Fixing the value chain

Let me tell you why we do what we do.

08-11-2019

Fixing the value chain

From 1990 to 2010, about 20 million youth entered the Nigerian workforce. These triggered the youth unemployment rate to spike over 60% and, in turn, triggered not one, not two, but three insurgencies. I spent some years living and working in the south-eastern part of the country, where the Niger Delta militancy crisis was. I had seen the rise of Boko Haram and the crisis with the Fulani herdsmen. We knew that the problem was only going to get worse.

We firmly believe that, as oxygen is to fire, so are unemployed youth to insecurity. Between 2010 and 2030, we expect another 80 million youth to enter the Nigerian workforce. That’s nearly the population of Germany!

So we asked ourselves what sector could unlock the most jobs for these young people. We believe it’s smallholder agriculture. It is labour intensive and requires relatively limited skills. The other benefit of focusing on agriculture, particularly smallholder agriculture, is that you can address the weakest part of the agricultural value chain: farm-level productivity. Once you fix that, you have an economic impact on all aspects of the value chain.

Cooperatives

My previous career had been mostly focused on health care, and I had only limited experience with agriculture. I got lucky and received an Eisenhower Fellowship, enabling me to travel around and study all kinds of farms, from little 25-member organic cooperatives to 30 billion-dollar industries. That is how I learnt that a successful cooperative needs three things: grassroots-level leaders, professional management to efficiently and effectively deliver services, and access to capital.

Armed with this knowledge, we created Babban Gona, meaning “great farm”, in Hausa, a language in northern Nigeria. It’s an agricultural franchise model, whereby we support small-scale farmers to create a network of grassroots-level farmer cooperatives to help them create larger economies of scale. We bring them together in a great farm to enable them to be highly profitable and productive.

There are many grassroots leaders, but they do not necessarily possess professional management and funds. So we use the power of franchising to find them and bring the missing pieces together. We developed a psychometric test that helps predict which individuals will be great leaders and have used it over 200,000 times by now.

Customers

When you are working, as we do, with poor farmers in remote rural areas, customer acquisition will be one of your biggest costs. That is because your customer base is very fragmented and often spaced far apart. So, we focused on how to optimise our acquisition process with an easy-to-use application. Basically, someone can be sitting next to somebody at a wedding, tell them about Babban Gona, and take them through the psychometric testing process. Applicants can even use facial recognition to register before their loan is dispersed.

We support these farmers/customers with several services. First, we offer commercial guidance so that they start thinking of their farms as businesses. Then, there’s education on farming techniques. Thirdly, we provide credit designed to optimise the yields. It includes labour-saving products and requires very limited collateral. The package begins with a farm analysis, where we map their fields and do a soil health assessment, so we know what nutrients it needs. Afterwards, we offer these nutrients for sale, as well as the highest quality seeds. After these initial services, every two to four weeks we will visit to offer advice and guidance, all the way to harvest, at which point we will literally provide empty bags, as well as the needle and the thread to sew them up.

Finally, we offer marketing services, starting with a network of transportation contractors akin to Uber. They move the produce from the fields to one of our fifty collection centres. There we weigh and grade the product, issue a receipt against the value of the product and then offer the farmers a loan against the value. In this way, they have cash in their pocket for pressing needs like school fees. As their agent, we then sell their produce over the next nine months. We are able to deliver the profits every quarter as a dividend payment.

what Babban Gona means to our members

Jamilou lives in this beautiful place in northern Nigeria. It has lovely rock formations, but despite all that beauty, Jamilou knew that he would leave the place as soon as possible because he had seen all of his relatives being stuck in poverty.
So, he moved to the nearest city, where he borrowed a tattered motorcycle from his uncle and became a motorcycle taxi driver. He lived in absolute fear that he would lose that precious motorcycle, as several of his friends had done. Because they lost their source of livelihood, they spiraled

down into abject poverty, with some even being recruited into insurgent groups as getaway drivers for kidnappings and bombings.
Jamilou was fortunate in having a caring father who told him that with Babban Gona he could make a living out of farming. Within two years, he made enough money to start a goat rearing business. He owned his own retail shop and he was able to buy not one, but two motorcycles with vanity license plate.
We have thousands of stories like Jamilou’s.

Fixing the value chain

Impact

One of the things we’ve noticed is that in the communities we serve in the far northern part of Nigeria, people tend to be quite conservative. It is difficult, for example to service women in those communities. So we are working hard to enable women to dramatically improve their economic opportunities. With our Last Mile Retail Programme we’re financing women to start retail shops in their community.

Our members are able to increase their net incomes to over two and a half times the national average. Today, we have grown to become Nigeria’s single largest maize-producing entity and over the years, we have dispersed over 140,000 individual loans to farmers. We attain a repayment rate of over 99%. All of this is done in a financially sustainable way and we’re able to make a positive net income.

Fixing the value chain

Not all innovations are technological: Babban Gona is a novel business model in Nigeria that helps farmers hold onto their crops longer.

Bill Gates (www.gatesnotes.com)

Recently, Forbes listed Babban Gona as one of the five most innovative and impactful social enterprises. We’re also the first for-profit social enterprise in history to win the prestigious Skoll Award. Bill Gates recently recognised us as one of five agricultural innovations that are helping to mitigate for climate change. And the London Stock Exchange listed us as one of the companies that inspires Africa.

Without the support of partners like BIO, we would not be anywhere close to where we are today. At the end of the day, we control our future, and it’s only through making smart investments in high impact areas that we can truly address these intractable challenges.

Kola Masha Text Image

Mr Kola Masha is the founder of Babban Gona, the first for-profit social enterprise in history to be awarded the prestigious Skoll Award, due to its financial sustainability and highly scalable impact.

Babban Gona Farmers Services

  • Debt € 1,837,000.00 (2019)
    Sub-Saharan Africa, Nigeria

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