Why The African Startup Ecosystem Could Use More AgriTech Enterprises

By  |  September 19, 2018

With current figures indicating that an estimated 70% of the continent’s population depends on it for employment and income, the agricultural sector remains one of the mainstays of Africa’s economy. As of 2016, agriculture was reported to have weighed in with as much as 32% of the continent’s Gross Domestic Product (GDP) and with this statistic, it is not entirely out of place to consider the sector as having the most telling impact and holding the most significant potential in the area of alleviating poverty and empowering people – from the top end to the grassroots.

It is, thus, something of a paradox that despite the sector’s proven efficacy in bringing about all-inclusive, continent-wide growth, it is still somewhat neglected. In such African countries as Malawi, Uganda, Zambia, Ethiopia, Mozambique, and Tanzania, the agricultural sector is envisaged to hold immense potential in the aspects of job creation and poverty alleviation, but it does call for concern that this treasure can hardly be said to have been exploited or explored for its true worth in various parts of the continent.

The entire situation has all the makings of a scenario where it seems like we have got so much and we have given back so little. It makes for gloomy reading that even as the importance of agriculture to Africa’s development gets drummed up almost ceaselessly, an estimated 160 million of the continent’s population still suffer from hunger and starvation. And this is the direct consequence of inadequate food production, amongst a myriad of other factors.

Simply put; a considerable number of people in Africa are having trouble getting enough of a necessity as basic as food because the agricultural system is flawed. It will be apt to say that we are facing an imminent food crisis because we are yet to optimize our farming practices, and this assertion is buoyed by the fact that many African farmers still decry the lack of access to sufficient inputs, dearth of funds, and inadequate agricultural extension facilities as just a few mentions of factors that hamper growth on a small scale.

This, thus, informs the need for a return to the drawing board. Individuals are quick to apportion a large part of the blame to the government, and while these grievances may not be entirely unfounded, a new approach needs to be sought to change the agricultural narrative as a better alternative to sitting on the fence and sulking. And in recent times, African entrepreneurs and innovators appear to have been pioneering this new approach which is aimed at addressing some of the many challenges bedeviling Africa’s agricultural sector. The task at hand is, in many ways, daunting and intimidating. But with the significant strides made and successes so far recorded by a number of African agritech startups in the area of combating the problems associated with the sector, there is cause for optimism and we can only hope for the establishment of many more of these enterprises whose business models have a bearing on alleviating hunger and extreme poverty.

African Agritech Enterprises On An Upward Surge?

The Agritech sphere of the African startup ecosystem can be thought to be witnessing remarkable growth. A recent startup and VC ecosystem funding report put together by WeeTracker for the first half of this year revealed that African agritech startups amassed a total of 10 deals during the first half of the year, with only the fintech and healthtech sectors faring better with 25 and 13 deals respectively. As at early this year, the African agritech space boasted up to 82 startups of which more than half that number are believed to have been incepted within the last two years.

In 2017, African agritech startups are reported to have raked in a respectable USD 13.2 Mn in funding which is made all the more impressive by the fact that it represents growth of up to 121% when juxtaposed with the figures obtained from the previous year. Throw that in with the idea that agricultural applications account for a significant proportion (around 38%) of drone implementations/use cases on the continent and the notion that the African agritech sector is on the rise becomes all the more relatable.

With such names as Kenya’s trio of Twiga Foods, Wefarm, and Tulaa, Nigeria’s FarmCrowdy, Egypt’s FreshSource, Ghana’s Agrocenta, as well as South Africa’s Aerobotics and a number of others, causing ripples in the ecosystem in recent times, there appears to be an air of renewed optimism surrounding the African agritech space as a significant number of startups are popping up and getting in the act. These startups, amongst others, who through their efforts at increasing yield, efficiency, and profitability for farmers, can be considered as putting in significant work towards the development of agriculture on the continent. And more of such establishments will only serve to accelerate the growth of the sector.

Successes And Bottlenecks

Slowly but surely, the proliferation of agritech startups on the continent are beginning to weigh in significantly on both the operations of the farmers and the lives of individuals in general. It may have taken time for enterprises of this nature to gain significant ground and garner some amount of clout in the ecosystem, but efforts are starting to yield substantial fruit.

