In a new Atlantic Council report titled ‘Unlocking Africa’s Agricultural Potential: Scaling Agtech to Improve Productivity,’ Aubry Hruby and Fatima Ezzahra Mengoub write that the rise of agriculture technology (agtech) solutions in Africa has opened significant avenues to transform food systems and address long-standing obstacles to improve smallholder productivity. An excerpt is provided below.
Agtech is described as the use of digital technologies to break down market barriers and improve agricultural productivity and sustainability. Improved access to financial services, inputs (such as seeds, fertilizers, and agrochemicals), markets, information, and shared assets are all part of the solution.
While traditional agricultural technologies such as fertilizers, mechanization, seed hybridization, infrastructure development, and cold storage have resulted in green revolutions in farming regions around the world, African nations have yet to fully reap the benefits due to regional fragmentation and long-term underinvestment in infrastructure. Progress in increasing productivity through agtech does not necessitate complex technological innovation; rather, it necessitates the use of digital solutions to connect farmers to loans, inputs, markets, and information.
Agtech businesses are breaking down hurdles for smallholder farmers in 18 African countries. These companies help farmers increase productivity and profitability by improving market access, reducing the value chain, expanding insurance options, and encouraging a shared economy for mechanized equipment.
However, investment in Africa’s agricultural and food sectors increased significantly between 2021 and 2023, with 193 projects with a minimum expenditure of $100,000. While some of these transactions involved food-delivery services, restaurant services, fish farming, and specialist food preparation, the majority of the money went to agtech companies that use digital platforms to improve farmers’ access to markets, inputs, information, equipment, and finance. The progressive growth in investment, increased attention to food security by development finance institutions, and pioneering success of many agtech startups in African markets all point to the agtech subsector’s maturation within the African startup ecosystem.
What are the agricultural technology business models?
The proliferation of mobile phones and the increasing availability of connectivity in emerging markets such as Cambodia, Colombia, India, and Indonesia have made it possible for enterprises to reach smallholder farmers at a low cost. These advancements have allowed businesses to provide loans to the unbanked population using non-traditional credit-assessment procedures.
Smallholder farmers frequently lack access to basic financial services, such as financing to purchase seeds and fertilizer, as well as insurance to protect their livelihoods. These same farmers frequently lack direct market access, weather event information, advice, crop monitoring, and mechanized farming equipment. Given the variety of needs, most agtech firms in emerging economies provide a variety of goods to farmers, with loans being the most revolutionary.
