This article features excerpts from the London Stock Exchange Group’s Companies to Inspire Africa 2019 report.
The agricultural sector is an engine of job creation in Africa and accounts for about 60% of total employment in the sub-Saharan region, while the share of jobs across the food system is potentially much larger.
While expanding land under cultivation has boosted African agricultural production, it has come at an environmental cost. Technology has the answer to intensifying agricultural production sustainably without harming the environment, whether by providing access to finance for farmers, powering cooling systems for fresh produce or improving communications with markets.
Here are four companies targeting the agriculture sector which are featured in the London Stock Exchange Group’s Companies to Inspire Africa 2019 report. The publication identifies and celebrates some of Africa’s most dynamic growth businesses.
From field to fork: Selina Wamucii (Kenya)
Selina Wamucii was set up to connect Kenyan smallholders with customers, both locally and overseas. The company offers buyers consistent quality while giving farmers fair pricing and a guaranteed market for their fruit, vegetables, herbs and spices.
Technology lies at the heart of its approach, with a mobile phone-based platform used to shorten the supply chain and manage the relationship with growers. However, farmers do not need to have a smartphone or even access to the internet – they can register with the company simply by dialling a code on their phone.
The company has grown consistently since it was set up in 2015 and has financed its growth entirely through its own cash flow. “We have adopted a patient, long-term view as a company and this has kept us going even in tough times,” says John Oroko, co-founder and CEO.
One of the big opportunities Selina Wamucii has identified is the growing popularity of avocados and related products like extra virgin avocado oil, especially in markets such as China, Russia and the Middle East. “With Kenya now being the largest exporter of avocados in Africa and over 80% of avocados being grown by smallholder farmers, this presents a unique opportunity for Selina, given our fast-growing network of farmers and an optimised supply chain,” says John.
The company is now embarking on an expansion into Ethiopia, with entry into Rwanda, Tanzania and Uganda also planned over the next five years. However, there are challenges ahead, according to John. “Sub-Saharan Africa’s working age population is expected to grow to around 800 million by 2030,” he says. “Agriculture is the only immediate viable economic opportunity for these young people. These young farmers are adaptable to trends and opportunities, including uptake of technology, that will increase agricultural output. On the other hand, climate change is going to be a challenge that needs to be addressed.”
Eye in the sky: Charis UAS (Rwanda)
Charis Unmanned Aerial Solutions (Charis UAS) is the only licensed drone operator in Rwanda, providing rapid and high-quality aerial imagery to customers in a range of industries. The company has tripled in size in the past year, with projects that have included using drones to map the wetlands in the city of Kigali, as well as monitoring construction sites and helping farmers to boost their productivity and yields.
“We have grown the business by showing our clients the value-add of our services, namely: cost and time savings, high-quality data and the best customer service,” says Eric Rutayisire, founder and CEO. “The best marketing comes from customers who refer you to others based on their experience of your work. Furthermore, we have built a strong team of young people with great enthusiasm for the technology.”
Charis is now planning to expand far beyond its home market of Rwanda, with the aim of operating in about 20 countries around the continent within the next five years, tripling its workforce every year as it expands. The main opportunities it has identified are the use of drones in the agriculture, construction, inspection and mining sectors.
As drone use becomes more widely accepted, the opportunities are likely to proliferate, but so will competition. “There are opportunities as more industries embrace the use of drone technology to advance their operations,” says Eric. But, he adds, “there will be more players coming into the industry.”
While regulations may slow the adoption of drone technology in some markets, Eric says a more significant hurdle is accessing government contracts. “The main challenge is having access to government projects. Most projects go to international companies and locals sometimes miss out,” says Eric. “The government should prioritise local companies in tenders and give them a chance in executing local projects. This will increase the capacity of local companies.”
Water courses: CMGP (Morocco)
CMGP has been helping farmers in Morocco to maximise their food production for more than 20 years. The company specialises in the irrigation sector and offers a wide range of products and services, including manufacturing and integration of irrigation and micro-irrigation equipment, primarily for the agriculture and infrastructure sectors.
The company attributes its strong growth in recent years – with an average 30% increase in annual turnover from 2014 to 2017 – to its openness to new ideas. “This growth was made possible thanks to a continuous effort in the development of new products and services, investment in the distribution network as well as strengthening of human resources,” says Youssef Moamah, CEO.
CMGP has also been expanding into new areas, recently buying a business specialising in plant protection products.
The company was set up in 1995 and has built up a 25% market share in Morocco, making it the market leader. It now has ambitions to expand beyond its home base, with Senegal and Kenya the first two markets it is targeting. “In the next five years, CMGP aims to extend its regional coverage to become a leading pan-African operator in the irrigation sector,” says Youssef.
To help with its growth, the company recently attracted investment from London-based Development Partners International (DPI). “CMGP intends to profit from DPI’s proven experience and its deep understanding of the African markets,” says Youssef.
Agriculture is one of the most important sectors in Africa, and given that water scarcity is a critical issue in Morocco and more generally in Africa, the ability to grow food using less water is only likely to become more important in the years ahead.
Ploughshares not swords: Babban Gona (Nigeria)
Babban Gona, which means ‘Great Farm’ in the Hausa language widely spoken in Northern Nigeria, was set up to create jobs and a viable future for young Nigerians in the agriculture sector, and thereby discourage them from joining extremist groups. The business operates a franchise model in Northern Nigeria, providing thousands of farmer cooperatives with a full range of services, including finance, training, agricultural inputs and support for harvesting, storage and marketing. The aim is to help farmers optimise their crop yields, keep production costs down and in the process increase profitability and improve household food security and livelihoods.
Babban Gona focuses on rice and maize and the poultry that uses maize as feed. Kola Masha, managing director, says that over the past year there has been an increase in demand for such food products as a result of the growing population and an emerging middle class. “Demand for Babban Gona’s products is expected to rise,” says Kola. “We see a willingness for customers to use our products.”
The business has grown quickly in recent years and its members have, to date, produced and marketed some 30,000 tonnes of produce. The next stage of growth is now being planned, with the business setting its sights on expanding into new territories in the coming years. “Within the next five years, we will look to expand the model across both West and East Africa,” says Kola. “Babban Gona is targeting having one million farmers across Africa by 2025.”
The demand will be there, given the continent’s growing population, but there will be challenges too. More extreme weather conditions, increased desertification and insecurity are all issues that will have to be faced, but the opportunities are equally apparent. “The industry has high growth prospects, particularly if technology and processes can be developed to surmount these challenges,” says Kola.