Tapping into digital technology platforms to boost farming productivity in Africa
Africa is a bit of an anomaly as far as agriculture is concerned. On the one hand, it has 65% of the world’s available uncultivated arable land, and it has the potential to feed the world. However, a country such as the Democratic Republic of the Congo (DRC), which has the potential to feed Africa’s 1.2 billion people, struggles to feed its own population of about 70 million.
On the other hand, the continent is a net importer of food to the tune of US$41 billion annually. This figure is set to grow to $110 billion by 2025 should nothing change. We also find that the average age of farmers in Africa is about 63 years, and 85% of farming activity takes place on smallholder plots of 2-3 hectares each. At the same time, the youth of Africa are fed-up with the poverty of their parents, who are struggling within the agriculture sector, and are migrating from the rural areas to the cities in the hope of finding a better paying job. Unfortunately, most of them end up unemployed and disillusioned, living in squalor in shacks made of corrugated iron and wood. Those that can, migrate to Europe and elsewhere.
We also find that about 60% of Africa’s population is employed in agriculture, but the contribution of the sector to GDP is at about 25%, on average.
There are various reasons for the low productivity of the agricultural sector in Africa. The size of the smallholder plots, as mentioned, places constraints on the size of the harvest. In addition, the lack of modern irrigation techniques, poor road and rail infrastructure, lack of knowledge of modern farming practices, lack of knowledge of market needs and marketing per se, lack of financing, old age of farmers, lack of political will to bring about meaningful change, poor supply chain channels (including the absence of cold chain facilities) and high post-harvest losses all contribute towards the unacceptably high food import figure. Populist policies of governments pulling out all stops to remain in power have contributed towards this situation.
There is therefore a strong motivation to industrialise and commercialise agriculture. The sector needs to increase its productivity, and to attract the youth back into the sector by increasing the image thereof and making it appear to be “sexy” for the youth. Currently, when they do get involved in the sector, it is at the sexy part of the value chain, i.e. marketing and sales, and not at the coal face on the farms.
According to the African Development Bank (AfDB), Africa has the world’s youngest population. Sixty percent of its 1.2 billion people are under 25 – but only 3 million jobs are created for some 12 million young people who enter the workforce each year. While developed nations turn to robots, blockchain, artificial intelligence and machine learning to solve agricultural challenges, simple, mobile phone-based offerings could produce great results in Africa.
Digital technologies are increasingly being embraced to make farming more interesting. These technologies can be transformational for Africa. Amongst others, there is an increasing need for farmers to access real-time information as climate change brings erratic weather, making traditional knowledge on planting seasons unreliable.
An increasing number of technology initiatives in the agriculture sector are becoming available. Technology is making it easier to get involved in the various sub-sectors of the agriculture industry, as an investor, a supplier, a farmer and as the market. These initiatives, it is hoped, will help the farmers to address many of the challenges and constraints they are currently experiencing. It is also hoped they will attract the youth and entice them to move back into the sector. Below are a number of initiatives that are based on digital technology, all with the aim of supporting the farmers of Africa in various ways.
myAgro: Technology application in Mali and Senegal
myAgro was founded in 2011 and now operates in Mali and Senegal in West Africa. Seeds and fertiliser are two of the biggest costs in a smallholder farmer’s life, but they are sold differently than any other product. While farmers can buy $1 of sugar or 50 cents of oil at their local store, seeds are only sold in bulk – at the cost of $100. The founder of myAgro wanted to make buying seeds more like buying oil or sugar, and to create a system that provides farmers with credit. She subsequently developed a savings-based payment model for seeds and fertiliser, as well as training.
Today myAgro has a team of 300 with its headquarters in Bamako, Mali and a second office in Thiès, Senegal. In a five-year period, the idea of using mobile technology as a savings platform has evolved from a 240 farmer trial to a multi-country programme that serves over 30,000 farmers, proving that farmers can and want to save. myAgro is on track toward its goal of reaching 1 million smallholder farmers and increasing their income by $1.50 per day by 2025 to move above the poverty line and into the middle class.
The myAgro system works as follows:
• It is a mobile layaway system for farmers to save and pay for agricultural inputs
• It operates via scratch-it cards that contain value (a prepaid card system like phone minutes)
• These scratch-it cards are available at local convenience stores, giving smallholder farmers relatively easy access to it
• Accounts are identified by the farmers’ unique mobile numbers
• Farmers text the scratch-it codes to a number to “deposit” their money
• Farmers need to text an order command to make their purchase and have it delivered to them
In the long-term, myAgro sees its model bringing about structural changes in two areas: how governments and multilaterals fund the agricultural sector, and how the financial inclusion sector provides services to smallholder farmers. The company is of the opinion that when myAgro can demonstrate the power of mobile layaway to serve farmers and the bottom of the pyramid, there will be a major disruption in traditional antipoverty strategies for the sector at large. When financing is self-directed from smallholder farmers themselves, it will be sustainable. The market will react to this unlocked capital by providing better and more useful services or products.
eMsika in Zambia
In Zambia, there are 60 agriculture suppliers that provide supplies to 1.3 million farmers and 2,500 agro-dealers across the country, making the ratio of suppliers to farmers 1 to 7,000. This has led to farmers and agro-dealers having to travel long distances, losing valuable time and money while being exposed to accidents and theft.
