Thousands of Nigerians who invested in two agro-investment platforms Farmzhi and Payfarmer are currently in a battle to recoup their capital after repeatedly postponed payout timelines.
The agro-investment value chain has recently come under the spotlight after several operators that promised returns of various rates left investors high-strung. Thrive Agric, HO Corn, and AgroPark are some of the platforms owing investors millions of naira in both capital and promised returns.
Payfarmer, a platform that claims it connects farmers who are ready to farm on a commercial-scale to investors has been finding it difficult to pay accrued returns since September 2020.
In July, the company had informed investors that due to an outbreak of swine flu, which claimed the lives of many pigs on its farms, it would be delaying payments for piggery investment. Payfarmer promises investors a huge return of about 30 percent in 9 months. In the past, it had offered investors over N1 million on its cucumber within a three month period between 12 to 15 percent RoI.
While investors whose funds are tied on the platform say there really has been efforts to offset the arrears, the pace is very slow and can be frustrating. An investor who is expecting to be paid N6.7 (N5 million capital and N1.7 million RoI) million told BusinessDay he had only received N2.5 million as of November.
“I have had success with them in the past and I know folks who have been doing this with various farm companies since 2016 without issues,” said the investor who wanted to remain anonymous.
In the case of Farmzhi investors stopped getting their money in March. Like PayFarmer and other platforms, Famzhi requires an initial investment of N100,000 in exchange for ten percent returns every month. In previous times, the company had paid RoI of 20 percent, then reduced it to 15 and finally to 10 percent around February.
Unlike other platforms, Farmzhi has an unconventional method of communicating with its investors. According to one of them who spoke with BusinessDay, the owner of the platform, Hajiya Mariam Suleiman communicates with investors via a Telegram group, rather than email. The group on Telegram had over 15,000 as of July, but the number has depleted to about 10,000 people.
An investor who was convinced to invest in Farmzhi by a relative told BusinessDay that the 10 percent RoI was paid in February and reduced to 5 percent in March. The company stopped paying after that.
Why the delays?
According to a mail sent by Payfarmer to investors, the company blamed the impact of the COVID-19 pandemic on its business and the outbreak of the African Swine Fever (ASF) which killed nearly one million pigs.
“As a result of this, we have been faced with a critical situation that needs a quick and long-lasting solution,” the company said.
Consequently, the company said it was locking down sales of pigs in all its pig farms in Lagos, Ogun, and Oyo State as a safety measure due to the increase in pig loss. It also announced a repayment plan by its team to ensure investors get the investment amount and RoI in batches not more than five within a timeline of 16 weeks after the maturity of the ongoing investment in the pig farms.
Farmzhi, on the other hand, told investors it was also affected by the COVID-19 pandemic. But investors told BusinessDay they are worried the company is deliberately removing investors from the Telegram group. Hence, a few investors began inviting the police to intervene in the matter.
“She claims that anytime she is being arrested or invited for questioning she has to shut down the organistion until she returns,” said one of the investors who pleaded anonymity.
Experts react
Kalu Aja, a personal finance expert and a columnist on BusinessDay said the platforms may have misled investors by offering a fixed return on an output whose return is not fixed. The companies would have chosen to issue a bond, offer equity, and share profits.
“They are trying to raise finance but once you start to guarantee, you are running a bond, not a farm. A bond is not a sinking fund. None of those farms have one. A farm needs equity partners, patient capital. It should be profit and loss, not interest and guarantee,” Aja said.
