New Market Opportunity: The Digitalisation of African Agriculture

Just over two weeks ago, I analyzed a report on the Digitalization of African Agriculture on twitter. Bandwidth heavy PDFs aren’t user friendly for mobile first or mobile only browsing environments, such as prevalent across much of the African continent, and ‘granulating’ reports is something I’ve gotten into the habit of doing quite regularly for a few years now. This is the first such analysis that I’m bridging over to the blog, and this and subsequent ones will be available under the category “Report Review”.

The full report is available for download on the CTA website.

My Review

In their summary, the report acknowledges the need for human actors – intermediaries, brokers, extension workers – as a critical component of the agricultural value web’s last mile. From the technology perspective, they make the case (again) for the need for “a highly connected, intelligent, real-time agricultural ecosystem that is vastly more productive, efficient, and transparent.”

Illustration by Jam Visueldenken of Amsterdam, 2013

This was the essence of my team’s recommendations to the Dutch government back in 2013, also published at Wageningen, by the University’s Economic Research Institute. However, what the CTA report has comprehensively evaluated is the economic impact and the investment opportunity for agritech – which they dub ‘D4Ag’ in yet another neologism – in the African context, while we focused on the end users at the last mile in our early phase analysis.

They estimate the total addressable market for digital solutions to address the African agricultural space at around 2.3 Billion euros and growing. The four key areas where technology can offer impactful value to the smallholders are:

1.  Advisory Services

2.  Market Linkages

3.  Financial Services

4.  Supply Chain Management

Yes, there are a plethora of macro and micro information services – the bulk of the current and past crop of farmer information systems – but they have been found to be less directly useful, and difficult to monetize in a sustainable manner once donor funding ends. Therefore, I choose leave that sector out of the opportunity spaces for innovative digital services delivered on the mobile platform for agriculture in Africa.
Here are my bulletpoints – drawn from analysing the report – outlining the market opportunity in this emerging space.

  • Competitive Landscape: The report notes 390 active players across the entire African continent as of the first half of 2019. More than half were launched in the past 3 years, and ~ 20% in 2018. The bulk of the players are concentrated in East Africa, and Kenya stands out for its disproportionately high number of both D4Ag solutions as well as farmers onboarded. Pareto’s Law is in action in this space, as largest 20 solutions account for ~80% of farmer registrations.
  • This implies that the Francophone Africa market is either wide open or not comprehensively covered by the Anglophone report. Regionally, Central Africa is the least saturated at this point in time, while opportunities seem open in both Western and Southern Africa. I would hesitate before recommending entering East Africa at the market entry or pilot testing stage, unless the agritech solution is bundled together with more broadly targeted use cases.
  • Profitability: Only 26% of the solution providers surveyed for this report were breaking even. However, optimism is high in this D4Ag space, as it estimates profit margins and revenue per farmer to be higher than the evidence around business model viability and solution desirability documented.

…possible to generate up to €90/farmer annually, though average revenue much lower (e.g., ~€5 for advisory services, ~€25 for market linkages, and €4 for digital financial service intermediaries & supply chain management solutions…

  • Business Models: The viability, feasibility, and desirability of business models and sustainable revenue generation strategies seems to be a bigger challenge than the usability or design as currently faced by the 390 or so solutions surveyed by the CTA/Dahlberg report. Through the rosy optimistic pictures painted for each section, the barriers to adoption (regular usage rather than simply registration) and monetization come through as we read between the lines. From the innovation planning perspective, the vast majority of the solutions are taking the more expensive ‘spaghetti on the wall’ approach to discovering ‘fit for purpose’, and as we discovered back in 2013’s analysis of 100+ mAgri pilots, generous donor funding usually runs out by the time some glimmer of insights on what might work in this rural, informal, economic context emerge for the solution providers to use.
  • The vast majority, at this point of time, also seem to focus on pushing ‘knowledge’ or ‘information’ at the farmer – a top down expert driven approach – rather than uncovering farmer needs that can be boosted via technological intervention, as would be the design planning approach for concept design.
  • Target Audience: The end user is being considered as an individual, as tends to be the case in the first world’s highly individualized urban techno saturated context, rather than understood to be a node in the highly interdependent rural economic ecosystem and a member of a community, and in many locations, a member of various groups addressing different facets of her lifestyle. Little segmentation of the lumpen mass of “farmers” seems to be evidenced by the solutions covered in this CTA/Dahlberg report beyond drawing attention to gender – women make up almost half of the smallholder farmers in Africa – and the youth bulge.

