Hello Tractor

Year: 2018 | Geographic Region: Sub-Saharan Africa

Criteria Met:
  • Catalytic
  • Discrete
  • Mid-Implementation
  • Unexpected
About the Project
The Situation
The Roadblock
Open Road's Response
The Situation

Hello Tractor is a social enterprise focused on increasing agricultural productivity to match the food demands of the world’s growing population. A major barrier to increasing agriculture productivity is the inaccessibility of mechanized tools available to smallholder farmers. In Nigeria, farmers face some of the lowest rates of mechanization: estimates show the country only has 6 tractors per 100 square kilometers of arable land where the global average is 200. Lack of tractors and other adequate machinery means farmers rely on manual labor, resulting in under-cultivating land and losing valuable income.

As a solution, Hello Tractor offers an IoT (internet of things) digital platform that facilitates the tractor shared economy model through its low-cost tractor monitoring device sold to tractor owners. This ensures that tractor owners are able to monetize their equipment as business assets and make profit, while providing farmers with equitable access to tractor services. Tractor owners have an increased ability to capture critical data and reach more farmers with faster, quality, tractor service. Smallholder farmers are then able to decrease the number of days spent working on the farm, improve the quality of their harvest, and increase their crop yields, leading to higher on-the-farm income.

To further increase mechanization services, in 2016 Hello Tractor launched the Feed the Future-Partnering for Innovation (FTF-P4I) program, implemented by Fintrac, a consulting firm promoting agricultural solutions to end poverty and hunger, and funded by USAID. The program proposed to train and equip youth “agripreneurs” with financing to purchase tractors. Since the program launched, Hello Tractor has adapted their technology to meet the needs of the Nigerian market; provided business service support to tractor owners; and trained youth to become tractor owners, mechanics, and booking agents who aggregate demand at the farmer level.

The Roadblock

The Nigerian recession in the summer of 2016 caused Hello Tractor to face a series of unexpected roadblocks. In the midst of trying to sell the tractors, credit markets contracted, and tractors required financing. At the same time, the naira depreciated against the US dollar, leading to tractors doubling in price in less than one year. The increased cost prevented the young agripreneurs that Hello Tractor had been training from purchasing tractors.

Simultaneously, the recession caused the banks Hello Tractor had agreements with to pull back and not fund tractor owners (a core part of the USAID grant). The changes caused Hello Tractor to experience delays in the import of their tractors which led them to effectively miss out on the major farming season.

As a result, Hello Tractor did not reach certain project milestones for FTF-P4I, causing a delay in funding from USAID. The delayed disbursements forced Hello Tractor to self-fund the technology, pushing them into a financial deficit.

Open Road's Response

In June 2018, Open Road offered a $250,000 loan to allow Hello Tractor to continue developing their technology, and continue training individuals – including lead farmers and input distributors – to become booking agents. The loan also allowed Hello Tractor to build a youth network across the region that will become responsible for assisting their farming communities access the tools they need to thrive.

The loan will support Hello Tractor reach its projected milestones and create a transformative impact in the Nigerian mechanization space. These actions will further the long term goal to increase food security and rural income through a private-sector led business model that provides employment opportunities for rural entrepreneurs.

Learn more about Hello Tractor: www.hellotractor.com