Zambian startup eMsika is helping farmers find, buy and receive agricultural inputs in a fast, trustworthy and convenient way, as well as access markets for their produce. eMsika is an e-commerce store for farmers, listing over 300 different products in 10 different categories of agricultural input, including poultry, crop protection chemicals and seeds. They enable their clients to source inputs and even contact suppliers in their local language. They also serve areas in Zimbabwe, the DRC, Namibia and Mozambique, with plans to eventually spread across Africa. They have six suppliers across different agricultural sectors, including livestock, poultry and horticulture, plus a database of 500 farmers and 200,000 from affiliates.
The solution also helps farmers sell their own produce. Farmers complain after harvesting of lacking markets in which to sell their produce. Those that exist either under-price them or take a very long time to pay the farmers for their goods. eMsika offers farmers a more efficient and affordable process. They have also introduced a call centre for farmers who want to know more about certain products before buying them. Those in remote areas now have the same opportunity as those in urban areas to get any farm inputs from suppliers of their choice. eMsika has introduced m-commerce features that supplement the use of their website for all customers that are in areas of limited or no internet.
FarmCrowdy in Nigeria
Nigeria’s first digital agricultural platform, FarmCrowdy, aims to help smallholder farmers improve their production. These smallholder farmers struggle to get the financing needed to improve farming methods and boost their yields. FarmCrowdy is trying to fix this by connecting farmers directly with local investors to generate a healthy return for both the investors and the farmer. Most of these small-scale farmers are abandoning their farms and migrating to the cities because they cannot commercialise their operations due to poverty and a lack of finance and access to markets.
FarmCrowdy encourages Nigerians to participate in agriculture while going about their normal day jobs. Investors select the kind of farms they want to invest in via the firm’s website shop, and then release the funds to FarmCrowdy to set it up. Options for investment include maize, poultry, cassava and tomato farms. FarmCrowdy advertises a 20% return every 6 months. After the investment cycle, investors can choose to cash out or reinvest on the platform. Upon receiving investor funds, FarmCrowdy hires farmers, leases land, and helps source seed or buy animals. The farmer gets 40% of the profit, the investor gets another 40% and Farmcrowdy takes 20%. Farmcrowdy plans to expand into markets in west and east Africa.
This digital agricultural platform is another example of Africa’s ability to step up and create the technology to deal with these and other problems. Necessity is the mother of invention – this has always been true for Africa.
FarmCrowdy has developed an exchange business model where it links up the investor on the one hand with the farmer on the other hand. It goes further than just linking up, and ensures that land is leased, and seed and other inputs are procured. By hiring the farmers as well, FarmCrowdy can ensure that competent farmers are selected. It does seem that crowdsourcing will work well in this instance.
Making farming a lucrative option by providing the factors of production (land, capital and labour), FarmCrowdy is taking the steps to ensure that hopefully, amongst others, the youth would be willing to take agriculture more seriously. The kind of returns envisaged are not small change at all. This is the kind of approach that Africa needs to bootstrap the industrialisation of the agricultural sector. All that now remains is that the projects must be transparent and characterised by good governance. The last thing that Africa needs is for this kind of empowering project to run afoul of the law. FarmCrowdy’s business model has served as the basis for various other intiatives, some of them mentioned below.
