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The Trigger

I was driving through the Lekki area of Lagos recently when I saw a large billboard asking the public to “invest” in a certain agricultural technology scheme that invests in pork rearing. The billboard further suggests that anyone who finances the pork rearing scheme will get some guaranteed return in the range of 30% per annum.

Recently, @tosinolaseinde, one of the few personal finance coaches I respect, was explaining how treasury bills interest rates work, on twitter. I was amused at a comment from another user, essentially comparing 11% per annum treasury bill rate to 30% in 11 months from @PorkMoneyAfrica.

I am not sure about the education these technology platforms give their users, but I believe that to a large extent, the information can be misleading.

Over the past year, I have seen the increased proliferation of platforms like these, seeking funds from the public to invest in different schemes including agriculture, fleet of bikes, trucks, amongst others. I think the biggest worry for me is the suggestion that the investment from the public is GUARANTEED and safe.

Most of these platforms also guarantee returns on invested capital in the range of 20% per annum to over 40% per annum.

I am not saying that it is impossible to earn such returns, but I am sure it is impossible to GUARANTEE such returns CONSISTENTLY. That’s where my biggest concern shows up.

Another miscommunication from some of these operators is the suggestion that the funds from the public is insured, meaning that irrespective of whatever happens, the public will not lose their initial capital because the funds are insured! This communication, I believe, is misleading.

In the course of writing this article, I have spoken to a number of insurance practitioners to understand if they will truly guarantee my capital investment in any business if the business goes south. The response I got was a resounding NO.

Let me explain this. What you are asking the insurance company to do essentially is to guarantee your irresponsibility. Imagine yourself as an insurer, and the owner of an organization (say FarmerFriend) walks up to you and asks you to insure his capital because he wants to invest in a poultry business.

FarmerFriend will be buying the day-old chicks, FarmerFriend will buy the feed, FarmerFriend will vaccinate these birds, FarmerFriend will essentially rear the birds till maturity and eventually sell to a local restaurant. FarmerFriend wants you to provide a cover in case ANYTHING happens along the rearing process. How much premium will you charge?


The risk the insurer is willing to take, however, is in cases of some unforeseen circumstances, say a fire outbreak, disease outbreak, some natural disaster or other “acts of God”. The insurance will indemnify you. Outside of these events, the insurance company will not assume any risk based on the farmer’s negligence or irresponsibility.

Know your Risk

As part of a participating public, I guess the most important feature here is that you need to know and fairly assess your risk. Like we have all learnt, the higher the risk, the higher the reward. In essence, if your reward (investment return) is 35% per annum in Nigeria, then the risk being taken to “guarantee” such reward is equally as high. This suggests to me that you might also be at risk of losing your entire investment.

You have to come to terms with this reality. If you are not willing to take such risks, I’ll reiterate the advice from @tosinolaseinde, buy treasury bills and government bonds instead. The risk is lower, hence the reward is lower at about 11% per annum.

Edge your Risk

Diversification is one of the biggest edging tools in investing. So, don’t put ALL your money in any of these platforms. Mix it all up. Please talk to your professional advisers regarding this.

However, one thing I need you to know and be sure of is the ability of the provider to EXECUTE on his promise. Before you put your money in any of these schemes, you have to be sure that the platform provider has the requisite skill and experience to do the business he is trying to get you to finance.

Please be sure to know the faces of the founders of such businesses to avoid Mavrodi and his likes. You are placing a bet on these people’s abilities to execute, so don’t just drop your money blindly.


A Peep into these Platforms

I believe FarmCrowdy was the first to introduce sponsorship platforms like these in Nigeria. After this introduction, we have seen follow-on businesses modelled after the same pattern. ThriveAgric runs a similar model. Porkmoney, on the other hand, focuses on just pork production, rather than different farm produce like ThriveAgric and FarmCrowdy. Grain Capital as well focuses on grains production, storage and sales.

