Growsel Due Diligence

Frequently asked questions

We use Social Underwriting to determine a smallholder farmer’s creditworthiness. While we provide Insurance Cover, farm Insurance does not cover poor yield and market fluctuations. However, Growsel conducts and takes due diligence and farm monitoring very seriously as part of our responsibility to our community of supporters around the world.

NO! Growsel DOES NOT hold deposits. All farm supports and peer-to-peer crowd-funding to support and empower smallholder farmers are not deposits and shall not be deemed to be deposits held by the Company as stipulated in the Banking Regulations.

We DO NOT give smallholder farmers money. We rather provide access to enhanced farming inputs, training on global agricultural best practices and extension services in collaboration with our Partners and Trustees across communities from money raised by supporters. We DO NOT give have money.

Growsel uses “social underwriting” against conventional financial underwriting to determine a smallholder farmer’s creditworthiness on the strength of their personal network, farming experience and character, which helps create a more complete picture of a farmer when considered alongside his/her capacity, potentials and financial history. A poor community-based form of due diligence that enables Growsel to involve the smallholder farmer’s own connections, network, friends and family in the crowd-funding process to determine his or her commitment to cultivation, harvest and repayment

Growsel crowd-funding reaches out to support and empower under-financed smallholder farmers with limited access to financial services, so these types of farm-loans come with some inherent risks for supporters. However, while we can guaranty your principal investment with our insurance policy and risk management processes, we cannot say same for your estimated Return on Support (ROS) largely due to unforeseen circumstances (market fluctuations, crop failure and others outside our insurance coverage). Supporters are strongly advised to learn about the crowd-funding and guaranteed repayment policies.

Smallholder farmers are screened, verified, vetted and endorsed by either our Filed Coordinators or Trustee partners. All Growsel farmers are crop and livestock insurance insured. However, insurance does not cover poor yield and market fluctuations. In the event that the farmer’s harvest and sales did not meet the capital funded and expected return on support and do not have enough means to cover the capital and interest rate due to unavoidable circumstances (low market price, weather effects, natural disaster et. al). Growsel will still provide the farmer with another round of funding for the next farm season to recover the amount lost from the previous farming season. The supporter will only receive the repayment when the amount has been fully recovered by the farmer at end of the second farming season. Since return on support (ROS) is a function of the crop duration, supporters would need to wait for crops to be harvested and sold within the same duration communicated at the initial support first phase.

Most of our farm-loans are administered by Growsel Trustees, who work hard to ensure smallholder farmers are screened, verified, monitor, trained and follow up for repayments. This is means farming inputs and tools are distributed through the Growsel Trustees working in the community to smallholder farmers. The funds are also repaid by smallholder farmers through the Trustees after cultivation, harvest and sales. While working with our Growsel Trustees increases the likelihood that your farm-loan will be effectively used and repaid, new institutional risks are introduced. Even if a Growsel smallholder farmer are able to repay, Growsel supporters, could still lose principal or ROS due to Trustee issues such as: Bankruptcy (the Trustee may go out of business and be unable to collect your farm-loan). Fraud (staff members at the Trustee may embezzle funds). Operational difficulties (the Trustee may have some cash-flow or other challenges that could prevent repayment). However, before admitting and working with a Trustee Growsel performs due diligence on the individual or organization to help assess this risk and get endorsement from top management, community and legal authorities.

When supporting internationally it is important to consider global market fluctuations and exchange rates risks particularly since developing countries where Growsel operates mainly are open to all kinds of risk: Economic Situation (a large currency devaluation – or the institution of exchange rates, local currency valuation, market access collections valueless for you). Political Situation (Growsel farm-loans are mainly supported in developing countries across Africa where policies can change at anytime regarding funds repatriation or even the requirement that borrowers have to repay their farm-loans). Natural disasters such as a flood, tsunami or drought may greatly reduce the likelihood of farm-loan repayment from certain countries or from specific regions in a country. Growsel currently targets a country limit of no more than 15% of total farm-loans outstanding to help ensure a balanced portfolio. Individual supporters may want to consider the country and regional balance of their own portfolios as well. In certain instances, the Growsel imposed limit is lifted on a temporary basis particularly in Nigeria where we started operations from.

Growsel official working currency is the Nigerian Naira, many farm-loans are disbursed to smallholder farmers in their local currency, thus adding an additional risk to supporters especially in times when the Nigerian Naira is weak. Please determine if currency exchange loss is possible for a farm-loan. For loans with currency risk possible, lenders bear the risk of loss if the Nigerian Naira depreciates against the global currency. Additionally, if your home currency is not the Nigerian Naira, another layer of currency risk is added because farm-loans made through Growsel must be converted to Nigerian Naira. Therefore, the initial conversion from your home currency to Nigerian Naira will add foreign exchange risk. Note: foreign exchange risk is not present if your local currency is the Nigerian Naira and farm-loans are disbursed in Nigerian Naira.