The emergent opportunity seems to lie on well designed platforms supporting diverse use cases and viable revenue models.

Posted in Africa, Airtime, Alternative currency, Analysis, Base of the Pyramid, Biashara Economics, Cattle, Design, Ecosystem, Indigenous & Traditional, Informal & Flexible, Innovation Planning, Livestock, Mobile platform, Platforms, Report Review, Research, rural, Rural Economy, Sub Saharan Africa, Systems, Technology | Tagged , , , , , , , , | Leave a comment

Mobile Money and the Informal Economy: A Paradigm Change

One of the most powerful pieces of data analysis I have come across recently has been the Banque de France’s working paper on the role of financial innovation in the informal economy. In my opinion, the importance of their conclusions are no less than the famous “price of fish” paper of a decade ago – both provide evidence that transforms the way we perceive the role and the impact of mobile telephony in the developing world context.

The essence of the paper by Luc Jacolin, Joseph Keneck Massil, and Alphonse Noah give us robust evidence that the presence of financial services on the mobile platform – basic mobile money transfers, as well as attendant value adds like loans and savings – have a proven relationship to the decrease in economic contribution of the informal sector (the relative size of the informal economy), in that particular country. In their own words:

This paper investigates the impact of mobile financial services – MFS (mobile money, and mobile credit and savings) on the informal sector. Using both parametric and non-parametric methods on panel data from 101 emerging and developing countries over the period 2000-15, we find that MFS negatively affect the size of the informal sector.

According to estimates derived from propensity score matching, MFS adoption decreases the informal sector size in a range of 2.4 – 4.3 percentage points of GDP. These formalization effects may stem from different possible transmission channels: improvement in credit access, increase in the productivity/profitability of informal firms attenuating subsistence constraints typical of entrepreneurship in the informal sector, as well as possible induced growth of firms already in the formal sector. The robustness of these results is supported by the use of an alternative estimation approach (instrumental variables).

These conclusions frame the discourse around MFS in an wholly new way. Conventional research tends to focus on the poverty alleviation impact of mobile money in developing countries such as Kenya, with mixed results. Jacolin et al focus on MFS impact* on the size of the informal economy. Thus, you get the kind of take downs of the poverty alleviation studies as recently published by Bateman, Duvendack, and Loubere, followed by debate  and discussion, even more so on Twitter. The subject matter is far too complex for simple answers and/or simplistic solutions. In my opinion, its a systemic one.

Informality != Poverty

What is left unpacked in these analyses and conversations is the unspoken assumption being made by researchers from the Global North regarding the relative wealth or lack thereof among the economic actors in the informal economy. Informality is not equivalent to poverty, although it may seem that way to academics and economists more accustomed to dealing with numbers rather than people themselves, in situ.

My go to example is Teresia, whom we met selling new clothes under a tree in the market at the border of Kenya and Uganda in spring 2016. At first impression, she seems marginalized, literally in fact operating by the side of the road. But after spending a few days with her to understand her commercial investment decisions and business management practices, one discovers that her annual investment in trade goods (her inventory) and services (transportation; mobile money, etc) ranges around 20,000 US dollars, on average.

Location specific segmentation attributes (by Niti Bhan, March 2016)

She is the perfect example of an informal business that is on the path to future formalization – not yet a proto SME, as we discovered, when segmenting the informal trade ecosystem at the border by their investment capacity, but showing all the signs of being on her way.

Digital economic ecosystem spurred by Mobile Financial Services

More recently, we undertook fieldwork to understand the rapid adoption and utilization of digital platforms among the informal trade ecosystem, this time in the regional hub markets of Nairobi. Here, what I am seeing, is the emergence of a hybrid economy, one that is neither wholly informal, but not yet wholly formalized.

