• Business - Companies
  • Updated: October 07, 2020

Has Leadway Assurance Dug Grave Of Farmcrowdy, Farmsponsor, Groupfarma?

Has Leadway Assurance Dug Grave Of Farmcrowdy, Farmsponsor,

Agric investment platforms (Agrictech) in Nigeria have been under immense pressure due to the confrontation between Thrive Agric and its investors. This faceoff has increased the scrutiny on Agrictech startups among their client-base that is largely dominated by doubting Thomases.

For years, farmers struggled to get funding to support their farms and increase their yields. Trust issues couldn't allow farmers and individuals with deep pockets to meet on common ground. But that changed as the rise of agrictech startups were all farmers need to tie down the private sector or blue-collar individuals with disposable income.

Farmers began to get the needed funds to farm their crops as Farmcrowdy, Groupfarma, and Farmsponsor created a "trusted" platform - or so investors thought - for individuals or groups interested in investing in the agric business.

How did Agricech Startups Lure Investors Despite Reservations

Investment through online platforms was overshadowed by trust issues caused by Ponzi schemes. Pitching the idea to invest in a farm without having direct ownership was a hard sell by Agrictech startups, but Farmcrowdy, Groupfarma, Farmsponsor, and Thrive Agric had studied the market extensively.

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These Agrictech startups didn't just offer a platform to transact, they also equipped themselves with insurance cover, slamming insurance firms' names on their platforms in order to convince individuals that their investment is covered by an insurance firm, which means no loss of investment regardless of risk exposure to farms.

Thrive Agric said, "Farms are insured, capital guaranteed." All the Agrictech startups passed similar messages, promising returns after harvest, and assuring that principal payment is safe and not at risk. However, recent developments have shown that that is not the case in the agric investment market.

How Leadway Assurance Might Have Ruined Business For Agrictech Startups

The confrontation between Thrive Agric and its investors has exposed the misrepresentation of insurance cover by the agric investment startups which was brilliantly done by using appealing slogans like that of Thrive Agric.

While many investors still believed their principal payment is covered by insurance, in a bid to save face as its insuree, Thrive Agric comes under fire, Leadway Assurance announced that investors' money is not insured by its insurance cover.

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"As we have stated repeatedly, Leadway Assurance does not in any way guarantee the safety of investors funds if lost due to agric-business failure. Investors funds and the returns thereof are not covered as the subject of the insurance policy Leadway provides.," the insurance company said.

Note that Farmcrowdy, Groupfarma, Farmsponsor, and Thrive Agric are all under the insurance cover of Leadway Assurance, according to AllNews findings. The insurance company's statement means that the investment of individuals in Farmcrowdy, Groupfarma, Farmsponsor, and Thrive Agric is not covered by insurance as investors were made to believe.

During an enquiry, AllNews gathered that Leadway Assurance only covers the farm assets but does not insure Agrictech investors' funds except in unusual cases where the Agrictech startups insured their company funds and include the investors' funds as well. But this isn't the case, as AllNews' findings revealed that farm assets are prioritised ahead of investors' funds.

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AllNews' findings gathered that Crowdyvest - Fintech arm used by investors to invest in Farmcrowdy - only insures farm projects, excluding investors' funds, and they can't 100% guarantee the return of investors' funds.

Crowdyvest stated that while the company can't completely assure investors of their money back, it hasn't failed to pay investors in the last four years based on due diligence, AllNews' findings revealed.

However, the revelation of Leadway Assurance has diminished the trust and integrity of the agric investment market, restoring the trust issue that once overshadowed the market. The realisation that insurance coverage doesn't include the investment of investors will be a wake-up call for many individuals investing in agric investment platforms or those planning to invest.

This might reduce the number of interested individuals willing to invest in agric investment platforms as their credibility has now been dented. Since the agrictech startups can't guarantee the safety of investors' funds, individuals will be unwilling to join a crowdfund for farmers - thereby affecting the operations of agrictech startups.

Note that these agric investment platforms are yet to be regulated by the Securities and Exchange Commission (SEC), meaning the market is still largely underregulated, so the investment is not secured.

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