🚁 Heli view: African agriculture is the future… and always will be?

Big guns have been brought to bear in Africa’s agricultural transition – but so far failed to supercharge the sector. 

The latest example: A $61 billion African Development Bank plan to “industrialise African food systems” has run into opposition this month. 

• Civil society groups called the plan a “threat to small-scale farmers”. 

• They accuse the bank of pushing towards agro-industrialisation.

• This in turn would “increase dependency on multinational corporations”.

Why it matters: More than 60% of Africa’s population live in rural areas dependent on agriculture. Meanwhile, crop revenues will fall by 30% due to climate change. 

• Agriculture is the largest sector in Africa’s green economy.

• And no successful transformation is possible without it. 

Early successes: Some progress is made. The transition is focused on innovation.

• Africa has eight of the top ten “scalable disruptive agritech hubs” (see chart).

Battle of ideas: A growing number of solutions is available for sustainable farming. The number of startups and sub-sectors is mushrooming. 

• The focus is, among other things, on specialist information, sales, financing, insurance and distribution. 

Signs of stress: Regardless of progress, sustainable agriculture is far behind other sectors such as renewable energy and carbon markets. 

• Only about 4% of capital funding African tech innovation goes to agriculture. 

Asking for patience: Reasons for the slow pace are to some extent internal.

• John Woolsey, CEO of agri-biotech startup Node Bio, said, “Some technologies take time to roll out as they need network effects, which are slower by nature.”

• Convincing farmers to collaborate with agritech companies has also proven challenging as existing supplier structures and relationships resist change.

• Many farmers lack incentives to transition, especially where customers for greener products can’t immediately match existing ones. 

Infrastructure gap: Farming is furthermore disadvantaged by mostly being situated in the least developed areas.

• The lack of roads and power grids near farms are familiar challenges. 

• The data gap between urban and rural areas is only closing slowly. Feature phones still outnumber smartphones outside cities. That hampers connectivity-based solutions. 

Wow factor: There are nonetheless game-changing ideas that could accelerate transition meaningfully. 

• Modelling shows a 13% yield increase by 2040 if regenerative approaches are implemented compared to traditional agriculture. 

• Other studies suggest the increase could be as high as 40% in the future.

The details: Regenerative agriculture can reduce soil erosion, improve water retention and have biodiversity benefits as well as reduce costs for farmers. 

• 80% of farmers engaged with a sample of agritech providers have reported increases in income & yield.

• Estimates suggest that by 2040 a 50% adoption rate could produce a 30% reduction in soil erosion as well as other significant benefits.   

New evidence: The use of technology in agriculture is modelled to an ever greater degree, showcasing a variety of benefits. 

• Every year, 90 million tonnes of maize are processed in more than 500,000 mostly diesel-powered mills.

• CrossBoundary, the investment and advisory firm, calls electrifying grain mills via mini grids a $2.5 billion opportunity across Africa. 

What’s missing: The biggest bottleneck, many insiders suspect, is not funding or innovation but training on new technologies. 

• Outside capital will need to play a greater role in developing skills. 

• “It is the role of investors like us to push towards incorporating behaviour changes in business models,” said Rebeecca Mincy, Investment Director at the Acumen Resilient Agriculture Fund.