Heifer International in partnership with Hello Tractor have offered six tractors to young agricultural entrepreneurs as one of the ways to generate agribusiness opportunities for young people in Uganda and Africa at large.
While handing over the tractors to the smallholder farmers on Wednesday, Heifer International Country Director, William Matovu revealed that the youth received tractors under a collateral-free financial model dubbed ‘Pay As You Go’ (PAYG).
Mr Matovu further revealed that Heifer International invested in USD1m in a booking platform from Hello Tractors to provide loans for tractor purchases-loan that can be repaid from revenues earned by leasing them to local farmers.
The PAYG Tractor Financing is aimed at increasing agricultural productivity in Uganda and has already attracted the participation of youth in the districts of Dokolo, Kiboga, Amuria, Luweero and Ngora districts. These purchases could make tractors accessible to thousands of small-holder farmers via the increasingly popular Hello Tractor leasing platform.
Hello Tractor offers software and tracking devices that allow farmers to book tractor services from local tractor owners via a mobile phone app.
“Heifer’s new investment announced today for the company’s PAYG product will give more entrepreneurs and smallholder farmers access to tractor services at an affordable rate. And that in turn can boost farm productivity, employment, food security and farmers’ livelihoods,” Mr Matovu said.
He added, “As we handle over a set of these pieces of equipment to farmers, we confident that they will put them to good use and act as good example and points of reference for other farmers to adopt similar practices. We will also learn together as we walk the journey of improving and scaling up the product.”
Folu Okunade the Executive Director of Hello Tractor revealed that each tractor with full equipment costs over Shs140m (USD40,000). He added that farmers don’t need the collateral as long as they have booked land that is over 610 hectares to plough since the tractor has to work under the Pay as You Go format.
“In fact, this would have been called Pay As You work. We developed the PAYG program to make tractor ownership-and the reliable income these mechanics can bring -a reality for entrepreneurs who find it impossible to get credit through normal channels. Therefore, we look at the revenue tractor owners can generate, not how much collateral they can pledge,” said Mr Okunade.
He also stated that partnering with Heifer enables them to extend innovative financing to people who were previously considered unbankable while increasing access to technology that has the potential to improve the incomes of millions of smallholder farmers across Uganda and Africa at large.
The local smallholder farmers will pay between Shs80,000-10,000 per hectare to have the services of these tractors.
Meanwhile, Hello Tractor is one of the many new agritech start-ups emerging across the continent that are finding business opportunities in addressing mechanization and other challenges. However, while private equity groups and large impact investors have provided more than $ 5 billion for tech startups in Africa, very little of that financing has gone to young agritech entrepreneurs. Currently, Hello Tractor has financed 17 tractors for 17 entrepreneurs in three countries.
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