FarmKonnect Agribusiness Nigeria has said that its business administration, operations, trade and communication are being handed over to third party companies going forward, as part of its effort to restructure the business.
This is following a report by Nairametrics that the platform alongside others is tying down investors’ capital and stopping them from reaping the returns on their investments.
According to the mail received by investors of the company, an organization (Rehoboth Chambers) will now take over as Debt Manager, Mediator and Communication Managers for the time being between FarmKonnect and its esteemed clients.
It added that the company will stop all profit accrual models and work towards refunding of all investments, within the shortest time possible whilst also noting that the CEO will not be available on mobile phone and emails for the next 3 months on health reasons.
Responding to this, investors have expressed different reactions to the development, especially as it is coming several months after the company had started delaying. Nairametrics gathered that the business had stopped payment of capital or ROI since around September last year.
What investors are saying
Speaking on the recent development, some investors told Nairametrics that they find the action of the company rather preposterous as the company is coming out to propose a payment plan that would extend to 2023 after having kept investors waiting for a very long time.
- Hope Adebayo, while expressing her thoughts, told Nairametrics that the whole thing isn’t looking good at all, considering that for a company that had failed in the past, it is difficult to believe anything they have to say now. However, she also admitted that it’s better to walk their part as half bread is better than none.
- “I understand that the business had gone bad but I just hope they won’t fail this time around. The reality is that I am not happy with the whole thing, but that is the feasible solution now,” an investor who pleaded anonymity said.
What FarmKonnect is saying
According to FarmKonnect, the effect of COVID-19 related constraints around the globe in the last two years had affected businesses and systems in many ways.
It said, “With the effect of the COVID-19 pandemic, and other Force Majeure that were suffered in the previous years, the Company has lost lots of funds and time in its operations, which has rendered it impracticable to continue with the business model in the immediate.”
Speaking on how regulatory agencies affected the business, it pointed out that the prime regulatory agency, in its effort to protect investors, began to take actions toward regulation of the investments in the industry. “The Company, in its response to the intent of the agencies, quickly withdrew from all activities in the similitude of crowdfunding, while restructuring AgRE to ensure that it is not in any way mistaken for crowdfunding.
“During this period, the Company geared its effort towards rating and capital market entry, and paid less attention to investment-based finance and AgRE and notified its client base and the regulatory bodies. This led to a major cut in its cash inflow, but was not envisaged as big threat as the Company was working towards the capital market entry.”
Also on how the force majeure affected business, it pointed out that the Company experienced 3 Force Majeure, the most popular of them was the wind incidence of Egbeja Snail Village.
It said, “On 17 March 2021, the Facility was hit by winds, leading to loss in excess of 350 Million Naira. The total insurance received was 109 Million Naira, after adjustments. According to undocumented comments from the insurance consultant and company, the disparity was grossly due to exchange rates and other factors.
“It may be interesting to learn that the location of the Farm was previously accessed by the franchising company prior to commencement of the project. It is also expedient to note that the project never encountered such winds in its previous 3 years. The other challenges were related to travel restrictions and logistical challenges that delayed the transportation of acquired assets from China, with up to 6 months, therefore grossly disrupting the Company’s operations.”
- In addition, it noted that the hostile business clime in the country, series of unforeseen disappointments and uncertainties led to runs of disappointment as the Company began to default on its obligations.
- According to FarmKonnect, the best course of action is to restructure the business and the Company. It explained that while this may result in immediate discomfort, it is a more sustainable, (Win-Win option) and will eventually be beneficial to all the stakeholders, adding that the downside is that it requires time and patience.