Switching from a high-profile career as an investment banker to the unpredictable world of entrepreneurship, especially in agriculture, was a bold decision for Jehiel Oliver.
And that is exactly what he dared to do 10 years ago, when he came up with the idea of manufacturing his own brand of affordable tractors, which unfortunately did not see light of day.
“I quickly realised that I couldn’t compete with the established industry giants and decided to switch gears,” says Mr Oliver, the founder of Hello Tractor, an agri-tech firm connecting tractor owners to farmers and tractor financing.
A typical tractor owner only needs a tractor within a short window of time, Mr Oliver says, and that resource is too valuable to lie idle at the farm, so why can’t they make money with the excess capacity?
Hello Tractor started by putting a gadget on existing tractors so that tractor owners using their application could see machine location, how it is being used, maintenance needs, fuel consumption, and acres done in a given period of time, which allows them to serve other farmers with the excess capacity.
“Through the app, our network of agents book farmers for services and links them to the nearest available tractor, while the company earns its revenue on a five percent commission basis per acre of land serviced,” explains Mr Oliver.
To diversify its revenue stream, Mr Oliver says that three years ago, Hello Tractor ventured into asset financing, a move that propelled the tech firm to become the biggest financiers of tractors in Kenya, allowing their customers to own tractors.
“With 250 acres, you pre-qualify for a tractor after assessing the quality and serviceability of those acres with a 35 percent down payment,” he says, adding that the down payment is waived for farmers practicing conservation agriculture aimed at promoting climate resilience.
He adds that the tech firm has so far onboarded over two million customers on the platform, over 5,000 tractors across key markets in Africa, and financed the purchase of 250 tractors.
To avoid the pitfall of default amidst a tough economy, the former investment banker says Hello Tractor borrows from commercial banks to finance tractor purchases and therefore cannot afford to take chances.
“We bear the risks on the commercial loans we take from banks, so there is little room to wriggle. We track the tractor operations through technology and ensure they follow our plan of servicing farmers, collect the money, remit the amount back to us, keep the machine, and retain their income, which is 10 times on average,” he says.
He says the firm does not give much space for negligence because many good entrepreneurs cannot support bad ones. To further supplement their income from selling the fleet management technology to tractor owners and asset financing, Mr Oliver says Hello Tractor has also added after-sales maintenance and sale of spare parts.
Mr Oliver is quick to point out that Hello Tractor does not control prices but rather lets the market decide, and, in the app, tractor owners set their own pricing and the information is transmitted to all farmers that need the services, adding that price negotiations create market inefficiency due to a lack of transparency.
Risks, opportunity and setbacks
At the macro level, high interest rates are putting a lot of pressure on the business and other key value chains, adding that nowhere in the world where food is produced commercially do farmers pay the level of interest rate Kenyan farmers are being exposed.
“We mitigate against that by blending local borrowing with money from foreign partners that have lower rates,” he says.
Forex volatility too is an issue, so they hedge internally to avoid being overly exposed to dollar-dominated debt and to reduce currency imbalance.
Mr Oliver says if Africa’s mechanisation level of 27 tractors per 100 square kilometres is going to close the gap of 200 tractors per 100 square kilometres of arable land globally, it’s a $180 billion worth of opportunities, something they are excited about.
“Yes, the business is profitable, and we are just scratching the surface. We bootstrapped to start the business, and as the business grew, courted strategic investor like John Deere joined, which now owns 23 percent of the business. They came not just with the money but technology on mechanisation as well,” he says.
Jehiel Oliver, founder of Hello Tractor at the ag-tech firm's office at The Address Building, Westlands, Nairobi.
Photo credit: Pool
He says his success in building the company would not have been possible if he had not assembled an ethical and entrepreneurial-minded team, and that his role is to allocate resources to make sure they grow their businesses and keep the money flowing.
The most challenging times in entrepreneurship, Mr Oliver says, were during the Covid-19 pandemic. It almost brought the business to its knees because the supply chain collapsed and they could not deliver devices put on tractors, no marketplace hence couldn’t make money.
“We had to make sacrifices, including pay cuts, to keep the business alive. It was a big lesson on resilience,” he says.
Be daring and strategic
Mr Oliver adds that even though most businesses in the innovation fail, with very few succeeding, when they find success, they scale and soar. But the challenge is that there is a small amount of investment going into innovation spaces.
“People look at a few failing businesses and get alarmed. If you don’t expect to fail then you shouldn’t be in any business,” says Mr Oliver, adding that investors should ask themselves if they are investing in predictable businesses or one with potential of being a billion worth of dollars.
“There is an adjustable market for mechanisation in Africa, a multi-billions of dollars’ worth of opportunity, and it’s not easy to get that kind of opportunity. Many have tried; many have failed, and nobody knows which one is next in line.”
He says that the culture of investment locally is still nascent, and with the asset class having the highest risk, people expect most of those businesses to fail, so he cannot point fingers at his peers who fail in their businesses.
He adds that as an entrepreneur, you curate right partnerships, some of whom may end up being your investors, but you have to be smart about it and avoid mimicking what happens in Silicon Valley or elsewhere.
“Gain some traction, develop a story, product narrative, and market fit, rake in some revenue, then take that story to the right investors,” he explains, adding that in agriculture, he would encourage any entrepreneur to find patient capital that is strategic.
Entrepreneurial lessons
Mr Oliver advises fellow entrepreneurs against creating unrealistic expectations and to live within the confines of business reality, being overly aggressive, over capitalising the business, and growing faster than the market can allow, and most importantly, growing unprofitably.
“We shut down our biggest commercial bank facility in 2024, when the Eurobond was refinanced and rates jerked up, and we certainly didn’t want to put our customers in a position of default due to exorbitant interest rates,” he says.
To him, this was a case of living within the confines of business reality.
