More than 90 percent of the market for digital services that support African smallholders remains untapped and could be worth more than €2 billion (US$2.26b), a new report by the Technical Centre for Agricultural and Rural Cooperation (CTA) and Dalberg Advisors says.
The report which found nearly 400 different digital agriculture solutions with 33 million registered farmers across sub-Saharan Africa stated that the market penetration only accounts for six percent of the total $2.6 billion market.
“Digitalisation for agriculture has the potential not just to support agricultural transformation in Africa but to do so sustainably and inclusively for Africa’s 250 million smallholder farmers and pastoralists,” said Michael Tsan, partner and co-leader of Dalberg Advisors global digital and data practice.
“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,” Tsan said.
The study noted that with more investment in the continent’s agrictec industry, African younger population will find farming attractive.
“Digitalisation can be a game-changer in modernising and transforming Africa’s agriculture, attracting young people to farming and allowing farmers to optimise production while also making them more resilient to climate change,” said Michael Hailu, director of CTA.
“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,” Hailu said.
The report identifies online marketplace solutions such as Nigeria’s Agrikore as significant use cases of how digital tools are being built to tackle major challenges of attracting and retaining a significant number of buyers and sellers, and in thus doing, help to solve the problem of inefficient and fragmented agricultural markets.
Also, the report identified Cellulant as being among only 390 active Digitalization for Agriculture (D4Ag) solution providers that are working across the continent and have the potential to not only support agricultural transformation but also the ability to do so sustainably and inclusively.
The report presents evidence on how these enterprises have proven that digital tools can improve market efficiency, transparency, aggregation and integration.
Speaking on this findings of the report, Bolaji Akinboro, co-CEO, Cellulant said “technology is at the heart of transformation in Africa. We believe by innovating around how supply and demand are organised, we can solve Africa’s food crisis.
“We are scaling up our existing payments products in the agriculture sector, this will allow us to increase access to payments for the millions of farmers who are still unbanked, despite the financial inclusion revolution,” Akinboro said in a statement made available to BusinessDay.
Unlike many of the D4Ag solution providers studied in the report, Cellulant’s Agrikore solution was noted to be one of the few marketplace players that are focusing on digitizing at both the input and produce stages by linking all the players in agriculture at the input level (farmers, agro-dealers, financial institutions, governments, development partners ) and at produce level.
Among the digital solutions tracked and analysed in the report were farmer advisory services, which provided weather or planting information via SMS or smartphone applications, and financial services including loans and insurance for farmers.
Other solutions linked farmers with markets for farm inputs and farm produce, or provided supply chain management to improve traceability and last-mile logistics.
Some services used satellite imagery, weather data, powerful big data analytics and machine learning techniques to deliver valuable real-time agricultural insights and forecasts at national and regional levels.
More than a third of participants in the study said they already used at least one form of advanced technology such as drones, field sensors, big data or machine learning, and almost 60 per cent of respondents said they expected to integrate these types of technologies into their operations within the next three years.
According to the report, Africa’s agritech market is an emerging sector with an estimated total addressable market revenue of between €2.3 billion (mid-range estimate but with potential to go as high as €5.3 billion in 2019) and growing at 44% per annum.
Josephine Okojie
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