On the same day a national newspaper celebrated Tope Omotolani on its front-page as one of Nigeria’s leading female players in technology, the company she led, Crowdyvest, would send out an email that afternoon, informing investors the fintech platform could no longer repay them, at least for the time being. The company later held what it called a townhall meeting, held virtually on Sunday, February 13, and BusinessDay followed much of the proceedings.
As also attested to by Omotolani, co-founder and CEO of Crowdyvest, the default has disrupted plans of investors who needed to use their funds for payments from school fees to house rent, weddings, and other scheduled payments and assumedly, emergencies such as hospital bills. There were others who needed to be paid so they could in turn even pay back other loans. All are now stranded and no definite date in sight for them to be repaid.
Over 1000 people were said to have registered for the meeting, which was held via Zoom, and over 90 percent had sent in questions, which the organisers claimed they grouped to reflect most recurring questions.
Did Farmcrowdy contribute significantly to the failure of the investment platform, which had called itself a cooperative society? This was one question that was not answered and appears may not be answered, as well as identifying other so-called impact partners that Crowdyvest had invested money in. In a January 31 email sent to its members, Crowdyvest had suggested Farmcrowdy was an integral cause of the ongoing financial difficulties that made repayment impossible for the time being.
The company had said in the email, “In March 2021, Crowdyvest fully exited EMFATO Group through a debt acquisition agreement where it acquired Farmcrowdy’s debt at the time. In retrospect, the choice of the debt acquisition model was ill-advised as our projections to onboard equity investors and long-term financing did not yield anticipated results.”
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Going further, it stated that “a combination of the acquired Farmcrowdy debt and the ongoing defaults by our impact partners has now led to the inability to pay all monies plus interests that should accrue on the monies received via the platform”.
Crowdyvest had at different times indicated Plenty Waka (a transport startup) and Landwey as impact partners it had either invested in, or sought members’ funds to invest. Coincidentally, Onyeka Akumah, who has been CEO of both Farmcrowdy and Plenty Waka, was a part of the partnership that birthed Crowdyvest in the first place.
BusinessDay reached out to Akumah following the initial email where Farmcrowdy was the only entity named (even though there were others claimed to be responsible) in the repayment difficulties. He did not respond to an email seeking his comment on the claims that his company (or companies) had contributed to the default by Crowdyvest and the misery being experienced by the platform’s investors.
It was perhaps little surprise that when the townhall meeting would finally hold, Farmcrowdy was suddenly not being mentioned, neither were any others that may have contributed to the situation.
It remains explicitly unanswered: how much is supposedly outside and how much is being owed investors, to determine this can be covered
Omotolani on her part replied BusinessDay’s enquiries after the meeting, saying “The email we sent to our members referenced a period when Crowdyvest was established and the process of total exit from the EMFATO group. Due to non-disclosure agreements with our impact partners, we are not able to name any organisation and amount at this time.”
She would not say if Farmcrowdy has ongoing debt apart from the original debt acquisition and certainly not how much was being owed. She however, mentioned during the meeting that the sectors that had been invested in and most impacted by ‘situations beyond control’ that hampered repayments were agriculture, followed by telecoms.
“We can’t come out and give the names and addresses of those defaulting,” she had said at some point, describing such requests as ‘interesting’.
BusinessDay in the email had also sought clarity on the cause of the problem; the Farmcrowdy debt acquired or that the company didn’t do well because of COVID-19? To this, Omotolani stated “The current challenge we are experiencing was caused by a combination of factors: the impact of COVID-19 on the businesses of our impact partners, significant economic downturn in the last two years, panic withdrawals, and a significant debt that was in our book balance when we fully took over operations.”
During the Townhall meeting, which had Omotolani, and two other speakers identified as Femi, in charge of finance at Crowdyvest, and Oliver, a debt recovery lawyer, they wouldn’t disclose how much is being owed to members, and of course, how much is being expected from the ‘impact partners’.
But at some point, Omotolani had said what people are trying to take out of the platform as a fraction of what the company is expecting is about 40 percent. Yet, it remains explicitly unanswered: how much is supposedly outside and how much is being owed investors, to determine this can be covered.
While remarking that the delay had led to some members involving regulatory bodies and she has had to honour invitations (but wouldn’t state where), Omotolani reiterated at different times during the meeting that she had no intention of running away.
Importantly, she stated that investors would be repaid (but no date yet) and there were people working with the company to determine the selection criteria for repayment, which would be communicated by email for members to monitor when they are scheduled to be paid.
Equally important was a comment by Omotolani, that any form of emotional and aggressive reactions from those being owed would only divide attention and extend the time they are able to resolve the ongoing issue.
“I know you have every right to react in any way you think will help expedite this, but that reaction or aggression or emotional display is not really solving the problem, rather delaying and dividing attention to solve the problem,” she said.
Live questions were sent in, all marked answered but none was actually directly addressed with the exception of a certain Mahmud Musa who wanted to know whether he could still invest, to which a typed response in summary said; No! As the company had announced, while repayments remain on hold, so will new investments.
The debt recovery lawyer, who was simply identified as Oliver, had also explained that following its brief on Crowdyvest defaulting on payments because it is also being owed by partners outside, there were the good and bad parts. Following demand letters sent to kick off the debt recovery process, the feedback from 60 percent of those defaulting was encouraging in the sense that they admitted receiving money and they are behind payment schedule, asking to negotiate how payments can be structured on account of undisclosed business difficulties, particularly in the last quarter of last year, he explained.
“They are willing to pay, so we don’t have a situation of money going into the hands of people who are not willing to pay,” he said, “but they are asking for time and a structure for the payment.”
The bad part: the remaining (40 percent) haven’t responded and legal steps are to be taken for them to honour the existing agreements. For those in that category, the lawyer stated there would be need to exercise some patience because the debt recovery process is not one concluded within a short period of time, particularly for the segment of those who will require legal procedures before the monies can be recovered.
Which companies fall in the category of 60 percent (responding and willing to pay) and 40 percent (relatively unresponsive), they wouldn’t say.
When a question was asked about the track record of those being engaged in recovering monies owed and the process of paying back investors, the moderator, as though irritated by the need for such question, responded, “I wouldn’t take that question because Crowdyvest wouldn’t take someone on board without requisite track record.” Yet, ongoing events may not support the declaration of confidence, and only time would tell how much competence would be deployed in resolving the issue.
“We will laugh over it in a few months,” said Omotolani during her closing remarks, but whether or not investors would agree with this could require polling the company’s thousands of members (and investors).
