Africa’s economy is inherently dependent on agriculture. More than 32% of the continent’s GDP comes from the sector and it accounts for two-thirds of livelihoods. Yet despite Africa’s vast, resource-rich and arable land, tropical climates and a booming young population it remains a net importer of staple food products (it spent $35bn on food imports in 2011). This devastating reality is further highlighted when we consider the fact that Africa actually has the potential to feed the world as well as itself.
“Africa could replace these imports with their own produce, which would, in turn, reduce poverty, enhance food and nutrition security, and provide sustainable growth to the respective societies.” Otavio Veras howwemadeitinafrica.com
The issue lies in Africa’s agricultural productivity – or lack thereof. Agricultural productivity on the continent still remains far from developed world standards. Over 90% of agriculture in Africa still depends on rainfall, with no artificial irrigation aid*. As well as this Africa’s smallholders still face basic infrastructural challenges and barriers to market access which stifles potential earnings, causes poverty and upholds gender inequality (women make up 70% of Africa’s farming community).
To counter foreign dependency, African governments have attempted to rejuvenate their economy’s agricultural sectors in recent years through a combination of policy and investment including import restrictions, institutional reforms, and direct investment. However many commentators have questioned the effectiveness of such policies. For example, the use of import restrictions on foods such as rice in Nigeria under President Buhari only worked to inflate the cost of a staple food product in many Nigerian households. Instead, focusing more attention on technology change and market improvement has been suggested to be the answer to Africa’s productivity challenges.
Solutions in Agri- Tech
Africa’s adoption of technology has been rapid and unprecedented. Sub-Saharan Africa has the fastest-growing mobile market in the world, increasing at an average of 44% annually since 2000, according to GSMA. Mobile penetration in Kenya is well over 70% and in 5 years the continent has accumulated 700 million smartphones. Some have even suggested that Africa now has more phones than toilets! This type of ‘technological leapfrogging’ has left room for opportunities in technological transformation in many areas. For instance, Africans have rapidly adopted financial technology (fin-tech) as a way of life; this has led to fin-tech solutions leapfrogging the Western world’s traditional way of financial services as we know it.
The same is beginning to be seen in the agricultural industry with the growth of ‘agri-tech’ solutions to help combat productivity challenges. Startups in agri-tech have been popping up across the continent, providing solutions for smallholders from seed to market and everything in between. Ghanaian startup Landmapp provides a solution to every smallholder’s initial challenge: land ownership. Landmapp uses a mobile mapping and data collection technology to offer farmers affordable land rights documentation that is fully compliant with Ghanaian regulations as well as customary traditions. Poor land governance systems are one of the biggest challenges to agricultural productivity. According to Thisisafricaonline.com, only 10% of Africa’s rural land is registered, leaving the remaining 90% susceptible to contention and corruption which drives up costs and stifles productivity. Thus such technology could reduce the cost of land administration significantly.
On to the issue of trade, the combination of fin-tech with agri-tech has naturally been a common feature of agri-tech solutions since financial access remains a significant barrier to productivity, especially in rural areas. One example is 2-Kuze (duh -KOO-zay), a new digital marketplace for East African farmers to sell their crops and receive payment via their mobile telephones. Smallholder farmers trying to get the best price for their crops are often dependent on middlemen – agents, buyers and sellers who leave them with inconsistent and unpredictable returns. The technology offered by 2-Kuze gives real-time mobile solutions and transparency in the market. That way smallholders are able to get the best deals for their crops and are paid faster. There is also an indirect benefit for smallholders when using this type of platform. A financial log or history is created, which could prove helpful when they seek credit or loans to expand their farms.
Companies such as Farm Shop aim to improve access to information about farming techniques and input quality. Farm Shop agents collect soil samples from farmers, and within a few days send results directly to the farmers via SMS, informing them about what will help improve yields. According to howwemadeitinafrica.com, the average farmer in Ghana uses only 7.4kg of fertiliser per hectare, while in South Asia fertiliser use averages more than 100kg per hectare. As a result, an estimated 8 million tonnes of nutrients are depleted annually in Africa. Agri education/ information sharing like that provided by Farm Shop’s technology is therefore key and has the potential to make a significant impact on productivity.
Financial technology solutions > access to finance > financial freedom > access to quality inputs > agricultural productivity
Technology platforms providing information > access to information/ education > improved skills > agricultural productivity
The Agri-tech startups popping up across farming communities offering solutions to Africa’s productivity woes have been encouraging and have begun to yield significant results. However, given the complexity of Africa’s challenges, it is clear that individual startups cannot be the answer to all smallholder woes. At the moment these startups and their solutions are confined to their individual regions/ farming communities lucky enough to be in the vicinity of such ventures. And in fact, many smallholders remain unwilling to risk testing out new ventures. Moreover, the reality is that despite their promise, these innovative startups will face challenges with scalability that will need to be addressed. Therefore to achieve sustainable economic transformation, innovation will need to be complemented with effective policy, strategy and investment backing. It has been encouraging to see many African governments prioritising the agricultural sector. Combining the innovation we are seeing in agri-tech with investment backing and policy (e.g. in agri education, research, infrastructural investment, entrepreneurship etc.) will build the ecosystem of digitised solutions Africa is in need of. That way Africa may begin to translate its wealth in natural resources into prosperity.
Some examples of Agri-tech startups in Africa:
Greenfingers Mobile (South Africa) – a mobile-first software-as-a-service (SaaS) technology platform that manages and finances large groups of smallholder farmers.
Zazu (Zambia) – allows farmers with extra produce to connect with new markets, while buyers are provided with a more sophisticated and easy way to order more produce for less.
Ghalani (Ghana) – provides a mobile and web-based ERP solution to the contract farming sector that integrates all agricultural supply chain processes seamlessly.
Kilimo Salama (Kenya) – an insurance designed for Kenyan farmers so they may insure their farm inputs against drought and excess rain. Weather stations are equipped with small sim-cards that wirelessly transmit data every 5 minutes to a cloud-based server to create a weather-based index insurance system.
Mfarm (Kenya) – through SMS allows rural farmers in remote areas of Kenya to check the latest market prices, post information on their harvest for buyers to see and purchase, and band together with other farmers in their area to make bulk purchases.
*Only 5% of the cultivated land in Africa makes use of irrigation, with most of the farmers depending on rainfall. In comparison in Asia, 38% of the arable land is under irrigation
What are your thoughts on Africa’s Agri-tech industry? Could it be the solution to productivity shortfalls? Comment below.