Recover, Regenerate, Act: Africa’s Solutions to Food Systems Transformation – the 2023 edition of Africa Food System Forum took place under this heading.
Food systems in Africa require a considerable transformation as it is estimated that 50%+ of the population works and lives off agriculture and yet 37 out of 54 African countries face “hunger levels that are ‘stressed’ or higher,” per the 2022 Global Hunger Index.
One obvious solution is to increase smallholder productivity. There are many well documented avenues for this that require policy changes, public/private partnerships and all types of innovation. Below we mention a few and highlight the type of digital tools required for their success.
Improving productivity through knowledge
During our conversations with various stakeholders, accurately collecting huge amounts of data through different intermediaries came up as the number one digital challenge that many organisations face when working with smallholders farmers. They need the data to know what is being done at scale in remote areas: crops being planted, outputs produced, techniques used and so forth. Based on the information collected and analysed, they then design pilots or ambitious programs to improve practices and/or provide goods that ultimately increase smallholder production. During and after, they collect new data to measure the impact of their work through time within these communities. Data becomes critical to get more funding to continue work or roll-out operations at a larger scale.
For efficient data collection to work in remote areas it needs to be done digitally from the ground up. Data collection apps need to work offline. The user interface needs to be kept simplistic and focused on the job to be done. The tools need to be light by design and yet be able to collect a considerable amount of information such as pictures and GPS coordinates. Moreover, the right support mechanisms need to be considered time and time again. As we have seen organisations undermining the importance of digitising this process and not equipping staff with at least a smartphone or the right training.
The other part of the equation is knowledge sharing. Fortunately, there is a growing number of private companies providing USSD/SMS based content that reaches the smallholder farmer directly. It informs them on market prices and weather forecasts, or simple agricultural techniques.
Without a direct reach however, content sharing goes through different layers of field operators and agronomists that travel to remote areas to empower communities. We talked to one organisation that reaches more than 400k farmers, through 500 operators on the ground. In addition to data collection, they were struggling to coordinate remote staff and track activities. Disorganised WhatsApp exchanges and inefficient and intermittent back and forth emails make it very difficult to manage teams. As on the ground teams lack reliable connectivity, have poor smartphones and many tasks with deadlines to meet. Ticketing systems help organise communication amongst team and individuals. However, just like the data collection tools previously mentioned, they need to be designed for teams working in challenging environments.
Productive use equipment (PUE) – PAYGO and farming-as-a-service
Farmers across the world could not work without a tractor, an irrigation system or some form of machinery. Yet – most in Africa work their land without any form of machinery.
The main reason is obvious: their inability to pay the upfront costs which becomes a chicken and egg endless riddle. This is where PAYGO and farming-as-a-service comes in.
How do you get a farmer in Africa to buy a tractor? Sell it under a well-designed PAYGO model. Selling of products through PAYGO is now common across Africa, and especially in Eastern Africa. The concept is simple: you pay your asset in mini-installments (daily, weekly, monthly). If the payment is late, the product in many cases will lock itself until you pay your dues. This practice became very popular more than a decade ago with the sale of solar home systems (SHS): a solar panel to power a light bulb, small appliance. Today, it is making its way into the agriculture space and should accelerate.
One company solving the tractor riddle is Hello Tractor: “the company has supported 104 pay-as-you-go customers, financed 300 tractors, and brought mechanisation to nearly 5,000 farmers.”
SunCulture has been selling solar pumps for years under the PAYGO model and in early 2023 set a target of “deploying 274,000 solar irrigation systems over the next 5 years which will directly improve the lives of 1,068,600 Kenyans, create 411,000 jobs, grow 7,100,000 metric tons of food, and generate $5 billion of increased incomes for smallholder farmers.”
There is a significant difference between selling PUE equipment under PAYGO vs SHS: with PUE the product you sell allows your customer to produce more, and therefore makes it easier for him or her to pay you back. It is a virtuous cycle.
Another model is Farming-As-A-Service (FAAS) such as the one deployed by Oorja in India. They provide irrigation, milling and cooling services to smallholder farmers on a pay-per-use basis. Similar to the PAYGO model except that the farmers don’t need to buy or own the asset, Oorja makes the initial investment and the farmers just pay as they use the machinery. Although still a very young company, Oorja has already supported 20,000+ direct or indirect users and they are rolling out their model across India.
We have not come across companies that succeed in the PAYGO or FAAS space without a clear focus on their IT needs. To mentioned a few:
- Within PAYGO you need to collect thousands of payments per day or week in cash or mobile money – and so your ERP/CRM needs to be integrated to mobile money providers
- Most PAYGO products, require activation codes to be communicated to an end-user when they make a payment to unlock the product and use it for the value paid – it requires CRM to be integrated with the manufacturers and bulk SMS providers to send SMS
- Your team is very remote and needs to record all types of data, transactions and interactions: so your IT needs to be designed for the last mile
At the AGRF Summit many organisations present were already reaching thousands, if not millions, of smallholders farmers; it should only be a matter of time before they integrate similar concepts as those mentioned above. The IT tools already exist to support the model, they already have the distribution and many examples of how to do it right.
Seeds and fertilisers distribution – digitising the value chain for greater efficiency
As analysed in a McKinsey report “Supply chains for agriculture in sub-Saharan Africa are fragmented”. They “found that inputs changed hands at least three times before they reached the farmer, moving from national importers to regional distributors to “agro-dealers” (which are typically small, rural shops). Of nearly 1,000 agro-dealers surveyed, 68 percent purchased from local distributors, and only 23 percent purchased directly from manufacturers.” Which can lead to a 20-50% mark-up over import price.
An obvious way to decrease the markup is by reducing the number of intermediaries. If that, however, is not possible – you need to find ways to optimise the existing value chain.
Major corporations like Syngenta, who were present at the summit, have sophisticated tools to manage their internal processes and more. However, it is their implementation partners that sometimes lack the right tools to manage distribution. And, of course, the resellers of these distribution partners clearly lack tools to manage inventory, payments, operators or customer data. It makes the whole chain “digitally” broken and not cost effective.
Digitising up to the small shop is not easy. While keeping control of this digitisation can be even more challenging. On Upya, we solve this through what we call “Entities”. Entities help one organisation manage multiple implementation partners. Each party has its access: it is possible to control everything if you are on top of the value chain, or only see what is relevant if you are below (e.g the small shop). For each layer, you can define permissions on whether a partner only has access to the mobile app or can also create its products, define prices and data collection tools.
As major players use “Entity” like models for their distribution, up to the last mile, they should incorporate this in their cost structure and drive usage through incentives schemes passed down to various implementation partners.
The agricultural potential of Africa is undeniable, its transformation is a must. As solution providers, we all have our part to play. Although there is still a lot of work, we came back confident from the ARGF as we saw and heard that digital transformation is part of the equation and a key element of the needed food systems transformation.
