CTA D4Ag report
For the first time, a landmark report on digitalisation for agriculture in Africa compiles and highlights contemporary data on digital solutions that are enabling African agriculture to meet the challenges of its transformation.
Across a continent where 80% of food is still produced by smallholder farmers, digital technologies and innovations are putting Africa on the cusp of an exciting new revolution. As highlighted in a study by CTA and Dalberg Advisors, which is providing the first analysis of its kind, digitalisation is a game-changer. According to the study, there are nearly 400 digital solutions with 33 million smallholder farmers registered across sub-Saharan Africa, with an annual growth of around 45% since 2012. Nevertheless, more than 90% of the market for digital services that support African smallholders remains untapped with a turnover of an estimated €127 million out of a total addressable market of €2.3 million.
These figures are just a taste of what is revealed in the Digitalisation of African Agriculture Report, prepared by CTA and Dalberg Advisors launched on 21 June at the AU-EU agriculture ministerial conference. This impressive report of more than 200 pages paints a clear picture of the recent emergence of digital solutions in African agriculture. It also presents a baseline geographical mapping of these applications and service providers including NGOs, governments, mobile network providers and other commercial actors, etc. Critically, as well as surveying the D4Ag landscape and providing a valuable insight into the actual utilisation of digital solutions in agriculture across the continent (mainly sub-Saharan Africa), the report also provides a forecast for the period 2025-2030 – a first for the agricultural sector.
As data quality improves, the report notes that entrepreneurs developing new digital solutions for agriculture are growing exponentially. “In 2013, when the CTA organised a major international conference on information and communication technologies for agriculture in Rwanda, there wasn’t much happening in this sector. But the past 5 or 6 years have seen a very significant increase in the number of new digital solutions appearing on the market,” says CTA director Michael Hailu in a recent interview with Spore.
A barometer of digital agriculture
The CTA/Dalberg report establishes a benchmark against which it will measure progress every year or every 2 years, acting as a kind of barometer: what does the digital ecosystem in African agriculture look like, who are its main actors, what impacts do different solutions have, what are their growth prospects, who are their real users?
In all, 17 institutions have worked together as part of an advisory council to draw up a methodology, guide the data collection and provide feedback on the content. The report classifies digital solutions for agriculture into five primary use cases (advisory services, market linkage, financial access, supply chain management, and macro agri-intelligence), subdivided into secondary categories. In addition, the experts have proposed new terms – such as middleware – to describe the data infrastructure necessary for the deployment of concrete digital solutions, such as drones, weather stations, soil, pest and crop diagnostics equipment, and field sensors. The report thus shows what digital solutions have achieved to date, sets out prospects for growth in the short and medium term and, above all, analyses what could be achieved by reaching the sector’s full potential at the level of the various operators.
Despite some impressive achievements in digital transformation, one of the key messages of the study’s analysis confirms the digital divide regularly denounced by experts: women are under-represented, accounting for only a quarter of registered users of the digital solutions, while representing about half of the agricultural workforce in sub-Saharan Africa. Given that, in Africa, 1 MB of mobile data costs on average 10% of the average monthly income, women who often earn less than men are left out. Yet digital solutions could increase their capacity to produce, sell more and of better quality.
Young people, on the other hand, are over-represented among registered users (70%), and digital technology can be a driver to attract or retain them in agriculture. At the same time, this figure likely also indicates an important age divide that must be overcome in order to engage the significant proportion of farmers from older groups.
Another striking trend highlighted by the analysis is that there are far more registered users in East Africa, with Kenya leading the way, while paradoxically, there are more solutions in the West. Central and Southern Africa remain less represented overall. Nevertheless, despite the large number of players that make up this young market, only 15 companies have reached a million users or more, accounting for 70% of registered farmers.
The report authors have focused on the number of registered users, which is of interest to donors. But they do not overlook the reality of the situation, which is that the number of active users is far lower. More than a third of users surveyed in the study said they already used at least one form of advanced technology (drones, field sensors, big data or machine learning). However, almost 60% of respondents stated they expected to integrate these types of technologies into their operations in the next 3 years. “This report indicates that despite challenges, the economics are rapidly improving, with a handful of players beginning to develop viable, large-scale businesses. To reach its full potential, companies will now need to focus on converting customer reach to actual use in order for this type of model to yield returns,” says Hailu.
However, the study highlights that investment in digitalisation for agriculture to date has been isolated, scattered, and piecemeal, with efforts to scale-up being unnecessarily duplicated, causing inefficiencies and hampering large-scale, long-term growth. “While the opportunity is immense, the report is not naïve about the challenges that remain and the significant work required by agribusiness, governments, donors, and investors to maximise the transformative impacts of digital agriculture in years to come,” states Michael Tsan, partner at Dalberg Advisors and co-leader of the firm’s global Digital and Data Practice.
The need for all operators to be involved
All the achievements highlighted by this landmark report show how important it is for all stakeholders to invest in digital technology for agriculture, from donors to major technology companies and the agro-industry as a whole; investments in the sector started out with mainly donor-driven financing, but the private sector is now catching up.
The study’s recommendations will be critical for the development of appropriate policies at national and regional, but also continental levels, as well as for the development of human resources, public infrastructure and regulations. “The recommendations for concrete actions to be implemented have the potential to transform the agricultural sector,” says Ben Addom, one of the report authors, and head of CTA’s ICTs for Agriculture team, pointing in particular at the need to build an alliance of all stakeholders and to avoid duplication in effort.
According to Enock Chikava, deputy director of the Bill & Melinda Gates Foundation's Agricultural Development department, countries must start by having a clear vision of their agriculture and its potential for digitalisation. “Once you have the vision, there is the need for infrastructure. You cannot get into digital agriculture if the infrastructure will not allow connectivity, so we need regulations and policies to attract private sector investment,” he said in an interview with Spore.
However, Chikava does not shy away from reality, urging caution to respect the underlying motivation for digitalisation: “If the data already collected, standardised and analysed remains in the hands and control of the few, it defeats the whole purpose of digitalisation. It is only when the data is widely shared that newcomers do not have to spend the same amount of time and effort collecting the same kind of data.”
“Digitalisation is a game changer in the transformation of small-scale agriculture but it must be given the importance it deserves in policies and investments,” confirms Hailu. “Governments should consider digitalisation as a priority area, as it can have a strong impact on the transformation of agriculture, improving productivity, building resilience to climate change and creating opportunities for young people and women. Governments should seriously consider the benefits they could derive from digitalisation as part of their strategies for transforming agriculture.”