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Nigerian Agritech/Fintech Startups Have A Big Customer Education Problem

Nigerian Agritech/Fintech Startups Have A Big Customer Education Problem -  Teckexperts.com

On the evening of June 12, 2020, three longtime friends — all in their mid-twenties — finally had a long-overdue reunion by taking advantage of the public holiday that accompanies the commemoration of Democracy Day in Nigeria.

As it so often happens when the youthful trio gets together, it was only a matter of time before the conversation moved from “important nothings” to money matters. As they were all keeping busy working full-time jobs with subpar pay, they were always on the lookout for ways to beef up funds.

When one of the trio, Val (not real name), spoke of a legit agro-investment startup that offers up to 20 percent Return on Investment (ROI) within a period of 6-9 months, the other two expressed keen interest — especially as Val claimed to have just invested in the said platform.

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And then the talk came up: “What if we lose our money?” Val’s assured response killed any doubts the other two had: “Your money is insured. So no matter what happens, you get your money back.” Then Val directed them to the company website. Before long, they were all sold.

The agro-investment startup Val had introduced his bosom friends to is the YC-backed startup known as Thrive Agric. Fast-forward to three months later and Val and his friends are re-learning what they thought they knew, and doing it the hard way too.

It’s no longer news that Thrive Agric is currently facing operational issues which can be summarised as the inability to meet up with due payments to subscribers who had invested in its crop and poultry farms.

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According to Thrive Agric, the economic/logistical impact of the COVID-19 pandemic — caused by stringent restrictions — has been devastating to its business.

Consequently, it is not in a position to make payouts to subscribers, many of whom are incensed by the idea of waiting way past their due date.

For the likes of Val who spoke to WeeTracker, this is the sort of situation in which he had expected the insurance bit to come through. But it turns out he’d been mistaken all along.

“I thought them (Thrive Agric) being insured meant that I would get my money no matter what,” he said.

Of course, Val thought wrong, but whose fault is it? Him for drawing his own conclusions? Or the company for not educating him enough while knowingly or unknowingly using the insurance bit as a selling point?

Indeed, one of the most vocal of Thrive Agric’s affected subscribers, Tega Ajogun, did tell WeeTracker the following: “Many of us bought shares at Thrive Agric because they marketed themselves as a good investment option, and also with the promise that they were INSURED.”

Now, it’s hard to imagine that any startup as reputable as Thrive Agric would move to deceive its clients. But it’s easy to see that, in this era when tech is democratising and commoditising all kinds of investments (including U.S. stocks), many investors would see the “insured by” as a sign that their funds are secured by insurance.

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Nigerian Agritech/Fintech Startups Have A Customer Education Problem

A statement on the Thrive Agric website reads thus: “To make sure your funds are fully secured, our farms and farming activities have comprehensive insurance covers by Leadway Assurance.”

To many subscribers who didn’t know better, that came off as insurance cover on their investment. But that was until things began to heat up to the point that the insurance company, Leadway Assurance, went ahead to issue a disclaimer that it only insures the farms, not the funds of investors.

As the proliferation of fintech and agritech investment startups continues in Nigeria (there are now well over 60 of them), there is an ever-growing need for better customer education — people need to know exactly what they are getting into.

It’s a thought shared by Eke Urum, CEO of Nigerian wealthtech startup, Rise.

“I think this whole issue illustrates something I’ve been saying for a while. Insurance does not cover investment returns or even investment capital. It covers an asset against loss or damage,” he said.

“For instance, on Rise all our real estate investments are insured. That is, the properties themselves. They’re insured. If they were to be damaged, broken into, or burned down, they will be replaced. If they lose value on the market, insurance doesn’t cover that.”

He added, “SIPC coverage on our stocks portfolio means that if our brokerage fails or goes under, our portfolio will be reimbursed at market value. If stocks go down in value, insurance does not cover that.”


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The Thrive Agric episode, on its part, highlights that even a little ambiguity can impact the financial decisions of individuals. In this case, customers believed that funds were insured, even though they were not.

But in fact, the ambiguously-worded insurance bit would have advertently or inadvertently served as a marketing gimmick, helping nudge customers on board by giving them a false sense of protection.

As Urum further stated: “Ever since the advent of agritech investments people have peppered us with this question: are your investments insured? Are our returns insured?” 

“Rather than take the easy way out and say yes, like the agritech companies have done which is now being revealed to not actually be the case in reality, I have tried to explain that this is the wrong question to ask,” he added.

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Echoing those words, Chijioke Dozie, co-founder and CEO of Nigerian all-round fintech startup, Carbon, mentioned that investment risk is never insured.

“We don’t have any insurance, but we are regulated by CBN. No one insures investment risk. Plus for the deposit institutions that are NDIC-insured, insurance is limited to an amount regardless of how much was deposited. That is why it is important that investors understand the institutions they are backing,” explained Dozie.

He went further: “Carbon is not NDIC-insured but is regulated by CBN and audited by KPMG and what that means is that there is a regulatory body that periodically inspects our books and conducts a yearly on-site examination of the business.”

Similarly, Feranmi Ajetomobi of the YC-backed wealth management startup, Cowrywise, stated that the company maintains a transparent position, making it clear that the only way investment can fall short is based on the nature of the investment.

He also told WeeTracker that the investment instruments on Cowrywise are held on behalf of its customers by Meristem Trustees, which is registered with and regulated by the Securities and Exchange Commission (SEC).

As he said: “It is required for fund managers to state that clearly. Investors should always check that fund managers have trustees. They are described as the insurance policy in our space.”

In essence, it is well established that the element of risk that is inherent to investing means that investments are NOT (and cannot be) insured. What needs doing, however, is educating the average customer adequately — especially in these times when just about anyone can get in on the act.

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“Entrepreneurs have to learn the power of networking and the value of mentorship, as these are the things that most entrepreneurs take for granted. And also they must know that opportunities will not come to them; they have to go out there and create them by knocking on corporate doors with proposals. Personally, I am where I am because of a business mentor who changed the way I see things.”

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Nichole Manhire

Is the productive executive for the media department at GetFundedAfrica

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