In 2015, a twenty-seven-year-old Lesego Holzapfel moved home to South Africa from the UK to build a sustainable business that invested in agriculture’s most marginalized voices. A year later, a young Nigerian had an idea to use technology to connect farmers with potential investors and markets. Today, Lesego’s company, Bokamoso Impact Investments, empowers South Africa’s invisible rural population to share knowledge and skills via a diverse entrepreneurial platform. Meanwhile, FarmCrowdy has connected more than 25,000 small-scale farmers with over 4,000 unique sponsors via its online platform and in the last two years have raised investments of over US$2 million to support its scaling efforts.
What do Lesego and FarmCrowdy’s Onyeka Akumah have in common? They are both parts of a growing, young, tech-savvy generation in Africa in great need of jobs. And they both demonstrate how ambitious entrepreneurs can help to build globally significant African food markets that meet the mounting demand for nutritious food and better jobs while driving economic growth.
There is a huge opportunity in Africa’s food and beverage markets, which are projected to reach US$1 trillion by 2030. Providing for a growing population with rising incomes means that demand is skyrocketing. Technological innovations are enabling farmers and entrepreneurs across critical value chains to leapfrog, creating an unprecedented opportunity to invigorate a sector that already contributes on average over 20% of countries’ GDP and provides half the population with jobs.
A report released by the Food and Land Use Coalition (FOLU) at the African Green Revolution Forum identifies strong domestic markets as one of four critical transitions needed to support sustainable food and land use systems that deliver benefits for people, health and nature in Africa. The report, People, Health and Nature: a sub-Saharan African Transformation Agenda, outlines actions that governments, businesses, farmers and investors can take to reduce rising hidden costs embedded in the region’s food and land use systems, estimated by the Coalition at a staggering US$650 billion each year (US$1.8 trillion based on global GDP). What’s more, the reforms and strategies involved would open up business opportunities worth US$320 billion per year by 2030.
Thriving domestic markets would be more efficient, productive, healthy and fair. Strong market linkages would equip farmers to invest in boosting yields; improved transport infrastructure and storage facilities would reduce post-harvest losses, ensuring that safe and nutritious food reaches more markets; and intensive activities beyond the farm, including processing, packaging, distributing and retailing food, would enhance the value of Africa’s agricultural produce, lessen dependence on food imports and generate employment opportunities. This is an urgent priority: less than a quarter of the 375 million Africans entering the labour force by 2035 are forecast to find formal wage employment, adding millions to the cost of rural poverty.
At AACE Foods, we have cultivated a local supply chain in West Africa sourcing from over 10,000 farmers and selling locally processed spices, seasonings, corn soya blends and flours to retail, wholesale, commercial and institutional buyers. Through our operations, we help to meet consumer needs, improve farmer livelihoods, boost nutritional outcomes, displace imports and increase the value of exports. Similarly, Sahel Consulting supports private companies to source from farmers in the dairy sector, and engages entrepreneurs in improved seed systems for cassava, yams and maize, fostering technology transfer and ensuring a sustainable source of demand.
Yet entrepreneurs in the region still face serious challenges to enter and scale in agriculture. In a survey conducted by Sahel Consulting, respondents cited three key barriers. First, farmers and rural entrepreneurs struggle to secure affordable finance as they often lack secure land tenure to use as collateral and are costly to reach and serve due to their remote locations. Agri-business SMEs typically need between $25,000 and $250,000 in growth capital, which makes them too large for micro-finance providers and too small to attract commercial investment. Second, weak infrastructure – including unreliable access to roads and electricity – increases inefficiencies in the value chain and limits the scope to support value-adding activities and intra-regional trade. Third, political risk, uncertainty and corruption weaken the enabling environment for businesses and increase risks for private investors.
Supporting young people to enter and thrive in the agriculture sector requires collaboration across both the public and private sectors. The FOLU report outlines a set of actions that can be started today. Governments can invest in infrastructure, introduce stabilising policies and standardise regulation to support private enterprise. International partners can dramatically increase investment in rural infrastructure and agri-businesses can commit to local sourcing to boost funding for Africa’s value chains. Public and private sector players can partner to provide entrepreneurs with access to financing, training, information, and linkages to talent and mentors. For example, NourshingAfrica, spearheaded by Sahel Consulting, is bridging the information, financing and knowledge gaps in the sector.
The next decade is critical. Global and regional trends are putting new pressures on food and land-use systems. But the potential for transformation has never been greater. Africa’s future agri-business leaders are coming of age. The time to act is now.
The FOLU report on sub-Saharan Africa feeds into a broader global report, Better Food Better Futures, which will launch on 16th September.