It is a fact that there are risks involved in farming and agriculture in general. This is where the core business of Growsel comes in, providing structures and processes that reduce risks and increases yield and profitability for both farmers and supporters to the barest minimum. With our unique convergence of enhanced input providers, agricultural development partners and access to global best agricultural practices we are able to increase profitability and protect our investors and smallholder farmers is at the other end. To further mitigate risk, Growsel sets a cap on the amount of money you can support a local farmer and how much a local farmer can request based on his/she capacity. This is to encourage spreading out your support to different farms so as to lessen the risk to a single investor in case of unfortunate events, though already covered via insurance protection and use of model agricultural technology. The potential risk that Growsel, like any organization, may not continue its operations indefinitely. To better protect supporters’ funds in this circumstance and others, Growsel holds supporters’ funds separately from its own operational funds. When supporters have available funds in their Growsel Wallets (for example funds that have been repaid, or funds that have been deposited and not yet used to support a farm), these funds are held in bank accounts for the benefit of Growsel supporters. We believe that holding supporters’ funds separately from Growsel’s operational funds helps protect these funds from being subject to any claims of Growsel creditors - other than the Growsel supporters who have funds available in the Growsel wallets.

Farmers only get estimated 10% to 20% money paid into their Growsel savings account opened with our partner banks for direct-labour such as wedding, farm clearing and other related manual direct labour. Our overall repayment rate for all farm-loans includes all loans in all crops, including farm-loans that were repaid or defaulted and farm-loans that are currently paying back. It also factors in currency fluctuations. Please note that past repayment performance does not guarantee future results. T&C apply. In order to help reduce your risk exposure, you may wish to diversify your crop support portfolio, thus reducing your exposure to any one local farmer. For example, instead of placing N200,000 with 1 local farmer, you may wish to place N50,000 with 4 local farmers across different crops.

The Trustee looks at a variety of factors (social ratings, creditworthiness, past loan history, village or group reputation, loan purpose, farming session, crop type, market access, business plans etc.) before passing a borrower as creditworthy. However, a number of factors can result in borrowers defaulting, such as: Farming (crop failure, market access and market demand), Healthcare (malaria, cancer, physical disability or death), Socials (theft, paying for school fees, over indebtedness, reduced remittances, civil disturbances, etc.) However, if a borrower defaults, Growsel Trustees are expected to pursue collections according to their normal practices inline with Growsel’s T&C adhering to the Client Protection Principles

Smallholder farmers can be endorsed by Off-takers and an Off-taker can bring a smallholder farmer they endorsed as long as they are readily available to off-take and buy all farm produce at the end of harvest. In any case, Growsel staffers must carryout social underwriting and sign-off MoU with the Off-taker in question before posting on the Growsel platform. Also, the smallholder farmer must provide the following: Provide endorsement from available Off-taker and agreed MoU. Provide endorsement from available referee who connect the smallholder farmer with Growsel. Invite members of their own social networks to support their campaign as part of Growsel Social Underwriting before the campaign is able to go live publicly on Growsel. Direct farm-loans come in the form of commercial farms directly screened and vetted by Growsel.

Growsel provides real time weather update forecast via app and mobile to smallholder farmer and their Growsel Trustee

All Growsel farmers are crop and livestock insurance insured. However, insurance does not cover poor yield and market fluctuations. In the event that the farmer’s harvest and sales did not meet the capital funded and expected return on support and do not have enough means to cover the capital and interest rate due to unavoidable circumstances (low market price, weather effects, natural disaster et. al). Growsel will still provide the farmer with another round of funding for the next farm season to recover the amount lost from the previous farming season. The supporter will only receive the repayment when the amount has been fully recovered by the farmer at end of the second farming season. Since return on support (ROS) is a function of the crop duration, supporters would need to wait for crops to be harvested and sold within the same duration communicated at the initial support first phase.

insurance does not cover poor yield and market fluctuations. In the event that the farmer’s harvest and sales did not meet the capital funded and expected return on support and do not have enough means to cover the capital and interest rate due to unavoidable circumstances (low market price, weather effects, natural disaster et. al). Growsel will still provide the farmer with another round of funding for the next farm season to recover the amount lost from the previous farming season. The supporter will only receive the repayment when the amount has been fully recovered by the farmer at end of the second farming season. Since return on support (ROS) is a function of the crop duration, supporters would need to wait for crops to be harvested and sold within the same duration communicated at the initial support first phase.

Funding is not enough to support local farmers. Growsel provides global agricultural best practices to smallholder farmers such as pest prevention/ mitigation, farming tools, technology and inputs to support their farm cultivation process and yield.

Smallholder farmers are provided access to Zowasel.com marketplace and off-takers who are available to off take high value crops even before harvest. However, prices are volatile and may drop and spike at different times, depending on the supply and demand in the market. This is managed by recommending diversification of crops for each farmer, and by clustering different farmers together to further distribute the risks.