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Home-grown ICT solutions in agriculture come from young entrepreneurs

H. Baumüller and K. Lohento

Young innovators in Africa, the Caribbean, and Pacific region, have recognised the need for creative solutions to raise agricultural productivity and the huge prospective market for their ICT-enabled services in agriculture. Although they still face many challenges, their products have the potential to transform agricultural value chains in developing countries.

e-Agriculture entrepreneurship in ACP (Africa, Caribbean, and Pacific) countries probably began in 2004 with the market information services offered by TradeNet in Ghana (rebranded later as Esoko). Today, entrepreneurship is becoming common in this field even if the sector is still nascent in most ACP countries, according to the FAO’s 2015 “e-Agriculture 10 Year Review Report”. This issue of the ICT Update magazine focuses on businesses led by young entrepreneurs who usually face specific challenges and greater difficulties than more seasoned entrepreneurs.

Many young people who develop ICT-based applications for agriculture (ICT4Ag) consider themselves as entrepreneurs or start-up owners (although many have not necessarily been officially incorporated or did not develop a proper business strategy). It is often unclear whether they would define themselves as social entrepreneurs (with the main motivation being the social good) or as business entrepreneurs. Our conversations with young entrepreneurs show that although most of them are truly motivated by supporting the development of the agriculture sector and farmers’ livelihoods, they wish to set up a profitable company to increase their livelihoods opportunities. Indeed, the two goals are not necessarily mutually exclusive, and business and social objectives can also be pursued in parallel.

There are many examples of young e-agriculture entrepreneurs in Africa (and to a lesser extent in the Caribbean and Pacific) along the different segments of the value chain. The publication “Innovate for agriculture”, prepared jointly by the Technical Centre for Agricultural and Rural Cooperation (CTA) and the organisation Ashoka, presents about 30 such businesses, most of which were set up in the last two years.

Photo on the right: Winners of the AgriHack Talent Caribbean in 2014.
Winners of the AgriHack Talent Caribbean in 2014.

The majority of ICT4Ag applications focuses on the production segment, in particular on the provision of extension and advisory services, such as Farmerline (Ghana) and m-Shamba (Kenya). Other innovative examples include GPS-based tracking of livestock (Daral Technologies, Senegal) and “smart” tractors integrating geo-localisation services, SMS features for communication between farmers and tractor owners, and data collection on usage (Hello Tractor, Nigeria).

In the marketing and trade segment, ICT-enabled services have been developed to offer market information to farmers and virtual markets to sell their produce. This segment relates directly to revenue generation for farmers and thus has attracted an important amount of mobile applications and entrepreneurial initiatives.  M-Farm in Kenya, launched by three young women in 2010, is one of the most prominent examples. Others include AgroCentral in Jamaica and MlLouma in Senegal. Also important in this segment are agribusiness and supply chain management services (e.g. mFamrs, Ghana) which can greatly improve efficiencies.

Applications in the consumption segment are fairly new and opportunities for developing innovative applications are still to be explored. One example is Chowberry from Nigeria (former Foodrings) which aims to fight food waste by offering a platform to help collect food for disadvantaged groups. 

As a cross-cutting application, ICT-enabled solutions are also being developed to offer financial services, such as mobile payments, insurance schemes or group lending, some of which are targeted at farmers and other value chain actors while others are more widely available.

What has helped e-agriculture entrepreneurs to emerge?

A number of factors have supported the growth of e-agricultural entrepreneurs in ACP countries. We have seen an increasing ICT democratisation in the agriculture sector. Access to affordable (albeit low-tech) handsets has greatly improved and mobile networks have expanded deep into rural areas. These technological advances have opened up a large customer base for ICT4Ag applications. Also influential has been the growth of mobile banking in many African countries, which has created additional incentives for purchasing phones and expanding the network, has familiarised people with non-call related uses of their phone, and facilitates the provision of ICT-enabled services that require payments.

In addition, entrepreneurs have benefited from the emergence of supportive innovation environments in some ACP countries. ICT innovation hubs have sprung up in several countries, driven initially by visionary entrepreneurs and tech developers (such as the founders of the iHub in Kenya), and more recently also by large companies such as Nokia, IBM, Orange and Safaricom. The hubs offer a space for developers, mentorship from more experienced entrepreneurs, and opportunities to interact with fellow developers, business partners and, sometimes, investors. At the same time, the human resource pool in the ACP regions is growing rapidly, thanks to the large, tech-savvy and increasingly confident and risk-taking youth with improving access to education opportunities through universities and specialised training institutes (such as the Mobile Technology Institute eMobilis in Kenya).

International cooperation has also helped to strengthen ICT innovation and entrepreneurship in ACP countries. ICT4Ag is seen and promoted as a promising means to engage young people in agriculture by making farming more attractive and lucrative as a source of income and offering additional employment opportunities. Donors and development organisations are financing innovation hubs, incubators and accelerators, and provide start-up grants to entrepreneurs and technical support. The World Bank, for instance, has assisted in the creation of mobile innovation laboratories (mLabs) in different regions. CTA has also offered support through various initiatives such as the AgriHack Talent Programme and Plug and Play events. 

