Babban Gona
Location
Nigeria
Sector
Agriculture
Type of Investment
Risk Capital
Project Stage
Length of Investment
2017+
Website
Investment Overview
A $2.5m debt investment to support the expansion of Babban Gona’s innovative agriculture franchise model, which seeks to sustainably improve the lives of smallholder farmers through the provision of comprehensive farming services.
The Development Challenge
The health of the agricultural sector in Nigeria is critical to the country’s economic wellbeing, accounting for 22% of GDP and employing an estimated 58% of the country’s active workforce. The sector is predominantly made up of smallholder farmers, who produce over 70% of the nation’s food and own over 80% of all agricultural land. However, in the face of challenges such as low economies of scale, lack of finance for key inputs, poor knowledge of best farming practices, low yields, limited storage capacity, and restricted access to formal markets, many smallholders continue to live on less than $2 a day.
The Innovation
An innovative and comprehensive agriculture franchise model that seeks to sustainably improve the lives of smallholder farmers through the provision of end-to-end farming services. Babban Gona operates in rural northern Nigeria, where it provides farmers with all they need to thrive, be it inputs, know-how, harvesting services, or storage. This enables them to increase yields, lower their production costs, and gain a higher price for their crop. Through Babban Gona’s model, each farmer receives a net income of $542, which is 3.8 times greater than that of the average smallholder. Over the last years, the model has dramatically increased its reach, and has supported over 110,000 farmers across six states in northern Nigeria and impacted an additional 550,000 individuals in the local communities in which it operates.
Our Investment
An innovative $2.5m subordinated debt agreement in 2017 that enabled Babban Gona to improve net incomes for more farmers sustainably. It also included a financial incentive to create more impact for farmers. Thirdly, its subordinated position plays an important role in helping Babban Gona to attract larger amounts of investment.
Investment Objective
To catalyse capital and fund the company’s expansion in order to tackle multiple constraints in smallholder farming with promising increases to farmer net incomes in an extremely poor region of Nigeria.
Why we invested
Babban Gona is an intervention that tackles multiple constraints in smallholder farming, with promising increases to farmer net incomes.
It operates in an extremely poor region of Nigeria, where few interventions have managed to generate sustainable impact.
The end-to-end engagement with farmers allows for robust data collection and quantification of outcomes.
Further, the significant pace of growth to date suggests an efficient and replicable model.
Babban Gona also boasts strong Nigerian social entrepreneurship and an all-African national staff.
Lastly, this is an opportunity for GIF to play a catalytic role in unlocking DFI capital.
Babban Gona in numbers
Individuals impacted to date
Smallholder farmers supported in 2020 alone
Babban Gona Impact Brief
Babban Gona (“Great Farm” in Hausa) is an award-winning, high-impact, financially sustainable, and highly scalable agri-tech social enterprise part-owned by the farmers it serves. By developing and deploying advanced technology coupled with operational excellence Babban Gona transforms agriculture into a job creation engine with a goal to create 1 million jobs for African youth by 2025.
Babban Gona seeks to sustainably improve the lives of smallholder farmers through the provision of end-to-end farming services. Babban Gona operates in rural northern Nigeria, providing a holistic range of services that enable smallholder farmers to increase their average yields to twice the national average, as well as lowering input costs and attaining better pricing through delayed sales into the market.
Use of GIF Funds
The proceeds have funded the company’s expansion from 2017-2021. Proceeds were used to finance agricultural inputs to farmer members,advance payments to members at harvest, and company overheads capital expenditures.
Objectives
Catalyse capital and fund the company’s expansion from 2017-2021 in order to tackle multiple constraints in smallholder farming with promising increases to farmer net incomes in an extremely poor region of Nigeria.
Impact to date
To date, Babban Gona has supported over 110,000 farmers across six states in northern Nigeria and impacted an additional 550,000 individuals in the local communities in which it operates. Babban Gona doubled in size in 2020, from being Nigeria’s single largest maize producing entity, to now one of the largest maize producers on the African continent. In 2020 alone, Babban Gona aggregated over 62,000 MT of maize across c.50 collection centres. Babban Gona supported over 37,000 smallholder members with training, financial credit, agricultural inputs, and harvest and marketing services for the 2020 Maize Program. Since GIF’s investment, Babban Gona has raised approximately $70M in debt, equity, and grant funding for the expansion of its model with smallholder farmers in Nigeria and the sustainable provision of employment.
Innovating for Climate Resilience
Agriculture is susceptible to climate change as its negative impacts affect crop yields and livestock. Farmers in Nigeria with no viable means to increase their yields often engage in unsustainable agricultural practices which increase the effect of climate change and threaten farmers’ livelihoods and food supply.
Climate change mitigation initiatives include farmers' training which promote reduced deforestation, reduced crop burning, crop rotation and, optimised input use. To build Babban Gona farmers’ resilience to climate related shocks, Babban Gona implements innovative solutions to increase their productivity and profitability (i.e. post-harvest solutions to reduce losses) and takes out yield insurance in the case of extreme weather conditions to provide disaster relief.