Valid cases in point exist in the form of Digital Green and Hello Tractor, two agritech startups that can be said to be making significant strides in the sector. While the former claims to have reached out to over a million farmers in countries like Malawi, Ethiopia, Ghana, and Niger through the use of engaging videos aimed at inculcating farming practices that are known to yield optimum results, the latter appears to be making waves in the area of helping farmers increase yield to astronomic levels having worked with over 22,000 farmers in that regard. The earlier mentioned, FarmCrowdy, appear to be doing their own bit too as it boasts having assisted up to 3,000 on such aspects as increasing revenue and expanding operations. These relatively early signs could be construed to imply that agritech startups hold significant promise in boosting the continent’s agricultural sector and there is a lot more in the offing.

But be that as it may, it has been anything but entirely rosy for these agritech innovators as in spite of the hurdles already surmounted, there yet exist a number of lingering concerns, obstacles, and challenges that are threatening to derail the continued growth of the sector. However trivial it may seem at face value, the literacy problem still poses one of the tightest bottlenecks, for starters. Since the smallholder farmers who collectively account for a significant population of the continent’s agricultural machinery are not precisely grounded on tech, there exist difficulties in getting them acquainted to such technological innovations as, say, drone technology, for example.

In any case, it is believed that the general skepticism, misconception, and mistrust which these farmers may have against the full implementation of such innovative technologies can be overridden and eliminated by closing that knowledge gap with the adoption of education and training programs.

There are also economic and financial challenges which are hinged on the notion that even the farmers who themselves are receptive and open to the use of modern technologies, and who are especially in need of it, are hampered by the dearth of the financial capacity to actually procure these technologies, since a lot of them come on the high side with regards to pricing. Problems associated with financing can, however, be overcome through the implementation of payment policies and credit facilities that are suited to the needs of small-time African farmers.

What The Future Holds

It is true that agritech startups are doing their bit and leaving a mark on the African agricultural landscape, but there is still a lot of ground to cover if the goals of increasing productivity, bringing about food security, and improving the lives of the continent’s economically-disadvantaged across the food space is to ever come to fruition.

For starters, countries like Ghana, Nigeria, and Kenya are believed to account for a large proportion (up to 60%) of the continent’s agritech startup population. While this may be doing a solid to the sector’s growth in those circles, it comes with a downside which revolves around the fact other regions that are in dire need of similar developmental efforts suffer neglect. To eschew this lopsided growth to accelerating continent-wide impact for this agritech revolution, startups need to also look towards exploring less-talked-about countries like Chad where food security remains a critical problem.

And there might not be a better time to hop on the bandwagon than now as it is envisaged that food security and hunger may yet pose more significant problems in the future, especially against the backdrop of the notion that global population is expected to climb to an estimated 9.1 billion by the year 2050, with Africans billed to account for 2 billion of that figure. This may sound like the stuff of doomsday preachers, but it is not far-fetched to assert that the world may indeed be caught up in some major hunger crisis if food production doesn’t receive a boost soon.

The African agritech sphere is far from saturated as there is still enough room for many more players. It could be said that most of the startups in the sector build their business models around the eCommerce, supply-chain offering, and this is why some work needs to be done to develop the underlying sections of the sector.

There is still a lot to be desired as a result of the apparent lack of interest or activity in such areas as precision farming and soil management, which is made all the more baffling when it is considered that these are the feeder areas should arguably get the most attention since the operations of all other aspects are hinged on their welfare. Other R&D-driven areas such as robotics, biotechnology, and AI could also use some work as the continent now appears to be ripe for such big moves.

Agritech is indeed a relatively new and emerging sphere in the ecosystem, but that should only serve to trigger concerted efforts in a bid to fast-track its growth and to solving the problems associated with food production. This can serve to alleviate extreme poverty and hunger which still poses a problem in various parts of the continent. Africa’s best shot at ridding itself of both the lingering and the looming socio-economic issues lies in fostering far-reaching agricultural developments, and agritech startups have a role to play in that charge towards all-inclusive and accurate economic emancipation.

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