Unlocking financing in Africa’s agriculture through risk pooling

In a bid to unlock financing in Africa's agriculture sector, innovative approaches such as captive financing models and risk pooling are gaining momentum. The CEO of Hello Tractor, Jehiel Oliver, sheds light on de-risking financing and strategies to deepen food sovereignty in the continent. With agriculture being a major driver of employment and economic growth in Africa, Oliver emphasizes the immense potential in the agricultural sector and the need for tailored financial solutions to address the challenges faced by farmers. Hello Tractor's success in introducing captive financing, which combines financial products with tangible assets, has proven to be a game-changer in reaching previously underserved markets. By achieving a 7.2% net profitability across their portfolio and maintaining exceptional credit quality, Hello Tractor has set a blueprint for sustainable agricultural financing. Despite the potential in agriculture, less than 2% of bank lending goes into the sector due to its inherent risks. Climate change, market volatility, and aging farmers pose significant challenges. However, Hello Tractor's innovative financial product seeks to mitigate these risks while fostering strategic partnerships to de-risk investments further. Collaborations with organizations like Heifer International and John Deere have been instrumental in seeding and expanding Hello Tractor's portfolio, thereby enhancing the accessibility of financing for farmers. The issue of attracting young people and smallholder farmers to agriculture remains critical, given the aging demographic of farmers in Africa. To make farming more appealing and sustainable, Hello Tractor focuses on mechanization as a means to increase income and reduce labor-intensive tasks. By providing employment opportunities through tractor ownership and service provision, Hello Tractor empowers young people to stay in their communities, contribute to agricultural development, and enhance their livelihoods. Looking ahead, Oliver underscores the importance of increasing financing in agriculture to drive growth and food sovereignty in Africa. He advocates for the implementation of risk pooling at a regional level to mitigate challenges like volatile currencies and climate risks. By pooling resources and collaborating across borders, African countries can make credit more affordable, boost competitiveness in global markets, and achieve self-reliance in food production. Oliver's vision calls for a coordinated effort among governments, financial institutions, and agricultural stakeholders to realize the full potential of agriculture in Africa.