https://www.engineeringnews.co.za
Africa|Business|Components|Consulting|Cutting|Health|Innovation|Logistics|Services|Sustainable|Systems|Solutions|Infrastructure
Africa|Business|Components|Consulting|Cutting|Health|Innovation|Logistics|Services|Sustainable|Systems|Solutions|Infrastructure
africa|business|components|consulting-company|cutting|health|innovation|logistics|services|sustainable|systems|solutions|infrastructure

Africa digital agriculture needs growth-stage capital and robust, scalable business models

26th January 2022

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

Font size: - +

Digital technologies in agriculture have the potential to transform Africa’s food systems to deliver better livelihoods for farmers, high-quality and more consistent ingredients for processors, and healthy and sustainable diets for consumers.

However, without adequate growth-stage capital and a strong focus on developing robust, scalable business models, meaningful impact will remain out of reach, warns business strategy consultancy Boston Consulting Group (BCG).

In sub-Saharan Africa, only 15 digital agriculture solutions exceed the one-million registered users mark and, in many cases, only 15% to 30% of registered users are active. This showcases the unrealised promise of digital agriculture in Africa and the need to explore various mechanisms that will enable the new frontier for food systems.

“Digital agriculture solutions often fail to scale because of limited growth-stage financing and capabilities. Factors contributing to the high level of risk include restrictive regulatory environments, the challenge of integrating millions of smallholder farmers into the market and the potential negative impact of climate change on the economics of the agriculture market in the years ahead,” BCG says.

As a result, these businesses often need strategic investments, including bridge capital, and expertise in growing complicated business models across multiple geographies simultaneously.

“However, relatively few strategic investors and accelerators are on-hand to provide this support and capital, and most of them are international. Such investors often shy away from ventures that carry high levels of risk, such as those present in early to middle-stage digital agriculture plays in these countries,” the company says.

In its 'The Digital Agriculture Revolution Will Take More Than Innovation' report, BCG conducted an in-depth assessment of activity to understand why digital agriculture has not yet lived up to its potential, how countries might accelerate development of the sector and what may be holding digital agriculture back.

"Domestic agriculture markets in many developing countries remain fragmented and inefficient. This can be attributed to factors such as information gaps, price asymmetries, weak systems for aggregating output and quality assurance, as well as significant logistics and transportation issues.

“Digital agriculture efforts are not sufficiently focused on addressing the situation, yet solutions can, for example, offer price information services for inputs and outputs, enable demand and supply aggregation, and facilitate e-marketplaces,” emphasises BCG Nairobi MD and partner Chris Mitchell.

Digital agriculture ecosystems evolve along a continuum. Different stages require a different balance of investment in enablers, including digital infrastructure, and digital stack components, including mobile infrastructure, digital identity layers and digitisation of land records, BCG says.

For example, 75% of scalable interventions operate in just three countries, namely Kenya, South Africa and Nigeria, all of which have relatively well-developed digital ecosystems.

“Enablers and digital stack components typically do not create immediate impact, but they are critical to the development of high-impact solutions including digital advisories, supply chain solutions, and e-marketplaces,” the company says in the report.

The report also identifies three key stakeholders: governments, private-sector players, development organisations and donors, and the role they can play in advancing digital agriculture.

“It is critical for governments to begin by identifying the maturity level of their country's or region's digital agriculture ecosystems. Governments can also play a critical role in digitising data to make it accessible and structured for digital solutions. Making the digital data available to private-sector players will enable them to focus on developing optimal tools and solutions.”

Additionally, agribusinesses, mobile network operators (MNOs) and small and medium-sized enterprises (SMEs) can provide last-mile access to smallholder farmers. MNOs can drive explosive, cost-efficient growth in digital infrastructure, while large agribusinesses can help support the scaling of winning digital agriculture solutions, BCG highlights.

“Development organisations and partners are uniquely positioned to take an ecosystem approach. They can connect the dots between promising solutions and capabilities, capital, and coordination,” the company adds.

“The cross-cutting nature of the digital solutions will continue to improve inter-connectedness among stakeholders in the agricultural value and supply chains. This will boost efficiencies and productivity earnings in the sector while feeding the growing population sustainably and improving livelihoods of African farmers,” says Mitchell.

Agriculture forms the backbone of many developing economies and provides income and livelihoods for millions of smallholder farmers. These farmers face multiple problems that severely limit their agricultural productivity and income potential. However, digital agriculture can help them overcome these challenges by increasing their productivity and integration into food value chains.

“Digital agriculture has the potential to transform the sector much like digital tools have done in finance and health care,” says Mitchell.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

AutoX
AutoX

We are dedicated to business excellence and innovation.

VISIT SHOWROOM 
Willard
Willard

Rooted in the hearts of South Africans, combining technology and a quest for perfection to bring you a battery of peerless standing. Willard...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.127 0.181s - 170pq - 2rq
Subscribe Now