Farmers get an ‘Uber’ for tractors
An innovative farm equipment sharing application connects tractor owners and smallholder farmers in sub-saharan Africa
For some African smallholder farmers, having access to a tractor is as good as owning one, says Jehiel Oliver, the founder and chief executive of Hello Tractor. The award-winning agritech company, which has been described as an “Uber for tractors”, first set down roots in Nigeria in 2014 and has since expanded to more than 14 countries.
It offers software and tracking devices that allow small-scale farmers to book tractor services from local tractor owners through a mobile phone app.
“We started just really seeing a huge gap in the market, a huge need for more mechanisation,” says Oliver. “Our growers in Africa, and really across the emerging markets, rely on manual labour and so there’s a real opportunity to help them mechanise. They don’t have to plant late and under-cultivate and suffer from lower productivity levels because they can’t get their crop established on time.”
Globally, there are about 200 tractors per 100 square kilometres of agricultural lands but in sub-saharan Africa, this figure dwindles to 27, according to Heifer International, an international nonprofit working to end hunger and poverty in a sustainable way.
Hello Tractor reaches half a million smallholder farmers, including those in Jamaica, Pakistan and Bangladesh.
“That’s only a fraction of the need, right. So we’ve still got a way to go. You’ve got a few hundred million smallholder farmers [in Africa] and so some portion of them are commercially investing in their fields, not all, but even if you factor a third, you’re looking at about 100-million growers who need mechanisation services.
“And you carve out the ones who are investing commercially because our customers — 93% live at or below the poverty line — almost 100% of them are smallholders but they all pay for services out of their pocket because they see the value in it. And that’s the segment that we focus on.”
Oliver, who grew up in Cleveland, Ohio, and is now based in Kenya, says, “In the United States, it would be insane to do this work manually … Farmers globally are some of the hardest-working people on Earth and farmers who don’t have access to mechanisation, their work is triple to 10 times as hard.
“And, so a lot of our customers appreciate us because we’re reducing the drudgery and even beyond just the financial benefit, because our services are priced below alternatives, they then get to spend less time out in the field and their kids spend less time out in the field.”
Agriculture is one of the biggest contributors of child labour. “You can’t have your kids going to school if it’s the production season. Your kid has to be out there preparing the land and weeding.
“This is just as true all over the world but the problem is compounded in the region because we don’t have mechanisation at scale. And if you
solve that, you solve some of these other social challenges.”
This year, Hello Tractor started financing tractors and working with farmers who are involved in climatesmart agriculture. “For example in Kenya, 25% of our customers are doing climate-smart conservation agriculture and we underwrite toward those outcomes,” says Oliver.
There’s value in it for farmers with a network. “We’re looking at their booking activities saying, ‘okay, you’re a booking agent for Hello Tractor, you book farmers in your community, but you guys have done such a good job booking farmers that you have a large enough network where you could actually own your own tractor and service those farmers directly, keep that tractor busy, and generate enough profit to pay off the loan on time so we’ll finance that tractor on the basis of just that’.
“So you don’t have to have a credit history, you don’t have to have a bank history, which is what prevents the best entrepreneurs in these rural communities from getting financing. As we’re underwriting these tractor owners for loans, we’re looking at the types of services they intend to do.”
Those booking conservation agriculture services receive a higher score on their loan application, and the same is true for value chains. “Right now, oil seed and wheat are really important for the value chains because of the global geopolitical crisis so we underwrite toward that.”
Hello Tractor helps to gather data that “proves what many of us already know” — that there’s a huge opportunity for entrepreneurs in rural areas. “But they just don’t get the shot, right? They’ve been placed at the margins of our economy and they’re some of our best entrepreneurs. But it’s hard for financial institutions to make decisions based on anecdotal evidence, especially when they already have a bias against working with these communities.
“The one thing that the technology does is to say you can believe whatever you want about African farmers … And we’re going to raise our own capital and deploy it within these markets and we’re going to work towards portfolio outcomes that are better than what you do currently with your biased underwriting and
we’re going to let the facts speak for themselves.”
The goal is to continue to generate “proof points” so when done at scale the “evidence is undeniable”, he says, but points out that these are multibillion dollar problems.
“This isn’t just a Hello Tractor problem. We need competition, we need banks to say, ‘hey, we want to finance this asset class too, we want to finance these customers too, we can’t let Hello
Tractor steal away all our customers.’ “Kenya probably has a $3-billion to $4-billion deficit on tractors. Nigeria is probably 10 times that, so these are problems too big for just Hello Tractor to solve.”
Oliver, a former investment banker, wanted to use his finance background to do work that was “more meaningful”. He quit investment banking and focused on microfinance. Working in emerging markets, he realised the key role that agriculture plays in these economies. In Africa, agriculture employs 60% of the labour force.
“Even when we talk about the extractive industries … the truth is 40% of the continent’s GDP still comes from agriculture ... It brought my attention to how do you make agriculture more productive since it’s so important in the economy, and stabilise its position in these economies for broader-based growth. You want to employ people, you want to grow incomes, you have to focus on where people are today, and improve those sectors.”
Even though founder journey stories have “neat lines to success”, Oliver says the truth for Hello Tractor is that “there’s so much stuff we’re still trying to figure out.
“We’re honestly just scratching the surface. Our technology plays, I think, an important role in a much bigger picture that requires really capable customers who are committing to servicing those who are servicing the land — the farmers.
“It takes banks, financial institutions and investors to see a vision of the future. It takes farmers to commit themselves to take an additional risk and they’ve already taken on too much.”
People think about Hello Tractor as if it’s a fully baked cake, he quips. “We’ve got, like, two or three of the ingredients and it’s a very complicated recipe. If the oven is the macroeconomic conditions, you need to make all this work — low inflation, interest rate policies that make sense for agriculture, and import and export policies.”