The lead story on the front page of BusinessDay on February 26, 2020 had the headline; Agric crowdfunding at risk of Ponzi schemes as regulation lags. Three years later, the fears expressed in that story by this reporter have sadly become reality for thousands of Nigerians who thought they were investing to support local agriculture.
For almost five years when the run lasted, start-ups known as Agritech platforms, offering 15 to 50 percent gave some of the best returns on investment in Nigeria. As many people have now found out, ‘return of investment is better than return on investment’. Today, tens of thousands of victims lick their wounds with heavy hearts as billions of naira remain stuck in various platforms.
Farmers are poor, they produce so little, and at the same time, Nigeria has been facing severe food crisis for the most part of the last decade. It was on this premise that agritech platforms claimed to offer a solution to all of these in one strike. Using technology, they created websites and mobile apps to aggregate funds from the public, having identified ‘viable farming projects’ into which those funds would be invested. It was to be the perfect win-win that could change the world, starting from Nigeria.
“We had disposable income and you have farmers and people that need investment. I have farmed in the past, I used to own a farm in Jos before I left for Lagos and I know that the returns were possible,” said Agnes who invested N10 million across three platforms; Agrilet, Farmsponsor, and Bazuze.
The business model of the agritech companies was similar. For instance, a maize farming project is divided into 100 units of say N20, 000 per unit with a return of 25 percent payable after 4 months. It seemed straightforward enough at the time, except there was no regulation in place to protect the investing public.
The companies, though different, had an iteration of ‘agric’ or ‘farm’ embedded somewhere in their names. Popular ones were Farmcrowdy (which later merged into EMFATO, then Crowdyvest in a series of smart-by-half moves), Thrive Agric, Farmsponsor, Agropartnerships (owned by Farmforte), Porkmoney, Agrorite and HoCorn (known for its aggressive, widespread marketing). There were less popular ones like Agrilet and Shopagric, and dozens more. Then those without actual corporate entities but which relied on owners that claimed and advertised on social media that they were into agriculture. A picture in a farm here, and another in what was supposedly a warehouse for harvested crops, and they would suddenly build a following, and with it, investors that later became victims of fraud. While not all defaulted, more than 90 percent did in the end.
How many of these companies actually invested in agriculture? This question remains unanswered, two years after they all fled the scene
It was often a competition among the companies to announce fund raises, and every now and then, advertise the thousands of farmers ‘being impacted’ by their operations. Suddenly, everything went quiet. But for investors, it was about to get loud. BusinessDay saw several investment certificates and other documents that gave investors assurances their funds were safe, but it all turned out to be a ruse. Not even the so-called insurance packages with reputable insurance companies in Nigeria.
Much of the default started in 2021, when the Securities and Exchange Commission (SEC) finally decided to regulate the space. Onyeka Akumah, founder of Farmcrowdy who made it a bragging right that his company pioneered agric crowdfunding in Nigeria had told this newspaper that the company was eager for regulations, especially to weed out the potentially fraudulent players. Other major players contacted in an article at the time echoed his sentiments.
In request for comments at the time, none of the companies told this newspaper they had reservations with the SEC regulations that were to commence on June 30, 2021. But as the date for regulation to commence approached, the companies disappeared from the scene. Suddenly, they claimed they were no longer into crowdfunding. And thus began the series of most defaults.
A long list of victims
No one has documented how many Nigerians have money stuck with these platforms, but what is clear is that there are several thousands of them. Many of whom invested in more than one platform.
“It was a shock to us in June, when a day before we were to receive our money, Agrilet sent us an email that it was unable to pay,” said Binta, who along with her husband, invested N1.74 million in a poultry farm offered by Agrilet for 20 percent returns after four months. “It wasn’t something I was expecting because there was no indication they were struggling or not using the funds for what they were meant to.”
Binta (not her real name) had first tried Agrilet in 2020 for three months for a fish farm, and she was paid. After that, she convinced her husband to also invest, even though he was sceptical. When the default happened, “he told me ‘I told you so’,” she said. “Thank God I have an understanding husband because it is something that could have affected our marriage.”
According to some investors, Agrilet had collected up to N400 million, some of which they claim the company’s CEO, a certain Victor Yunusa, had invested in other things, including real estate. BusinessDay could not reach him as phone numbers provided were not connecting and an email sent last week has not been replied. An EFCC case and another instituted with police have both stalled, as confirmed by Kayode Agbedejobi, partner, KP Legal Practitioners that was engaged to take up the case.
Like the majority of people, that was not Binta’s only investment. Along with her husband, they had also invested N1 million each in the Farmforte Food Valley in April, 2021. The investment was to run for a year, with 20 percent returns. In the same June when she got Agrilet’s email, she also got Famforte’s email that the company was unable to make repayments to those due at that time. She didn’t panic initially as her repayment wasn’t due till the following year but when it became due, it was clear she and her husband were also not getting paid again.
