, it is imperative that local and foreign investors understand the sector and how businesses are operating in the face of the mounting internal and external challenges.
“In the last couple of years a lot of Agritech companies have sprung up to provide digital solutions to the myriads of problems faced by the smallholder farmers and then create an enabling environment for commercial agriculture to thrive in the continent. However, due to lack of finance and adequate support from the Government, many of these Agritech companies and agribusinesses resort to crowdfunding model, be it in equity or non-equity funding, as the mainstay of their financial wherewithal.
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“Between 2015 and 2020 the Agritech companies in Nigeria have increased by multiples of hundred, and due to oversaturation of the market, there has been a lot of abuse by many of the players. Several analyses have also shown that most of the Agritech and agribusiness companies in the country have failed to meet clients or customers’ expectations regarding ROI in recent periods while many of them attributed their inadequacies to the COVID-19 Pandemic.
“Hence, the lesson to be learnt is that having sufficient information not only about the business itself, but also about the impact of the macroeconomic and the macrosocial forces on the business is very vital in making investment decisions, especially in the agriculture industry which involves a high level of risk.
“Business risk assessment is an integral part of the due diligence expected of a potential investor before venturing into the business. This goes from a thorough understanding of the image, products, structure, track records and reputation of the company as well as the influence that an external factor like a sudden pandemic could have on the business.”
Our analyst had earlier reported that Nigerian professionals made a comprehensive case for realistic and sustainable return on investment. According to his analysis, Nigerian professionals expect managers of the businesses to work within the realities and challenges in the country instead of promising investors huge ROI that cannot be realised in less than a year. Mr Ismail notes that prospective investors and interested members of the public can order for the book via [email protected] or access the book here.