Agriculture accounts for approximately 23 per cent of Sub-Saharan Africa’s GDP. Smallholder farmers account for more than 60 per cent of the region’s population. Yet, Africa’s full agricultural potential remains untapped due to several factors ranging from a lack of investment to low tech adoption and poor youth participation.
With nearly 80 per cent of Africans under the age of 35, Africa has the youngest population in the world and its youth population will more than double by 2055. Agriculture could offer several opportunities, but the rate of youth participation in the sector is poor.
Adesuwa Ifedi, Senior Vice President for Heifer Programs in Africa, sees many ways to make the sector more appealing for young Africans, including through support for digital agriculture technologies that could generate a wide range of new job opportunities and higher incomes for smallholder farmers.
Ifedi has worked in the development space in Africa for nearly two decades, having joined with a financial and private sector background. She is passionate about engaging youths to think differently and reinvent agriculture in Africa—and committed to providing funding to do so.
Access to finance is a drawback to the transformation of agriculture in Africa. How can the weak synergy between financial institutions and the agric sector be strengthened? How can the industry be made more appealing to investors? And what role does Heifer International play in this?
The fact is that financial institutions are unlikely to fund SMEs. SMEs in non-Agric sectors have access to double the amount of financing as those in the agriculture sector because the sector is viewed as riskier. So what should we do differently? How can we de-risk the sector? This is a major focus of our work at Heifer International.
Driving sustainable growth in the agriculture sector requires both commercial financing and equity investment. We need to see more innovative financial instruments that are directed at agriculture SMEs. There is a growing understanding that SMEs working across agricultural value chains, such as small-scale seed producers, off-takers who purchase commodities directly from farmers, and processors, play a critical role in the African agriculture sector. These SMEs create much-needed jobs for our youth. This group of businesses often referred to as the missing middle, is now known as the hidden middle. They are not missing; they are simply neglected.
The dilemma for SMEs is that in today’s financing market, there are microfinance banks and commercial banks, most SMEs are either too big for microfinance or too small for commercial lending/investment. Through Heifer Impact Capital, Heifer works to provide blended finance to help de-risk financing for farmer coops and small-scale processors. We also offer innovative grants that help bridge the gap and position these enterprises to access commercial capital. This is because we understand that grants should not be an end in themselves but a springboard to growth.
Heifer helps provide access to finance for farmer cooperatives so more farmers can gain access to capital. Most farms in Africa are so small they struggle even to obtain capital from microfinance lenders. Over the years, Heifer has supported the strengthening of farmer cooperatives and farmer-owned businesses, supporting them to build the financial and business structures they need to be ready to take on commercial capital.
Despite the talks and efforts made in the last decade to transform agriculture in Africa, things do not appear to be moving quickly enough. To a large extent, the continent’s agricultural potential remains untapped. Besides finance, what is the most significant impediment to the sector’s growth? And what can be done to solve it?
Sub-Saharan Africa has the world’s largest area of arable land but the lowest productivity per hectare, with most of the land farmed by smallholder farmers. There is a considerable level of investment already in improving the quality of seeds and inputs to support farmers overall productivity. After access to finance, I would say the most important thing is to improve farmers access to technology and mechanization that can further boost productivity.
In Africa, the average farmer does not have access to a large plot of land, but if he can increase his yield per hectare, he would increase his income. Most smallholder farmers rely on manual labour to plant and harvest their crops. This significantly reduces their output and productivity, compared to if they had access to mechanization.
Today, Sub-Saharan Africa has fewer than two tractors per 1,000 hectares of cropland compared to 10 in South Asia and Latin America. While other regions purchase hundreds of thousands of tractors every year, Africa adds only about three thousand tractors yearly. Exploring innovative ways to drive affordable tractor sharing services for farm clusters is also necessary if we are to solve the tractor problem.
Young people gravitate to sectors/industries with ample opportunities, job security, and high financial returns. How can agriculture be made more appealing to youths?
Young Africans have this thing about them that I feel is inspiring. They have this entrepreneurial knack, and if given the opportunity, many of them will want to start something that they can own.
Because of its size and scope, the agricultural industry offers a significant opportunity not only for job creation but also for young people to start a micro-enterprise and build it into a small business. The sector is not mature. It is not yet at the level where everything works as it should, and that is an opportunity for young Africans to innovate and develop technology that can help close the gap between the sector’s potential performance and its current state.
But first, we have to change the narrative around working in the sector and help young people who may be quick to dismiss the sector to understand why they are in a prime position to capitalize on the opportunities in the sector. If you look at the curriculum in schools today, we are not talking about things likes aquaponics for fish farming or tech integration into agriculture. We have several buzzwords around ag-tech, but it is not being taught at the level where it can change the mindset about the sector.
Also, young people should not be looking at agriculture solely at the farm level. They should look at solutions to farm-level limitations, like developing technology to reduce the labour-intensive nature of farming and new ways to address spoilage by bringing processing, packaging closer to the farms.
We also need to fund initiatives that attract young people to agriculture, and stop our stereotypical way of thinking and investing in the sector so that we can attract the next generation of farmers.