Kingsley (an alias), who works in the energy industry has at least N21.5 million stuck with three platforms that he disclosed. N10 million for a poultry farm investment in Shopagric, said to be owned by a veterinary doctor, N5 million for a ginger farm in Groupfarma, and N6.5 million in Agrilet for poultry and sesame farming.
“At some point, I went into depression,” said Kingley. “Everything just happened at the same time and even to date, there are things that I can’t afford to do.” In September of that year, his first child was going to start secondary school but his funds were not available.
On the home front, “there was so much bashing,” he said. “At that time, there was a serious clamour for local investment in Agriculture. I went in with the mind-set that I was supporting local economic growth.”
For Agnes, a mother of two who lost her job with an airline at the peak of COVID, she had invested her severance pay and funds from three pensioners she said were her relatives. Her husband’s business had also collapsed during the pandemic and they decided to invest in agriculture through the agritech platforms as a way to sustain the family, while hoping to make an impact.
The N10 million invested since 2021 (out of which N2.5 million belonged to the pensioners) was; N6.5 million in Agrilet for a poultry farm at 20 percent returns after six months, N1.5 million in Agropartnerships and N2 million with Bazuze, which she said later repaid 40 percent.
Apart from not working, she said the investments were made because of her special needs son. “It is very expensive to cater for a child with a special need,” she said. Instead, “I lost everything. The only money I had left was to pay the people I invested on their behalf.” She has now left Nigeria with her family and is not looking back, except to get justice and recover her money.
Esther, another investor with Agropartnerships since 2018/19, did different cycles without issues until 2020/2021. She has N750,000 stuck in two different cycles, the last of which was N250,000 for a cashew value chain project in December 2021. Repayment was supposed to come in 2022 along with 40 percent returns, but neither capital nor interest has been paid.
She typically did not invest her money outside of fixed deposits or savings. “This is like my first non-traditional type of investment,” she said. But she went ahead because of how credible the company appeared.
“I used to follow Money Africa and other pages that talked about them. They also appeared in the media, and there was an engagement with Godwin Obaseki, governor of Edo State,” she said. All of these gave confidence that “okay, let’s put money on it,” she said.
She also referred her younger sister and a friend to invest with the platform and they had both invested N1 million at the minimum. “That was another painful part of it,” she said.
In June, it was reported that the Economic and Financial Crimes Commission (EFCC) declared Osayi Osazuwa and Uyi Osayimwense, founders of Farmforte, wanted. In July, the investments and securities tribunal sitting in Abuja ruled that the operations of Agropartnerships (which they owned) was illegal in Nigeria. It was also reported that the court ordered a freeze of some bank accounts.
In 2021, Gloria Igberaese and Muyiwa Folorunsho, were reported to have been declared wanted by the Interpol over their involvement in multi-million dollar investment fraud from their businesses which included PorkMoney and Porkoyum. They allegedly defrauded investors up to N1 billion.
In 2022, Harrison Osemwengie, founder of HO Corn, was reported to have been declared wanted by Interpol “over multi-billion-naira investment fraud”.
These are just a tiny fraction of those whose companies have committed these alleged frauds, and even till date, none has been reported apprehended. Many more remain free men, living large while their victims gnash their teeth.
“I guess the reason why this keeps happening is because of the slow justice system,” said Agbedejobi, the lawyer.
On its part, Crowdyvest, which is said to be owing 3,700 crowdfunding investors ₦7.7 billion, recently offered to convert their debt into equity in the company. Much of the company’s woes emanated from Farmcrowdy, the agritech platform it was once sister companies with, when it acquired its debt.
“I know that a lot of Nigerians will say we were greedy, but we were not. It could happen to anybody,” said Agnes. “We felt that we were helping people (i.e. farmers) as done in other parts of the world so why can’t we do it in Nigeria?”
For Fred (an alias), who has invested more than N10 million in Farmcrowdy (up till Crowdyvest), “this whole thing was more than regulation. Many people were victims based on trust.” He is still owed N1 million after N1.6 million was paid to him on “compassionate grounds” when he had to bury an uncle who was a father figure to him. Not many people get such courtesies, not even for life threatening cases.
In the end, how many of these companies actually invested in agriculture? This question remains unanswered, two years after they all fled the scene when SEC regulation that would have demanded transparency was to be implemented.
- In May 2021, Thrive Agric reported it had completed overdue payments to its investors after a delay attributed to disruptions from the COVID-19 pandemic
- The names of victims are used as aliases at their requests, especially for those who felt their anecdotes revealed personal information