#AfricanAwarenessMonth – Innovators creating prosperity: Babban Gona

Kola Masha is the co-founder and Managing Director of Nigerian social enterprise Babban Gona, which provides the members of hundreds of franchise farmer cooperatives, a holistic set of services to enable them to increase their yields to 2.3 times the national average and increase their profitability to over 3.5X the average farmer. Babban Gona expects to sustainably enable one million smallholder farmers to lift themselves out of poverty by 2025.

In the age of artificial intelligence, FinTech, and autonomous vehicles, agriculture may not seem like a sector that’s brimming with innovation. But Babban Gona, which means Great Farm, is beginning to change that in Africa’s most populous country. 

Nigeria is currently home to roughly 200 million people, most of whom are young. Given that youth unemployment is around 40 per cent, the country’s future hinges on drastically reducing that rate. That’s where Babban Gona comes into the picture.

Agriculture is crucial to Nigeria’s economy, employing nearly 40 per cent of the entire labour force. But the vast majority of these farmers—approximately 88 per cent—are small family farmers. And among those, more than 70 per cent live in poverty. One of the main challenges for smallholders is that they suffer from low economies of scale, which inhibits profitability due to high cost of production, low yields, and low prices. If small-scale farming becomes more profitable, however, market forces will draw millions of unemployed young people into the sector, while lifting a significant portion of Nigeria’s population out of poverty in the process. At least that’s the thinking behind Babban Gona. 

Babban Gona’s Agricultural Franchise Model helps smallholder farms reach their potential by building mini-farmer cooperatives. To increase productivity and profitability, the social enterprise offers training, distributes loans, provides a holistic range of services, and markets its products to buyers across the country in order to increase the price farmers get for their products. Babban Gona’s services have helped farmers double their productivity.

By creating a new market for agricultural inputs such as seeds, fertilizer, and credit, Babban Gona stands to significantly affect the economic trajectory of Nigeria. But how is it overcoming many of the challenges inherent to innovating in emerging markets, and innovation in general? 

We spoke with Babban Gona’s founder and managing director Kola Masha to learn more about the social enterprise’s journey.

Where did you get your idea? How did you know there was an opportunity?

Babban Gona was born from the inspiring life of my grandfather, who was a poor smallholder farmer in South Dakota and leveraged farmer cooperatives to attain economies of scale enough to increase his profitability. In a quest to better understand how successful farmer cooperatives were built, I leveraged my Eisenhower Fellowship, which allowed me access to visit approximately two dozen farmer cooperatives in the United States. The lessons from this exercise formed the foundation of Babban Gona.

What was your initial target market?

Our target market has remained smallholders, especially youth, who are typically low-income earners engaged in subsistence farming. 

What did your target market do/use before your innovation was available?

The market to serve smallholder farmers is extremely fragmented, so most farmers didn’t have access to a predictable supply of agricultural inputs, such as seeds, fertilizer, and credit. This fragmentation had negative implications on the farmers’ ability to grow, harvest, and sell their crops, thus severely impacting their livelihoods. In some cases, because farmers had always farmed a certain way, they didn’t know a better way to improve their yields. That’s where Babban Gona adds a lot of value. 

How have you raised funding, and what advice would you give others regarding fund-raising?

We have been very fortunate to have partnered with several strategic partners who have believed in Babban Gona’s vision from inception. Through some of these partnerships, we have been able to raise a combination of equity, debt, and grant funding from key development institutions and international foundations to scale our business model and help us achieve our target of reaching one million smallholder farmers by 2025. We would advise others interested in raising capital to seek partners that share their strategic vision.

Innovators often feel that the lack of an enabling environment in emerging markets—poor infrastructure, inadequate institutions, and little government support—is insurmountable. How are you overcoming these challenges?

In recent years, there has been an improved policy environment that is targeting growth in the Nigerian agricultural sector; however, the challenges of an emerging market still exist. Babban Gona has had a relentless focus on creating efficiencies in our model, which has led to us attaining a positive EBITDA margin for the first time in our third season, in FY 2015, and a positive net income in FY 2016.

What are some major barriers to your company’s growth?

One of the major challenges we have faced over the years has been accessing affordable financing in Nigeria, where lending rates to businesses range from an average of 20 per cent to as high as 40 per cent per annum. To remedy this issue, we access concessionary funding targeting the agricultural sector and partner with investors aligned with our strategic impact goals. Another challenge we’ve faced has been training and upskilling employees in preparation for scale, which we’ve addressed by proactively putting into place two training programs aimed at enhancing the skills of our employees across all levels of the organization.

What can other innovators take away from your experience? Is there anything you’d do differently?

The charge to other innovators in their respective fields will be for them to stay focused on proving their business model works and getting results. We spent years focused on our maize credit program, and now, having mastered that extremely well, we are planning on expanding our operations to cover other commodities to diversify the business.

SOURCE: 

https://agrainnovatewestafrica2016.sched.com/speaker/mr.kolamasha

https://www.christenseninstitute.org/blog/innovators-creating-prosperity-babban-gona/