There might be some merit in Porkmoney’s strategy, since they learn quickly the inner workings of a particular product line, get better at it and eventually become masters of it. However, when a disease outbreak affecting that specific product line happens, what happens to the business.

There are also other concerns regarding the religious bias against this specific product line.
We have seen other cases of this crowd funding model.

Max.ng and Gokada are using this model to finance bikes on their platforms. Kobo360 is financing trucks on its platform, using crowd sourced strategies as discussed above.

Ponzi will show up

In many cases, Ponzi schemes are created unintentionally. And I fear that a Ponzi scheme might be brewing.

How do I mean?

When one of these platforms is unable to meet up with its obligations to the first set of investors, maybe because the pigs refused to give birth to as many piglets as expected, or the crop yield was not as expected or maybe people are not just using the app to request bikes or truck goods. Suddenly, the entrepreneur will still have to meet up with his obligation to these investors, so he will use the funds from the later investors to bail out the earlier, hoping that the returns on the new set of investors will even it out.
What if it doesn’t happen, then the spiral continues.

Like MMM, you’ll start to delay payment until life is fully drawn out of the business, then that announcement, “We cannot meet our obligations anymore.” will come, then twitter goes agog and then the Securities and Exchange Commission steps in. And like with everything in Nigeria, their first action will be to cancel all existing schemes… I’m sure you can relate.

My Point

To the Entrepreneur – Your business is not necessarily tech, stop being obsessed with that. You are a farmer, Okada rider, truck driver or any other business you are in. The survival of your business is largely dependent on your success at those core operations. This cannot be overemphasised.

To the Public – Please don’t be greedy. All that glitters is not gold. Do your due diligence. Be sure that the team you are entrusting your money to, has the capacity to execute on the use of proceeds. If you have any doubt about the ability of the team, please hold your money or buy treasury bills.

To the Regulator – I am not sure what to say to them. But I think some level of oversight is needed. Don’t tar everyone with the same brush, there is a need to understand the business before providing regulation around it. It’s a delicate balance between protecting the public and scaling a business. I’ll end it at that.

Happy Entrepreneuring


  1. Good day Fisayo,

    I always enjoy your write-ups.

    If I may add to it sir, PONZI SCHEMES thrive due to two factors.

    A greedy investor
    A greedy business owner

    However, in my opinion, PONZI SCHEMES thrive due to GREEDY INVESTORS. Reason why I say so?

    I trade fx market and some investors will try to lure you into giving them ASTRONOMICAL MONTHLY RETURNS, even when it is obvious that such profits cannot hold when looking at long term investments.

    Such investors will tell you that:”If the bank can give them 10-20% per annum, why should they invest in you if you can’t give me more”?. It takes a lot of discipline to turn down such mouth watering offers, but again, not everyone has good business etiquette.

    Greedy investors give rise to PONZI SCHEMES. If investors are not in pursuit of GET RICH QUICK SCHEMES, I don’t think Ponzi schemes would thrive, because nobody would patronize them.

    Once again Fisayo, I enjoyed this article of yours, its a must share

  2. I honestly think the word ‘Ponzi’ can be found everywhere if you look at it holistically. The problem here is the bad foundation that’s been laid by our moral lifestyle, level of education/judgement, ignorance and a junk of irresponsibility from our government, plus the unconscious negative agreements from media agencies through which people are ensnared into very fraudulent schemes. For one, it’s a game by same people against same people and for same set of people. In Ponzi game no one [both investor(s) and the owner(s)] is/are innocent. What I don’t buy is the mentioning of a particular name, the article would have been best without name or a touch of few schemes – there were varying Ponzi schemes before MMM- but after MMM, thousands of its leaders and guiders started their own Ponzi and people fell for it. There are still a handful of them operating in different forms, some as bitcoin mining, cryptocurrency investment, agricultural investment schemes, etc. Good analysis though.

  3. But it seems the writer of this article omitted to mention the existence of agricultural insurance products! ! Deliberately or ?
    Living itself is a risk


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