Welcome to the February, the midpoint of the 1st quarter of the 2022. Lest, I forget, it is also the month of love. Here’s wishing everyone happy valentine’s day celebrations in advance.
Today, I will like to summarize a presentation shared by Ayodeji Balogun the MD of an Agricultural infrastructure and platform provider – Afex. In his presentation titled “The death of crowdfunding”, Mr. Balogun discussed the major things intending investors should look for”:
- Unrealistic interest payments – as many people had warned or highlighted in the past, many of the proposed interests were unjustifiable. In his words, “agriculture cannot give a 40% yield in 3 months consistently”.
This is not to say that there won’t be periods of bumper harvest but margins in agricultural business tend to be smaller and mainly unpredictable.
- Agriculture is a long-term business and as such requires funds with similar time frame to be sustainable.
Working capital requirements will understandably remain short term in nature but funding the infrastructure or equipment required to maintain an agricultural enterprise must be long term in nature.
- Carry out your due diligence on the personnel and management of the company you are investing in. This is crucial as competence and experience are critical things to look out. It is for this reason I will refer to the manner in which the owners of Thrive Agric went about resolving the issues they had with payment of matured obligations. The way and manner they handled things, for me should remain the benchmark other defaulters should follow,
- Be careful when others are bullish and be bullish when others are fearful. The fact that a lot of players suddenly appeared on the scene should have given many investors cause for worry. This is because it was a pointer to the fact that there a huge demand for this type of transactions which definitely would have attracted even unqualified players.
I decided to share the above points despite the fact that I know many of the club members have sworn off investing in this sector again because I still believe that this sector remains a source of profitable investing. However, would be investors just need to lower their interest expectations and invest only in the credible players.
Until next Monday, we will all do well to remember that the Omicron variant of COVID 19 is very contagious though mild.
Please maintain social distancing, wear your face masks in public and if you are yet to, vaccines (boosters inclusive) are still be administered to those qualified to receive them. Do have a fantastic week ahead.