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Agricultural incubation in ACP countries

Dossier: Agribusiness incubation

Small agribusiness incubators are effectively modernising agriculture in ACP countries. By supporting the creation and development of innovative activities, or the professionalisation of informal activities, they provide a key link in the improvement of agricultural value chains.

A broad range of agricultural activities are incubated from seed production, product processing, to the development of mobile phone applications designed to give stakeholders access to consulting and credit services – strategic activities in the development of agricultural commodity chains.

Contrary to other forms of entrepreneurship support, incubation generally refers to the innovative aspects of an activity in the sector. According to Rémi Kahane of the French research institute CIRAD, “Incubation is currently part of a wider movement in the development of public-private partnerships.” This involves setting up multi-stakeholder environments to boost innovation, entrepreneurship and make effective use of public research results through partnerships with the private sector by fostering the creation of enterprises dedicated to applying research results.

Besides innovation, one driver of incubation is job creation in the agricultural sector, which provides employment for over half of the workforce in many ACP countries. Small and medium enterprises (SMEs) provide more jobs than large industries. The development of a SME network through incubation in the agricultural sector supports better distribution of resources, while also playing a role in import substitution.

Incubator categories

The incubator system is designed to address the fact that enterprises are more likely to go bankrupt in the first few years after start-up than once they are established: guidance and strategic support is therefore beneficial during this difficult period. However, incubators also help start-ups access information and services, which can be challenging for developing countries where resources are limited, whether in infrastructure, advisory services, networking or financing.

Incubators offer easy access to a range of services, including premises, equipment, technology, customer and supplier contacts, financial services, technical and strategic consulting, and professional networks. The incubation community also allows a good flow of information between ‘incubated’ stakeholders. In a nutshell, the support offered by incubators depends on the type of enterprises that are targeted. Given the diversity of practices, incubators could be classified in the following - but not mutually exclusive - categories: technological, backed by universities and/or research centres, specialised in the agricultural sector or value chain, or a mix of these.

Some incubators, such as AgroPME in Cameroon, cover all agricultural activities in order to contribute to the economic development of the entire sector. Others have opted to specialise in different agricultural sectors. For instance, each incubation centre of the Universities, Business and Research in Agricultural Innovation initiative (UniBRAIN, see Viewpoint) is focused on a key commodity, namely: livestock in Ghana, sorghum as foodstuff and raw material in Kenya, non-timber forest products in Mali, banana and coffee in Uganda, and fruit and vegetables in Zambia. Sector-oriented specialisation ensures that there is a good overall understanding of the economic and regulatory environment because one of the challenges is inclusion in the national or regional economy. “By focusing on a single product, an incubator can capitalise on enterprise creation opportunities throughout the sector without too much spreading of invested resources,” says Mary Njeri, communications manager at UniBRAIN.

Many incubators are backed - and sometimes even hosted directly - by research organisations or universities. The aim is to bridge the gap between applied research and commercial use of the deliverables. For example, six incubators have been set up by the Forum for Agricultural Research in Africa (FARA)’s UniBRAIN initiative through the creation of consortia that bring together research centres and the private sector. These gateways have led to the commercialisation of some 50 technologies in five countries (Ghana, Kenya, Mali, Uganda and Zambia), especially in seed production. FARA states that, “Partnerships equally benefit universities, the research sector and agribusiness, while enhancing agribusiness teaching in order to train future graduate entrepreneurs to be immediately operational.” The challenge for universities is to also better professionalise their students, with incubators acting as catalysts for the workforce.

Agriculture-oriented ICTs

Like incubators that have emerged in the wake of the World Bank InfoDev programme, many business incubation centres are specifically oriented towards emerging technology enterprises. “We work in any area as long as the activities are related to new technologies,” stresses Richard Zulu of Outbox, an incubator devoted to new technologies in Uganda. Outbox has counterparts in all ACP countries, for example Buni in Tanzania and TMIL in the Caribbean. Some incubators and networks, such as AgriProFocus in Kenya, combine ICT and agriculture to upgrade the sector and attract youth. This network shares its members’ contacts, which includes 1,000 professionals in the agriculture sector. Immersed in the information society, networking is often a major focus of ICT incubators that offer thematic meetings and online platforms.

ICTs for agriculture also enable the development of agricultural management applications. Regional CTA AgriHack hackathon initiatives have rewarded several flagship projects for developing new technologies of interest for the agriculture sector. With the CropGuard app, for example, farmers can search databases to diagnose crop pest issues themselves, or send photos to agricultural advisors to obtain fast and targeted technical assistance. “We are setting up a real-time communication channel,” says Troy Weekes who, along with Mortimer Seale, both from Barbados, developed this award-winning app at the regional AgriHack Talent Caribbean contest in October 2014.

Another winner of a regional hackathon held in Rwanda in 2013 is the Mobile Banking and Information Software (MOBIS) app, which enables smallholder farmers with a mobile phone to manage their savings, apply for and repay a loan, and monitor their transactions. The app is used in collaboration with savings and credit cooperatives. MOBIS (formerly called Ensibuuko) benefited from an incubation at Outbox, while being one of its most promising members that has fulfilled its potential.

Supporting women

Young graduates – drivers of innovation – are often closely involved in incubation initiatives. But employment opportunities are also an issue as over 60% of young people are unemployed in many ACP countries. Moreover, women are a focus of development support initiatives and are given priority in some incubation projects, especially in the professionalisation of informal activities. Many women manage their own enterprises in rural areas, but their often informal and small-scale activities are poorly acknowledged and they face many barriers in raising the profile of their role, particularly in the absence of land access rights or representation in decision-making bodies. Incubators can facilitate their integration in new markets and help them build their businesses.

In Mauritius, the Food and Agricultural Research and Extension Institute serves as an incubator for small farm product processing businesses founded by women and young people. The incubation initiatives include 6 months of training on agripreneurship and starting a business. “Public support to help get through the early business years is also a good investment for the local economy,” says Rodolphe Carlier, economist at GRET, a French development NGO.

Economic viability, an obstacle

There are still too few national- or regional-scale studies to fully understand incubation. A study carried out under the InfoDev programme however, highlighted that incubators - despite their great diversity - have to overcome similar obstacles, especially in terms of economic viability. Customers, governmental organisations and donors are the main financial contributors: few incubators receive funding from private investors.

While some struggle to secure their income by favouring creditworthy projects, others approach foundations, universities or other public institutions for funding support, or to obtain free office space or expertise.

Nevertheless, international organisations’ growing interest in public-private partnerships is promoting incubation, explains CIRAD’s Rémi Kahane, who is also deputy manager of the Platform for Africa-Europe Partnership in Agricultural Research for Development which, amongst others, supports, via calls to consortia, the emergence of incubators.