This liminal space can be called the primordial soup from which the formal micro-enterprises are emerging, faster than before, given the exponential growth in usage between 2017 and 2019 that we documented.

Time to change the paradigm of digital development discourse

Thus, we can see why this Banque de France paper has the potential to shape the development discourse around poverty and mobile money services. By shifting our attention away from poverty alleviation – a magic bullet if I ever saw one – to that of transformational change – a decrease in informal sector! a long awaited magic bullet in its own right – we can open up a whole new paradigm in the way we approach the theme of economic development, at the policy design level as well as at the earliest research stages to inform programming and planning.

The evidence provides novel pathways for promoting progressively beneficial transformation of the complex adaptive system we have observed and mapped within the informal economy. And, the rapid adoption of mobile telephony and subsequent digitization imply that fresh lenses are now required for puncturing long held assumptions on poverty and informality that have been holding us back. Separating the impact of mobile money services on the informal sector from the impact on poverty offers a clarity of focus hitherto unknown in the literature, and a far more pragmatic path to follow. As Jacolin, Massil, and Noah conclude,

These findings lay the groundwork for the scarce literature on the macroeconomic impact of mobile financial services, a major dimension of the growing drive towards economic digitalization.



* Agreed, Mobile Financial Services cover a broader scope than mobile money alone, however few of these MFS could work without the foundation layer of a ubiquitious mobile money platform already prevalent in the region or location of study.

Posted in Africa, Airtime, Alternative currency, Analysis, Assumption filter, Banking, Base of the Pyramid, Biashara Economics, Cashless transactions, Economy, Emerging Markets, Flexibility, Income, India, Informal & Flexible, Kenya, Literature review, Loans, Mobile platform, Prepaid Economy & Informal Sector, Research, Savings, South Asia, Sub Saharan Africa, Technology | Tagged , , , , , , , , | Leave a comment

The results, two years on, from Kenya’s Movable Property Security Rights Act 2017

Photo Credit: Cowsoko

Movable property such as household goods, livestock and office equipment has helped add 183,487 loan accounts into the banking sector, a Kenya Bankers Association (KBA) report shows. […]

“The loans that flow out of the banking system on the basis of assets in the register has been growing. This shows that the alternative collateral has started picking up,” he said.

Two years after the movable assets bill was announced in Kenya some results have come our way. I covered the announcement and outlined some future areas of potential impact in a blogpost written in May 2017.

Household items are the most popular type of collateral with 198,873 items having being deposited with various banks since May 2017. KCB, KWFT, Equity and Co-operative Bank are the top banks in lending against these items.

This is followed by motor vehicle where borrowers have used 86,010 cars to get loans from banks and nonbank institutions.

Other popular accounts registered as movable assets collateral include furniture (84,626), equipment (71,396), livestock (27,785), stocks (25,000) and inventory with 19,010 entries in the Business Registration Service.

The Act also accommodates individuals working in the creative industry who can value their assets and obtain facilities against them. For instance, a musician can demonstrate to a bank that they have performance contracts lined up and is thus assured of cash flow to enable them to service the facility they seek.

At the moment, the results are numerical in nature, and the impact of this innovative loan facility has yet to be documented. But if this article is anything to go by, this has definitely had impact on the way banks perceive and serve their addressable target market. It should be noted that the article mentions a delay in the creation of the assets registry by a year, so the outcomes are actually quite healthy for such a short period of time for something wholly new to the banking sector.

Regular reports would be welcome, particularly from the rural areas, accompanied by narratives from the bank’s customers themselves. Still, its thrilling to hear about financial innovation in Kenya that doesn’t come attached to a mobile phone.

Posted in Africa, African Consumer Market, Alternative currency, Banking, Biashara Economics, Business Models, Cattle, Consumer Behaviour, Economy, Flexibility, Livestock, Loans, Perspective, Prepaid Economy & Informal Sector, Rural Economy | Tagged , , , , , , , | Leave a comment

Book Review: Stuffed and Starved by Raj Patel

Although the book I’ll be reviewing today was first published in the year 2007, I only came upon it this year in a used bookstore. Raj Patel’s Stuffed and Starved lays bare the innards of the world’s food distribution systems and the market dominance of the megacorps in the business.