Conferences also have to become more inclusive. If we are to attract young Africans, we must give them a voice and a lens. We only need to look to the entertainment industry that created African idols who inspire young Africans. We need to identify young African entrepreneurs in the agricultural sector, invest in them and position them to attract other young people to the sector.
What are some recent agri-tech innovations in Africa that have piqued your interest?
I recently encountered several through the launch of the AYuTe African Challenge, an initiative of Heifer International. AYuTe stands for Agriculture, Youth, and Technology. We had several entrants who are developing exciting innovations and chose two that we believe are game-changers to be watched in the coming years.
Hello Tractor in East Africa is one of them. They are changing the financing model for tractors while also mobilising farmers to have access to them. They operate an Uber-like model for the tractors, which means that they do not only solve farmers problems; they create jobs for young Africans in rural farming communities around mobilising farmers, tractor owners and tractor operators. This model addresses two things that we are excited about: farmers need to boost yield through access to affordable tractors and job creation across the value chain. Heifer has so far invested a million dollars to support Hello Tractor’s Africa-wide expansion strategy.
The second one I will mention is Cold Hubs. The tomato value chain in Nigeria alone loses up to 40 per cent of everything produced at the farm level because of wastage and a lack of storage. That is 40 per cent that should have been in the farmer’s pocket that he never gets. We cannot address poverty if we cannot address storage and wastage that directly impacts farmer income.
Cold Hubs is an innovation that is driven by solar panels. The company is building solar-powered cold rooms located near local farms to preserve the shelf life of their produce. That seems like a no-brainer, right? But there are very few innovations of this sort happening at a price point that farmers can afford and via a sustainable business model. And that is why we at Heifer have invested half a million dollars in Cold Hubs to help them expand.
Cold Hubs is also creating job opportunities for young people, jobs that require maintenance and management of the storage facility. At Heifer, we believe that any solution that creates jobs while increasing farmers income is a big winner.
There is another start-up I like that seems especially relevant for dealing with challenges highlighted by the pandemic. It’s called Kuza Biashara. The business trains young people to be digital extension service providers and facilitators. They also have a large platform where they aggregate service providers and allow young people in the field to provide services to farmers.
For us at Heifer, one of the things we believe in is farmer capacity building and training at the farm level. But how can you use digital technologies to connect with them? For example, while you and I can interact via Zoom, our farmers do not have access to relevant technology that allows them to enjoy the same privileges they did before COVID. A business like Kuza Biashara can help overcome this divide by equipping young people in farming communities with the technology they can use to go out in the field and connect farmers to training and extension services.
What are some practical ways to eliminate the barriers to tech adoption in Africa?
I have a simple approach to this. We cannot invest in technology for technology’s sake. We must invest in technology in service to the farmer. So we must start from the ground up, with an understanding of the farmer’s education, an understanding of the farmer’s price sensitivity, and the fact that it cannot be overly complex. We must also keep in mind that the farmer probably does not have access to Wi-Fi and power. I think that is where we must begin. Technology must meet farmers on their terms.
This is what the AYuTe Africa Challenge is all about. We are challenging innovators to approach solutions in a new way, where the farmer does not serve the technology, but the technology serves the farmer. That is more sustainable.
How can governments and other stakeholders encourage and scale up innovation in agriculture?
We must understand the success levers in agriculture and support them financially. Farmer cooperatives and farmer-owned agribusinesses are examples of these levers. Because we have worked with both for years, we understand that vertical integration, that enables them to earn income across the value chain is critical to support.
At the middle level, there must be support for the social entrepreneurs and SMEs that bring innovation to farms or that transport food from farm to table. As I noted earlier, we do not have financial instruments tailored to address agriculture SMEs and innovators. Government policies also have to recognize the strategic role of these groups and provide the kind of enabling environment that allows them to thrive.
I also believe that if we put agriculture, youth and technology together, and formulate government strategies that encourage young entrepreneurs to develop and scale-up innovations, we will be able to do great things in the sector. But this will not happen at the scale we want to see until we embrace the role of the next generation of leaders in this sector and include them today in the sector “thinking”.
How does technology and innovation impact food security and sustainability in Africa?
We have to look at the challenges that are driving low productivity at the farm level. We cannot shift our dependency on imported food if we cannot improve our food system within the continent.
The tomato value chain is an interesting one where we can plant and grow tomatoes almost everywhere across the continent, yet we are net importers of tomatoes. The infrastructure required to store and preserve tomatoes at the farm level is not available, and when we process tomatoes within our continent, it tends to be less competitive than the imported ones. All this can change through technology and innovation.
We can make tomatoes more competitive by innovating how we preserve and deliver them to the market as a finished product. We have an example called “Ready Stew” produced by Kaptain Foods, a local processor in West Africa where they are doing something different and adding value to the processed tomatoes.
These types of innovations should not come from development organizations. We should focus on investing in local entrepreneurs who are committed to driving these businesses long after we are gone because this is how they will support their families and achieve their dreams. They are the solution to sustainability.