Eighty-percent. That's the percentage of Nigerian farmers who are smallholder farmers. In a country that has long been dependent on oil revenues, the agriculture industry remains its largest employer of labour.
However, its farmers face a plethora of problems, including violent conflict in large parts of the country affecting productivity, access to finance, outdated agricultural practices, and supply chain deficiencies.
As a student at the University of Benin, Riches Attai teamed up with Chichebem Jibunoh and Winners Attai to start Attai's Beans, processing and repackaging beans for the final consumers. They ran the business for a few years before exiting for other pursuits.
While Winners went on to do a masters program and Jibunoh took on other jobs, Riches decided to figure out one of the major challenges they had faced while running Attai's Beans — the high cost of buying the beans.
"This was even more worrisome because at the time Nigeria was the largest producer of beans in the world, not just in Africa, in the world. It didn't make sense that beans would be cheaper in, say, London than it was in Lagos or in Benin, where we were schooling," he shares.
He spent over two years in Kebbi State in the northern region of Nigeria, birthing Winich Farms in the process. Having figured out the problem, he got Winners and Jibunoh to join him as Chief Operating Officer and Chief Technology Officer, respectively.
Riches' time in Kebbi revealed a few challenges with the supply chain. The presence of middlemen in the supply chain drove up costs for food processors, but that didn't translate to increased earnings for the farmers.
The second challenge was the inability of farmers to get access to credit. Most didn't even own a bank account. For the food processors, there was a lack of visibility into the movement of products or their source.
Helping Nigeria's farmers earn more
These three problems form the core of Winich Farm's value proposition. Smallholder farmers are connected to food processors that need these raw materials, while the food processors can track the movement and source of the products they purchase.
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There's also a financial inclusion play for the startup. It currently provides access to digital wallets for farmers and recently piloted a debit card in partnership with Sterling Bank.
But it hasn't stopped at providing them with these services. By tracking data from their sales and other activities, it helps them build their credit worthiness and connects them to its financial partners to access credit and insurance. Last year, it piloted a loan scheme for 500 female farmers with a 100% repayment rate.
Its value proposition has resonated with not just the farmers and food processors but also investors.
Today, it is announcing $3 million in pre-Series A funding. It previously raised $800,000 from investors such as 54 Collective, Expert Dojo, and a few angel investors.
The round is a mix of debt and equity, with Acumen Resilient Agriculture Fund, Climate Resilient Africa Fund, Marula Square, Plug and Play, Acasia Ventures and Tekedia Capital providing the equity funding of $2.5 million. Lagos-based Sahel Capital supplied the $590,000 debt funding.
"Smallholder farmers face multiple bottlenecks along the value chain, limiting their productivity and access to markets, which in turn hinders their income potential and growth. Investing in Winich aligns with our goal at ARAF of growing local businesses that support smallholder farmers towards increased productivity, sustainable agricultural development, better livelihoods, and increased food security," Tamer El-Raghy, Managing Director of Acumen Resilient Agriculture Fund (ARAF), said.
Building efficient agricultural supply chains
Internet and smartphone penetration is on the rise in Nigeria, but much of that growth is in its urban areas. Smallholder farmers, who are Winich Farms' target market, primarily live in rural areas and often use feature phones. Consequently, the startup adopts a hybrid approach to serving them.
In 2012, the Central Bank of Nigeria began a financial inclusion push that ushered in mobile money agents.
These agents were to ensure the delivery of financial services to the last mile, easing the pressure on physical banking infrastructure. Fast-forward to 2024, and those agents have become a key component of the country's financial system. There are now over 1 million registered agents across the country.
Winich Farms borrowed a leaf from the financial services industry by building out an agent network to help farmers sell their produce.
Agents are often located within a 300-meter radius of the farmer. Using a USSD short code, the farmers can locate the closest agent to them, request a call back from Winich Farms when they're unable to locate an agent, and find real-time prices of their produce even before getting to the agent.
Here's how it works: A farmer types in a USSD code, which helps them find the closest agent, and they set off.
On arriving at the agent's location, the agent collects and confirms the product quality before logging it onto the app using the farmer's unique identifier. Once this is done, a truck driver is assigned to come pick up the products and deliver them to the off taker.
While the agent gets a commission for facilitating the transaction, the truck driver is paid from the delivery fee charged to the off taker. Neither the agent locations nor the trucks are owned by Winich Farms, and the startup has more than 4,000 agents. It's farmers are spread across 16 Nigerian states, with off takers in more than 20 states.
Off takers are not the only ones who get visibility on their products. When farmers drop off their products with agents, they are encouraged to remain at the location until they receive an SMS confirming the product has been received.
The startup previously used WhatsApp's live location feature to help off takers with this process but ultimately elected to build the feature in-house when WhatsApp's privacy policy stopped them from leveraging its infrastructure.
Interestingly, it attempted to build out the agent network in-house but abandoned that in favour of a partnership with two fintechs.
Looking ahead
The startup's growth has been impressive, closing 2023 with $30 million in gross merchandise value, a 3x increase from the previous year. Users are about 150,000, made up of farmers, off takers, and truck drivers. It currently has 139,000 farmers.
Building a marketplace to connect farmers and end users is hardly a novel idea, but most startups have struggled where Winich Farms has succeeded, and Riches believes a lot of it boils down to the market segment it chose to serve.
"There are people who are doing B2C, and good luck to them. There are amazing market opportunities there, but it's a very tough space."
But it hasn't been smooth sailing for the startup with payments to farmers, one of its biggest challenges so far.
When it launched, it created digital wallets that could be accessed using a USSD code, but low mobile money penetration limited its usage. Regulatory changes have also reduced the amount of cash that can be withdrawn in Nigeria, making it harder to pay the farmers who are largely unbanked on time.
However, the introduction of the debit card means it can now pay the farmers on time in addition to helping them build credit worthiness. It currently has 25,000 cards in circulation and plans to increase that number to 195,000 in the coming years.
