NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, February 7, 2018

Agriculture is big business in Africa. The sector employs 65 per cent of the continent’s labour force, and accounts for 32 per cent of gross domestic product (GDP), according to the World Bank.

Yet it is beset by problems. Africa’s population is growing – it is projected to reach two million by 2050 – but farm productivity is low, as a result of weather changes, lack of technical equipment and expertise, and the movement of young people away from farming areas to cities.

Help, however, is at hand. African entrepreneurs are increasingly seeing the inherent opportunities within the agriculture sector, developing solutions that do everything from help farmers increase their yields to providing better access to markets.

Investors, too, are more and more attracted to a space that, should solutions scale widely enough, open up huge addressable markets. According to Disrupt Africa’s recently released African Tech Startups Funding Report 2017, agri-tech startups across the continent raised a combined total of US$13.2 million in funding last year, the fourth largest of any sector.

This was up 203 per cent on 2016 figures, which had in turn been an increase of 8,660 per cent on the pitiful of US$50,000 raised by agri-tech startups in 2015. It is a sector that has suddenly, and quite dramatically, sprung up the forefront of investors’ minds.

But why the sudden surge in funding? Much of the 2017 total went to one company, Kenya’s Twiga Foods, which raised a US$10.3 million round in July. Launched in 2014, the company uses technology to consolidate the fragmented purchasing power of urban retailers, saving them a trip to the market by delivering to their doorstep better quality and better priced stock.

Twiga Foods chief executive officer (CEO) Grant Brooke told Disrupt Africa it was the size of the market that primarily accounted for the attractiveness of agri-tech startups.

Photo courtesy of A’Melody Lee.