Digital agro-investment platform, Thrive Agric and Leadway, the insurer have clarified their positions on the ongoing repayment challenge investors are faced with.
Thrive Agric said that the up to 24 months timeline it gave to investors who were affected by the dip in revenue caused by the COVID-19 and off-takers’ delay in making payment, would depend on the specifics of the investors’ subscription.
The agric crowdfunding firm said in a statement signed by its two founders and sent to BusinessDay that it expects to payout before the committed due date.
Leadway, Thrive Agric’s insurer, also issued a notice on Tuesday stating that its contractual agreement covers the client, Thrive Agric, and not its individual investors. The insurance cover protects farm assets of its insured agric platforms.
“This, therefore, means that we only provide cover using our agric based insurance solutions for the risks to the insured farms and other farm assets against perils stated in the insurance policy document issued,” the company said.
The two companies’ clarifications are coming after a group of about 100 Thrive Agric investors met on Saturday 3 October 2020 and resolved to take legal action should Thrive Agric fail to meet up with their demands.
There are two classes of affected investors; those whose funds are due and are yet to be paid, and those whose investments will be due soon. The decisions reached during the meeting include that, for those in the first class, Thrive Agric has a five-day ultimatum to pay or face legal consequences. For those in the second class, Thrive Agric will need to write and sign a legal note that the investments expected will be paid immediately it is due without delay.
Charles Isidi, Head of Growth, Thrive Agric, told BusinessDay via telephone on Tuesday that the timeline is based on expectations that the harvest season would soon begin in a few months. According to him, for a company that has always fulfilled its obligations in the past three years, the COVID-19 pandemic was unexpected and was a severe setback.
“We do not want to continue to disappoint our customers, so we have given a timeline that we can more confidently keep,” the founders, Uka Eje and Ayo Arikawe noted in the statement. “We are taking steps to beat this timeline, but experience has taught us to be more realistic. We fully understand our customers’ frustration as the business is in the same position of linking obligations to expected payouts, only to have the schedule change.”
According to them, Thrive Agric’s primary revenue source is based on a successful harvest (inclusive of crops and poultry). Therefore, any revenue coming into the business is heavily dependent on the success of the operation and timing of sales. Like most other companies in the agricultural value chain the imposition of lockdown as a measure to curb the spread of the pandemic meant that nearly a full farming season was lost.
“When a planting season or harvest is lost like we did this year, Thrive Agric can only hope to earn such lost revenues from subsequent harvests. In our case, we have previously communicated to subscribers that we would meet our obligations based on overdue payments from off-takers. Some of those payments have come in, but not nearly enough to meet our obligations to subscribers. We hoped they would, but they did not,” the founders said.
Thrive Agric is facing a backlash from investors who felt the company has not been effective in communicating the challenges it was facing.
While Isidi said the company takes full responsibility for every lapse in communication, he, however, pointed out that Thrive Agric has in recent times made efforts to reach out through Zoom calls to address the concerns and respond to questions that may have been overlooked. The Zoom calls took place on Friday, October 9 and 10, 2020.