The Guardian’s original review captures the essence of the book succinctly:

His thesis is that the simultaneous existence of nearly 1 billion who are malnourished and nearly 1 billion who are overweight is in fact the inevitable corollary of a system in which a handful of corporations have been allowed to capture the value of the food chain. Moreover, government policies through history have been designed to control our food. Their aim has been to provide cheap food for the urban masses and so prevent dissent at home. The instruments of colonial command may have been replaced with newer mechanisms that give a greater role to the private sector, but control our food they still do with disastrous social consequences, despite all the neo-liberal rhetoric of free trade and choice.

I, on the other hand, could not help but think of the vast informal trade ecosystem that underlies the food production and distribution system in the developing world’s context. Somehow, and this still tends to be overlooked by those who design policies and programmes, fresh produce grown in peri-urban and rural farmlands manages to land in the city’s teeming informal markets.

Photo Credit: Yepeka Yeebo

The last mile of the farm to fork agricultural value chain is still outside of the formal economy’s command and control. Textbook definitions of value chains tend to frame them as linear as those in the more structured ecosystems of the formal economies of the very highly industrialized world, where food can very often be that which is manufactured in a factory, out of chemical components, rather than which is grown, by hand, on a farm that you can visit. And convenience is often a service provided by the market women selling the fresh produce rather than a frozen packet industrially produced and available at the supermarket.

Freshly shredded cabbage (Photo Credit: Niti Bhan)

Patel depresses us with details of the bottlenecks of the global food system but manages to shed light on the cooperative movements around the globe which empower farmers and peasants and enables them to bring their agency back under their control.

Fighting back against this is the movement to regain “food sovereignty” or the people’s right to define their own agriculture and food policies. The idea originated with the global network of peasant farmer organisations, Via Campesina, and has been honed through the early 2000s. Patel sees it as the hope for the future and ends with an impassioned call to action. The “honey trap” of ethical consumerism will not do it, he says; we must organise and reclaim our control of the food system, just as the landless in Brazil and cooperatives in America and Europe have done.

It is the existence (and the near invisibility) of the last mile value webs that give me hope that we have ways and means available to us that we may not yet be wholly aware of that can help us effect positive beneficial transformation of the industrial ‘food’ value chains. One that is sustainable, both ecologically as well as economically, and one that is far more equitable than the system Patel lays bare in his book. Technology might well play its part – as the nascent but burgeoning ‘agritech’ movement in sub Saharan Africa shows – but it will be the resilience and robustness of the so called ‘informal’ economic ecosystem that will ultimately provide the sustainability and endurance necessary for the current system to come through the impacts of the climate emergency that faces us all. The food industrial complex may possess riches and reach, but its dependency on industrial production systems that are rapidly obsoleting themselves, both in the consumer’s eyes, as well as the logistics of fuel and transportation, makes it far more fragile today in 2019 than when Patel wrote his book over a decade ago.

Twelve years after publication, Stuffed and Starved is still a valuable study of the global food ecosystem, and a worthwhile read whether you’re simply an interested layperson, like myself, or pondering the agricultural sustainability for our collective and emerging future.  I recommend it as a must read for anyone contemplating an agritech solution or startup in the developing world context, for a holistic understanding of the larger forces at play surrounding the production and processing of food stuffs, than simply looking at post harvest losses or farm gate prices alone.

Posted in Africa, ASEAN, Base of the Pyramid, Biashara Economics, Book Reviews, Economy, Ecosystem, Emerging Futures, Indigenous & Traditional, Informal & Flexible, Migrant worker, Perspective, Produits de grande consommation (FMCG), Retail in Africa, rural, Rural Economy, South Asia, Sub Saharan Africa | Tagged , , , | Leave a comment

My thoughts on the internet closures by various African governments

There have been a lot of internet shutdowns of late in many countries in Africa. These range from as little as simply blocking access to popular social media apps like WhatsApp and Facebook, all the way to shutting down the entire internet.