M-Shamba in Kenya
M-Shamba is a solution for the smallholder farmer leveraging on the power of the mobile phone. It is seen as an agritech social enterprise. M-Shamba has embraced the use of latest emerging technological tools like artificial intelligence, machine learning, the internet of things and blockchain in creating sustainable solutions for the farmer. Their solutions entail the following:
• Interactive voice service: This has proven to be the easiest and most effective way to disseminate information to the smallholder farmers in rural areas. Their voice platform works with/on any local language
• Virtual call centre: To avoid expensive infrastructure, M-Shamba has simplified the use of a call centre through their innovative call centre platform
• Interactive SMS: They broadcast short messages on agronomy, weather forecasts, climate change adaptations, gender mainstreaming, enterprise development and many others through their SMS service
• Customised mobile applications: M-Shamba develops customised mobile apps for their target audience. They can customise apps on GIS, surveys, monitoring, evaluation, trade, learning and financial inclusion
M-Shamba has also launched the following programmes:
• Digital literacy: As farmers must understand some basic digital concepts, M-Shamba has a detailed programme on imparting digital skills to the rural population
• Market access: M-Shamba links farmers to markets through an approach where the markets are identified and farmers are supported to grow crops that meet the quality demands of the targeted market. M-Shamba employs commodity aggregation to meet the needs of the markets
• Farming As A Business: This programme helps farmers evolve from farming as a lifestyle to farming as a business. Farmers are provided with various resources and tools to enable them create enterprises on their farms
According to the statistics on their homepage, the following performance levels have been achieved:
• Smallholder farmer families reached: 68,546
• Acres of land covered so far: 400,040
• Amount of commodities traded: $12 million
• Number of farmer cooperatives they have worked with: 90
Farmers throughout developing economies remain trapped in poverty despite $6 billion in aid spent each year over the past five decades to improve agricultural production and raise standards of living. This is due, in large part, to the disorganised and often antiquated agricultural value chains that persist across emerging markets. As a result, the individual farmers are often left without access to the information and inputs that are critical to improving their livelihoods. Without the right knowledge, labour, and equipment, farmers struggle to properly cultivate their land and plant on time, leading to underproduction and lost income. The Hello Tractor platform enables farmers to request affordable equipment inputs, while providing enhanced security to tractor owners through remote asset tracking and virtual monitoring. This value extends to all stakeholders in the mechanization ecosystem.
Hello Tractor is an internet-of-things (IoT) solution that supports the improved efficiencies, profitability, and transparency in the tractor contracting market. Their solution begins with a tractor monitoring device that can be installed on any tractor, connecting it to the Hello Tractor cloud. Once connected, the device transmits relevant data across their ecosystem.
The solution works with the following stakeholders:
• Tractor owners
• Smallholder farmers
Purchasing a tractor is out of the question for most smallholder farmers, but paying for tractor services is within reach. This creates an opportunity for tractor owners to provide service-for-hire – but first they must identify and organise smallholder farmer demand. Traditionally, this has occurred through word of mouth and poorly coordinated referrals: a friend of a friend knows a farmer in need of ploughing and sends him/her to a tractor owner, cooperative, or hiring association that may or may not be able to deliver the requisite service. Average farm sizes are under one-hectare and plots span large geographies, making the coordination of tractor deployment difficult. Scheduling and recordkeeping is done by memory or by hand, if at all.
Hello Tractor aggregates smallholder farmers’ requests for tractor services on behalf of tractor owners, while providing enhanced security through remote asset tracking and virtual monitoring. This allows tractor owners and manufacturers to expand their markets, reaching new customers who were previously inaccessible. Their solution begins with a hardware monitoring device that can be installed on any tractor, connecting it to the Hello Tractor cloud for remote data tracking and analytics. This durable, adaptable, and affordable device is designed for rugged use and extreme weather conditions. It is fitted with an international SIM card for higher connectivity, but can store activity data locally if no connection exists.
Once the device is in place, data is transferred to Hello Tractor’s mobile applications, where it is displayed in a user-friendly format. The Tractor Owner App incorporates a number of tools to enhance a tractor owner’s business and operations, including accessing new customers, increasing efficiencies and improving oversight. This leads to lower costs, higher revenues and increased trust and transparency.
Farm Capital Africa in Kenya
In Kenya, millions of small-scale farmers are locked out of the country’s formal economy. In 2014, Alex Muriu created Farm Capital Africa with the goal of generating wealth through investing in profitable business ventures in the underfunded agricultural sector. Farm Capital Africa uses the internet to raise funds and mobile money to disburse to agripreneurs (small-scale farmers between ages 25 and 35 – mostly youth and women). The aim is to connect them with investment groups that can help them access funds to scale up their agricultural ventures.
Through its investor networks, Farm Capital Africa participates in a profit- and loss-sharing arrangement between the agripreneurs and the investor. The company provides input financing to small-scale farmers by partnering with local agrovets (places where farmers can buy agricultural and veterinary products). On joining the programme, they can pick inputs from the agrovet on credit and pay upon harvest.
What Alex Muriu in effect has done, is create an agriculture cooperative. Basically the cooperative finances the operations of the farmer, and gets paid at harvest time. The farmer’s land typically serves as collateral for the credit he/she gets from the agrovet. This is somewhat similar to the FarmCrowdy initiative in Nigeria. Given that the initiative is financing the working capital cycle of the farmer, which can be up to a year, it must be financed from somewhere. Given the long operating cycle, the margins must be sufficiently generous to finance this cash cycle gap.
In South Africa, the cooperatives were owned by the farmers themselves, and they kept the margins low. In this instance in Kenya, the investors want a return on their investment. Elsewhere in Africa, we have also seen corporates such as Olam International helping its smallholder farmers with their working capital requirements, interest-free. This is one way of locking in your suppliers, and locking out competitors as far as supply is concerned.
The author, Johan Burger, is a senior lecturer at the Nanyang Business School, Nanyang Technological University, in Singapore. Johan can be reached at [email protected].