Farmsponsor Nigeria Limited, one of the agro crowdfunding platforms is mapping strategies that entail rescheduling short-term insured payments.
This is in response to the recent Securities and Exchange Commission’s (SEC) cease operations announcement for all crowdfunding platforms by June 30, 2021.
According to the SEC, crowdfunding is the process of raising funds to finance a project or a business from the public through an online platform.
Keen watchers of the industry have said that regulations for crowdfunding in Nigeria are long overdue and SEC’s new rules will need intermediaries to have ₦100 million paid-up capital.
Plus, they also have to observe tight rules regarding storing transaction data. Like other types of investment businesses, crowdfunding operators must send a report of all financial transactions on their platforms to the SEC at the end of the year.
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Consequently, Farmsponsor says it is unable to continue its crowding operation as the notice came abruptly, by the first week of June.
Paying everyone at once “will eat too deep into our operational cash flow. Let us continue to work to pay you,” a statement from the company sighted by BusinessDay said.
The pay-outs would be staggered and may take between 18 – 24 months to complete.
Part of the short-term strategy would comprise an overdraft or a term loan from some financial institutions.
The mid-term strategy would involve equity investment from institutional investors and the company says it is willing to relinquish 30 – 50 percent of directors’ shares in the company.
Then, the long-term strategy would be a direct revenue from the business, to take up to 18 – 24 months.
“We deeply share in your displeasure with the upset that the company has had in paying out its sponsors,” the company said. “We are taking appropriate measures to see that all funds collected from every sponsor will be paid back accordingly.”
In the time that the company was in business with the funds from sponsors it built the following operations:
A 360,000-broiler Pen (biggest in South-South Nigeria), 60,000 capacity breeders pen (with over 10,000 laying breeder birds), and 10 tons per hour feed mill.
Others were a 24,000 per day fully automated chicken processing plant (recently installed and commissioned, 128,000 birds per week state of the art hatchery and 823 Hectares of land in Oyo State (valued above $3m).
The company also built a veterinary clinic and two retail supermarket outlets in the heart of Port Harcourt, amongst many other great features that we have achieved together.
“We appreciate your understanding, and support as well as believing in us as we walk this journey of emerging a stronger Farm-sponsor.”
Picture caption: An overview of Farmsponsor facilities and operational layout–