Babban Gona's Agri-Franchising Model: Scaling up Challenges
| Case Code: LDEN134 Case Length: 18 Pages Period: 2012-2017 Pub Date: 2018 Teaching Note: Available |
Price: Rs.500 Organization: Babban Gona Industry: Agriculture Related Services Countries: Nigeria Themes: Social Entrepreneurship |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Kola Masha
Masha was born and brought up in Nigeria. His mother was an American, and his father a Nigerian. At the age of 11, he became a national figure when he hosted a weekly TV show "Life with Kola." In 2000, he went to the US where he completed a Master’s degree in Business Administration (Honors) from Harvard University and a Master’s in Mechanical Engineering (Distinction) from Massachusetts Institute of Technology. After completing his studies, he worked with General Electric Company and Abiomed Inc. , before coming back to Nigeria in 2007. In Nigeria, he worked as CEO and MD in a major subsidiary of the Notore Group, one of the leading agricultural conglomerates in Nigeria. There, he worked on various projects. He raised an equity fund (US$130 million), restructured debt (US$360 million), developed an integrated agriculture trading, production, and processing business, and developed a fertilizer and seed business, among other things...
Story of Babban Gona
After returning from the US, Masha founded Babban Gona in 2012. Its mission was "to inspire and enable hardworking smallholder farmers to reach their full potential." Babban Gona meant 'Great Farm’ in Hausa, one of the local languages of Nigeria. Babban Gona provided various things to smallholder farmers, such as a working capital loan for farming, low cost but high-quality agriculture inputs, training, and knowledge to optimize per hectare yield; warehouse facilities, and a good price for their harvest...
Business Model
Masha developed an agriculture franchise model to help poor smallholder farmers. This model was not only scalable and sustainable, but it also created economies of scale for small farmers. Through its franchise model, Babban Gona provided cost-effective, end-to-end services to a network of farmers groups...
Funding and Partnership
In 2012, the Alliance for a Green Revolution in Africa (AGRA) provided initial support of US$300,000 to Babban Gona, which helped it to take the first step toward its vision "to improve the income and livelihood of one million smallholder farmers by 2025." Later, Babban Gona received support from various organizations in the form of grants/donations, loans, guidance, services, and expertise support...
Impact & Accomplishments
Since inception, Babban Gona had helped thousands of mini farmers' cooperatives in northern Nigeria. During the five-year period (2012-2016), the company had grown 250 times and raised US$10.5 million in debt.
By mid-2017, Babban Gona was providing its services to more than 21,000 smallholder farmers. It had brought 27,000 hectares under sustainable cultivation and improved the yield by two times the national average of Nigeria. Experts stated that the Babban Gona members on an average produced
tons per hectare as against the national average of 1.5 ton per hectare, whereas some top performers under Babban Gona even produced 7.5-8 tons per hectare..
Challenges Ahead
Masha had developed a model which seemed to be working well with growing farmer enrollments, improvement in yields and income, and a high loan repayment rate. But, analysts felt that Masha's vision of adding 1 million framers by 2025 would certainly test the Babban Gona model. Scaling up required not only a large pool of skilled workforce to train farmer leaders and farmers but also a good management team at the top and in Nigeria, getting a workforce with the right skills set and the right experience for top management was a big challenge...
Exhibits
Exhibit I: Babban Gona: 1 Million Farmers by 2025
Exhibit II: Map of Nigeria
Exhibit III:Contribution of Various Sectors to Nigeria's GDP
Exhibit IV: Age structure of Nigerian Population (2016 estimate)
Exhibit V: Unemployment and Under-employment Rate in Nigeria by Age-Group (Q4, 2016)
Exhibit VI: Unemployment Rate in Nigeria (in Percentage)
Exhibit VII: Shocking facts about Nigerian Unemployment as of June 2017
Exhibit VIII: Annual Population Growth (in Percentage)
Exhibit IX: Area Affected by Terrorist Group
Exhibit X: Babban Gona’s Agriculture Franchise Model
Exhibit XI: Trust Group Service Delivery Model
Exhibit XII: Training Smallholder Farmers
Exhibit XIII: Smallholder Farmer with Tailored Agriculture Inputs
Exhibit XIV: Marketing Services
Exhibit XV: Babban Gona Margin Per Hectare
Exhibit XVI: Funding Details of Babban Gona
Exhibit XVII(a): Impact of Babban Gona: Increased Yield and Income
Exhibit XVII(b): Happy Smallholder Farmers with High Yield
Exhibit XVIII: Average Babban Gona Member's Net Income per Hectare (in US$)
Exhibit XIX: Babban Gona’s Satisfied Smallholder Farmers
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