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.”
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.
