African Business Magazine

England

Harnessing agri-tech transformative potential

If transforming agriculture in Africa is the objective then technology is surely its catalyst.

Although the sector is still in its infancy agri-tech has made considerable advances in the past five years or so. Whether it’s facilitating access to finance, monitoring and surveying crops or using communication technology to impart knowledge and share best practice, it has enormous potential. As ever, the private and public sectors have a great responsibility to ensure that digital problem-solving is nurtured and encouraged to grow. Maintaining a robust dialogue between all stakeholders will be key to growth and success.

Getting to the farmer

Nearly every service that is tech-enabled will work through a mobile phone. Ensuring that Africa’s rural population is not excluded from the continent’s digital transformation is therefore key to the sector’s growth. While most of Africa’s rural population do own a mobile, Benjamin Kwasi Addom, programme coordinator for ICT in Agriculture at the Technical Centre for Agricultural and Rural Cooperation (CTA), cautions that Africa’s rural connectedness should not be over-exaggerated. “While in Germany I met with some bankers who were thinking of subsidising smart phones for smallholder farmers,” he says. “I don’t think we’re there yet.”

One issue holding back rural development is the hesitance of telecommunications firms to enter rural markets. “The private sector is always interested in returns,” says Addom. “They don’t see the business potential of the rural sector.” This limits the potential of the rural demographic to access tech-enabled agricultural services. The solution, argues Adom, is partnerships with the public sector to build infrastructure in non-urban settings and link villages with cities. Indeed, governments must incentivise private sector involvement to help digitalise the rural economy.

On this front Onyeka Akumah, CEO of Farmcrowdy, a Nigerian agri-tech startup linking farmers with finance, argues that the government is making some progress in bringing the rural sector online by building key infrastructure. At the same time, those looking to work in agriculture understand they cannot wait for government or corporations to fill the gaps.

Farmcrowdy and other tech companies and service providers find ways to work around the lack of infrastructure by learning to deal with the situation at hand. Many offer complex services like bank accounts and access to data through basic phones by using UUSD technology, which grants users access to computer systems through text messages. Slowly but surely, the technological gap between the rural and urban demographic is being bridged.

Tech’s potential

As policy and technology works to bring the rural population online the mobile phone will assume an ever-increasing role in Africa’s rural economy. This opens up a range of possibilities for tech companies looking to provide rural solutions. Access to finance, for instance, is a common problem for smallholders in Africa and agri-tech firms like Farmcrowdy are working to overcome it.

The two-year-old Nigerian startup has already connected over 7,000 farmers with domestic urban investors, who can make returns of between 6 and 25% on their investment. A range of poultry, maize, rice and soya bean farms are on offer. “We’ve given Nigerians the opportunity to invest in agriculture through a secure platform,” says Akumah. The platform, an app, also provides monitoring and knowledge-sharing services which inform both the investor and farmer about agricultural best practice. Through this digital service Akumah argues his company has been able to highlight agriculture as an investable sector to the Nigerian public, and facilitate crucial funding where most commercial banks refuse.

Ivorian startup WeFly Agri is another example of agri-tech’s potential. The company allows agricultural landowners to monitor large areas of land via drones linked to the user’s mobile phone. According to CEO Joseph-Olivier Biley this helps users anticipate diseases, save time overseeing crops, better monitor the workforce and increase control of the land. “Gaining back control of the land means fewer expenses, more visibility and more traceability of the tasks done,” he says. So far the startup has been working with small farmers and large companies like one of Côte d’Ivoire’s biggest rubber companies, Tropical Rubber. Biley reveals that WeFly Agri has increased Tropical Rubber’s productivity by almost 20% since using their services.

Companies such as WeFly Agri and Farmcrowdy who provide much needed services to Africa’s rural sector have boomed in the last few years. “If you look at agri-tech in 2015 there were maybe six startups,” says Akumah. “In 2016 that grew by maybe 200% and today there are so many startups that are focused on agri-tech.” This has attracted an array of investors into the sector ranging from venture capitalists to institutional investors. The sector, according to Akumah, is extremely attractive due to its ability to turn profit while having great social and economic impact. He also likens it to the e-commerce spike a few years ago. “The businesses that build solutions are the ones that draw a lot of attention. It is similar to the rise in e-commerce in 2012 in Nigeria,” he says.

However, unlike, for example, the Kongas or Jumias, very few agri-tech startups have thus far been able to scale in the same fashion. At the moment the scene is still peppered by various small- to medium-sized players, none making a huge impact. Instead of encouraging more startups the challenge now is creating the right enabling environment for the already established firms to scale.

In fact, Adom argues that the continent is replete with initial stage startups. “Initially we started by holding agri-hack hackathons focusing on the development of new apps,” he says. “Then we realised there are enough apps. Most of them are dead and not moving up, so we decided to stop the hacks and focus on getting support for those already established.” This is where the continent must focus its efforts in terms of the agri-tech sector: scaling the companies already in operation.

Governments play catch-up

Governments must create an enabling environment and incentivise investment in this key area of growth. However, many are still figuring out how to respond to agri-tech and, indeed, tech in general. “Most governments are behind in terms of policy,” reveals Adom. “A few of them like Rwanda and Ghana are taking the lead but it’s very hard to monitor.”

Biley points to similar problems with regard to WeFly Agri. “Working with drones is relatively new, so the countries we are targeting either don’t have any regulation, or have too many modifications or too short periods, which made it very difficult at first to follow up with,” he says. “The procedures to obtain licences are also very long.”

In order to fully harness the transformational potential of tech in agriculture, governments must ensure they are fully in the driving seat with regards to regulation and incentivising growth in the sector. The private sector must also work with the government to help bring the rural sector online and expand the reach of those looking to drive technological change outside urban centres.

Tom Collins

The Technical Centre for Agricultural and Rural Cooperation (CTA) is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). CTA operates under the framework of the Cotonou Agreement and is funded by the EU.