What concerns me is the conflation of access to the internet with access to private companies such as the Facebook group or Twitter when voices are raised in support of people’s rights to connect, communicate, and in the majority of the cases, to conduct commerce (be it formal or informal).

There’s an economic cost to these shutdowns, with the greatest impact being felt by the most economically vulnerable. In today’s digital world, connectivity is critical for commerce and communication.

But, is it access to Facebook that is critical or WhatsApp rather than access to the internet and the world wide web?

Facebook’s recent past demonstrates vividly, in places such as Myanmar, what the real cost of unchecked access to a means to rouse violence and subsequent genocide has turned out to be. In India, WhatsApp has been directly blamed for riots and lynch mobs. Owned by the same company, their track record in managing hate speech and its inevitable consequences is shameful at best, and deeply dangerous and disturbing at worst.

As civil society groups and others raise their voices in support for peoples disconnected the global digital economy and society today, I believe we need to be cautious about what we’re speaking up for. I would not speak up for Facebook’s rights – there’s ample evidence they’ve trampled on mine even though I’m not a registered user of their platform – nor would I support other private sector tech giants headquartered far away.

The perception that people cannot communicate with each other, nor organize rightful protests, without the use of this one company or that one is a dangerous one in a world where these companies neither care for our rights nor our privacy.

Instead, there’s an opportunity for the emergence of a plethora of independent African “anti-block” social and commercial solutions -whether SMS based or USSD based or whatever the technology specialists deem fit – that can then be supported if shut down, instead of us raising our voices in support of the Facebook Group of Companies.

Posted in Africa, Mobile platform, Perspective, Platforms, Technology | Tagged , , | 2 Responses

Resurrecting the Perspective blog

A long time ago, sometime in the first couple of months of 2005, I was on the phone with Stu Constantine, the founder of Core77, wondering out loud about future prospects as I contemplated resigning from my position as Director, Graduate Admissions at the Institute of Design, IIT, Chicago. He advised me to start a blog, so as to build a brand for myself, if I was going to venture out alone as an independent professional.

By the end of April 2005, I had gone public with my first blog, Perspective. Over the next couple of years, I was to write extensively on business and design – from my first column in BusinessWeek in December 2005, to my first article in print for New Design magazine in 2006 which was commissioned for a fee.

Yet, I did not consider myself a professional writer, nor a journalist or even, author, although going by my prolific output, I could have claimed any of these roles. Writing was my medium for sketching out early stage design concepts, as the 700+ blogposts in the first version of Perspective show. It was there, during the years 2005 to 2007, that I worked on the then newly popular concept of design thinking – working out, in writing, my thinking on business and design, plus a soupcon of strategy.

The outcome of my thought exercises, in written form, on design thinking, bore their own fruit. But that is a topic for another blogpost. For now, I’ll just say, that, as I re-orient myself towards thinking and writing and research again, for my doctoral studies, the time feels ripe to resurrect the Perspective blog.

Its always had a very personal voice, rather than the soulless professional writing I’ve been doing for the past decade or so, on one site or another, and it was willing to be wrong, to experiment with ways of seeing and thinking and doing, so much so that I have taken my entire website apart just to be able to return to a learner’s mindset again.

It circumlocuted, and it pondered out loud. Alliteratively and frequently. It was a playground for my passionate love for design and business and engineering, and perhaps, it can be so again. Given all the academic work I will have to do over the next four years, having a sandbox, to again experiment with thoughts and concepts, will be a welcome break I look forward to.

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Building the Bridge: Design methods for success in the informal economy

The above is a screen cap of my research plan submitted at the end of March 2019 as part of the doctoral admissions process. Everyone understands its only a working title for a yet to be defined problem statement, which is the purpose of doctoral studies as I see it from the user’s perspective. Both the title and the content are expected to evolve and change as one proceeds with research.

Right now, as I work on my application for a personal working grant so that I can focus on studies fulltime, I am playing around with the title you see as the title of this post: Building the Bridge: Design methods for success in the informal economy

Its self descriptive, provides a hint of the primary discipline, implies the merger of design methods in the business context, and provides all kinds of clues on what the academic verbiage of the doctoral research plan might mean in terms of scope and focus.