Last but not least, while the role of national governments in actively supporting ICT entrepreneurs has been limited in many ACP countries, some examples highlight their potential contribution. In Kenya, for instance, the government has established a unified and open licensing regime, invested in submarine and terrestrial fiber optic cables, removed VAT for mobile handsets, supported an internet exchange point and reduced the calling costs between networks. These measures have played an important role in attracting private sector investment, increasing competition, improving network quality and reducing the cost of mobile access. Some countries have also organised innovation competitions. In Senegal, for example, the telecom regulator Agence de Régulation des Postes et Télécommunications (ARTP) rewarded ICT innovations for agriculture, livestock and health. In Côte d’Ivoire, the government launched an innovation fund of EUR 200 million in July 2016, in collaboration with the African Development Bank, which aims at supporting innovative businesses and start-ups.

Many challenges for young e-agriculture entrepreneurs remain

Despite the rapid growth of e-agriculture businesses and applications, most ICT-enabled solutions have yet to reach scale and companies are struggling to move from start-ups, or even from application owner, to fully-fledged businesses. Young e-agriculture entrepreneurs in ACP regions are facing a number of challenges related to three key factors.

First there are the characteristics of the agriculture sector. While the agri-food sector offers a huge customer base with potentially more than 7 billion clients who consume services on a daily basis, most of the farmers are digitally illiterate and small-scale with limited financial means. They are strongly dependent on climate variabilities and natural hazards, which may suddenly deprive them of many of their assets. Moreover, outdated infrastructure, unreliable electricity and weak network coverage still persist in many rural areas. Despite this reality, many entrepreneurs market their ICT4Ag services to farmers while business-to-business opportunities are weakly explored. Young innovators often have a limited understanding of the agriculture sector, specifically the functioning of value chains and the diversity of stakeholders that could be targeted by service offerings.

The second key factor is the early age of ICT adoption in the agriculture sector. In addition to farmers, other key agricultural stakeholders – such as extension officers, agro-dealers, retailers, agricultural researchers and policy makers – could be promising clients with a higher purchasing power and better access to ICT infrastructure. However, many lack the necessary understanding of ICTs to request or employ ICT4Ag services. This is also due to the fact that ICT applications in the agri-food sector are still relatively new, even in more advanced economies, and many e-services are still being developed (although this can also be seen as an opportunity by e-agriculture entrepreneurs).

Insufficient support for entrepreneurial activities is the third factor. Specific gaps frequently mentioned by young entrepreneurs and application developers include the lack of business courses in agriculture and ICT curricula, the lack of capacities and sustainability in innovation hubs and incubators, the limited availability of venture capital (especially mid-level financing needed for scaling), and an unfavourable business environment in general. The e-agriculture sector is more acutely affected by these challenges because it is a new market with unclear potentials for many stakeholders, including investors. Young entrepreneurs often struggle to develop profitable business models for their products. Information on their target market, its products and services is very limited. As a result, similar solutions are being marketed in parallel and most of them fail to reach profitability.

Looking ahead

Addressing the above-mentioned challenges will require actions at various levels. Governments need to create an enabling environment for e-agriculture (and other) entrepreneurs and then leave the start-up sector to grow. Attracting impact investors will require raising awareness of investment opportunities in e-agriculture and better information about the market potential of ICT4Ag solutions. Innovation environments will need to be further strengthened, not only for e-agriculture, but the ICT sector as a whole, including through sustainable incubation spaces and mentorship. In addition, training opportunities for e-agriculture entrepreneurs need to be expanded by integrating relevant topics in university curricula and developing specific courses and training centres.

Such measures will help to establish the necessary framework conditions for young e-agriculture entrepreneurs to develop and commercialise their applications. In addition, to overcome challenges of marketing, purchasing power and literacy, more developers need to think beyond farmers as the main end users to increasingly target other players in the value chain with linkages to farmers (e.g. agrodealers, processors, supermarkets or insurance providers) or stakeholders that can facilitate the use of ICT-enabled solutions (e.g. farmers’ organisations or savings groups). This will also require thinking beyond mobile phones, which have been the preferred delivery channel for many service providers, to also take advantage of other mobile technologies, such as weather stations to monitor rainfall for insurance purposes, electronic scales and tags for supply chain management or sensors to measure soil moisture and nutrient levels for farm management. Such a broader focus on users and technologies will yield a much greater diversity of ICT4Ag services to support agricultural growth and rural development in ACP countries.

Related links

FAO’s 2015 “e-Agriculture 10 Year Review Report

CTA’s 2016 report “Innovate for Agriculture: Young entrepreneurs overcoming challenges and transforming agriculture

Heike Baumuller’s 2016 publication “Agricultural Service Delivery Through Mobile Phones

 

Copyright © 2016, CTA. Technical Centre for Rural and Agricultural Cooperation

CTA is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). CTA operates under the framework of the Cotonou Agreement and is funded by the EU.