However, it too is a work in progress…

Posted in Education, Perspective | Tagged , , , , , , | Leave a comment

I have been granted right to study at Doctoral level by Aalto University School of Engineering

That is a friend’s restored vintage Porsche I’m standing in front of, on the day I heard about my admission to the PhD programme in Aalto University. I’m officially admitted to the department of mechanical engineering, or konetekniikka as its known in suomi.

In the Finnish system, I was admitted as an enrolled student as soon as I signed my acceptance form and I have already received my email address, log in details, and student number. I can, if I want, start taking classes in the summer programme but I will wait until the Fall to begin. I want to take this summer off and enjoy the liminal space between running a business for 12 years, and fulltime studenthood.

Right now, I’m running around figuring out the Finnish financial aid system for living expenses while doing fulltime research. The tuition itself is free, and, as a permanent resident I do get a small amount from social security as well as a fulltime student. I’ll write about that once I get through this week’s deadlines.

I’ll collate all my blogging on this topic of going back to school in your early fifties under the category Education, with the tag PhD.

Posted in Education, Perspective | Tagged , | 2 Responses

Informal 4.0: How Tech Savvy Africans Are Transforming the Informal Economy

Here are my slides. In PDF form.

And the video of the panel discussion.

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Kenya’s informal economy clambering on to the information highway through their smartphones

Sometimes cliches are the only way to communicate the sheer breadth and depth of the transformation now undergoing in the informal sectors, such as trade and light manufacturing, thanks to affordable smartphones and data bundles.

I began calling it digital and not online yesterday when we discovered many people didn’t recognize the word “online” in a question, and thought of it as their smartphone or an app. The next billion online, with their prepaid airtime on low cost devices, have recognized the market potential of the “internet” in the form of Facebook but do not yet recognize the concept of either “online” or the internet.

It was commonly perceived as things you could do with a smartphone that you couldn’t with a feature phone. MPesa, with its robust USSD system, could be used with a 15 year old phone, and thus, like sending a text, or making a phone, has become a basic feature of their mobile phone.

Everything else is magic.

Kenyans have leapfrogged more than just landline infrastructure in their embrace of mobile telephony. They also leapfrogged conceptual understanding of the internet, websites, HTML, and pages, that those of us who began with desktop or laptop computers had visualized conceptually as a model for our own need to understand the system.

We’re seeing wholly new ways of thinking about apps, tools, and services in the “digital world” – which, I find, is the easiest way to describe the span of technologies that most developing countries must straddle – from 2G to 4G and 5G, African countries can’t afford to turn off 2G like Singapore can. Too many people are still using old Nokias, and I was able to purchase an unboxed 2009 model Nokia for $25 in Nairobi’s Central Business District last week.

The future will remain unevenly distributed in the digitization of the informal economies of developing countries, but this is giving rise to interesting developments. Where the system is technologically “backward” as compared to the linear progression in the developed world, it will not have a development path to follow but will and does go off in its own direction of transformation.

What we are seeing here in Kenya is a hybrid digital economy that can be accessed by both featurephones and smartphones, the only caveat being the tradeoff made on the richness of information streams available for each category of device.

This to me also feels like what the mobile internet experience will be like for another decade in Kenya, and a local approximation of societal and demographic change for any other developing country context.

What will not change is the vast majority data management habits – 97% of Kenyan mobile subscribers are on prepaid airtime plans, although there does seem to be a segment of customers who are beginning to see the advantages of postpaid services. I met one of Kenya’s 3% – a Safaricom Platinum customer.

Posted in Africa, Airtime, Biashara Economics, Commerce en ligne (e-commerce), Consumer Behaviour, Emerging Futures, Informal & Flexible, Innovation Planning, jua kali, Kenya, Mama Biashara, Marketing, Mobile platform, Perspective, Platforms, Prepaid Economy & Informal Sector, Research, Strategy, Sub Saharan Africa, Technology, User research | Tagged , | Leave a comment