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2021 Report on Agri-tech Startups In Africa

The journey of the agritech ecosystem is a marathon, not a sprint. Many segments of the agricultural sector still require technology. As a result, new players are expected to flood in.

Across Africa, agriculture is quite integral to the economies of many countries. About 60 per cent of the sub-Saharan population are smallholder farmers, and 23 per cent of the sub-Saharan GDP comes from just agriculture. Despite its importance, agriculture on the continent continues to lag in productivity due to factors such as climate change, insecurity, finance, lack of market access, storage facilities, and mechanization. 

Recently, technology has become a resolve for these problems. The need for a technological footprint has given rise to an agri-tech ecosystem on the continent. Startups in this space are proferring technological solutions to problems faced in the agricultural sector with ultra-modern technologies like drones, automated irrigation systems, soil sensors, etc. They also set up digital systems to help farmers access markets, inputs, insurance, financing, and knowledge to boost productivity.

Nonetheless, due to the limited number of players, Africa’s agri-tech space can be considered nascent. Significant investment is required for the ecosystem to see existing players maximize their potential and welcome new players. With a projected value of $1 trillion by 2030, the continent is poised to become the global centre of agri-tech solutions.

A recent report by Disrupt Africa showed 2021 was a good year for agri-tech space compared to 2020 when the sector faced stagnation owing chiefly to the pandemic. Last year, agritech experienced a steady increase in funding and a surge in the numbers of agri-tech startups. 12 of 22 funded agri-tech ventures disclosed their funding stages. Seed accounted for half of these, but there was also activity at pre-seed (2), pre-Series A (2), Series A (2), and Series C (2). Two startups – 9.1 per cent of the total – secured some debt funding.

According to the report, twenty-two startups – 3.9 per cent of the overall total – secured investment over the year. This represents an increase of 37.5 per cent on the 16 startups(4 per cent) that raised funding in 2020. That year had seen a decline of 17 startups (3.9 per cent of the total) in 2019. The number of agri-tech startups fundraising per year has increased by 2,100 per cent since 2015. The African agri-tech space received a total funding of US$95,101,000, accounting for 4.4 per cent of total funding for African tech startups, a 58.5 per cent increase from US$59,990,000 (8.6 per cent of total) in 2020. That, in turn, had been up from 23.7 per cent on US$48,499,000 recorded in 2019.

Kenya is considered the early pioneer in the African agri-tech ecosystem, and it remains the major attractor of agri-tech investment in Africa. In 2020, Kenya accounted for over a quarter of all funded startups and more than 70 per cent of total investments, up from 59.5 per cent in 2015. Twiga Foods, as before, received the most funding for the space in 2021, accounting for more than half of all funding. Nigeria was also a strong performer in 2021. 

Usually, Kenya and Nigeria account for up to 96.8 per cent of investment within the agri-tech space. The space has often been dominated by one or two mega-rounds each year, but the dynamics of agri-tech investment are changing, and funding is becoming slightly diffused as there are more players now. The two biggest fundraisers in 2021 – Kenya’s Twiga Foods (US$50 million) and Nigeria’s Agricorp (US$17.5 million) – accounted for 71 per cent of total investment, down from 76.5 per cent (Twiga Foods and Aerobotics) in 2020 and 88.4 per cent (Twiga and Apollo Agriculture) in 2019. All funded agri-tech startups employed 1,000 people, an average of 45 per startup.

The impaired growth of gender parity

Women play a significant role in Africa’s agric sector as they constitute about an average of agricultural workers on the continent. In countries like Uganda and Nigeria, women account for 76 per cent and 70 per cent of agricultural labour, respectively. Yet their productivity is low compared to men. They are also heavily underrepresented in principal positions where critical decisions about their welfare in the agricultural sector are made. Social, economic, religious, and cultural factors are underlying factors for this under-representation. 

From all indications in the report, African tech still has a gender problem. Only 121 (21.5 per cent) of the 568 funded startups in 2021 have a woman in their founding team. In Nigeria, for example, 39 out of 161 ventures (24.2 per cent) had at least one female co-founder. Kenya fared well with the number of female co-founders, with 32.2 per cent of its funded startups (28) having at least one female co-founder – better than the pan-African average.

However, Egypt and South Africa underperformed for gender parity. Only 13.9 per cent and 14.6 per cent of their funded ventures had at least one female co-founder, respectively. 

In the agri-tech space, women were underrepresented. Only 9.1 per cent of funded ventures have a female co-founder. Gender inequality remains one of the greatest threats to Africa’s future. Hence, the continent needs to do more to bridge the gender divide. Advancing women’s equality could help the African economy by adding 10 per cent to its GDP, or US$316 billion by 2025.

Things are going well, but they could be better

Arguably, while the feat achieved by the agri-tech ecosystem is laudable compared to previous years, it did not tick all the boxes of success. Of the total US$903,680,00 funding raised in Nigeria, the agri-tech space contributed the least – US$23,708,000 (2.6 per cent). Agri-tech comes after e-health with US$37,605,000 in funding and the transport sector with US$35,620,000 in funding. With the country’s population strength and the relevance of agriculture to its economy, one would have expected more.

The situation was quite different in Kenya where agri-tech was the second best-funded sector after AI. Agri-tech secured funding of US$68,390,000, accounting for 23.4 per cent of Kenya’s total investment. Twiga Foods has always boosted the country’s total funding, and in 2021 it contributed US$50 million to the funding total. 

However, the report raises concern about ensuring a trickle-down effect in the agri-tech sector. This would safeguard startups other than Twiga Foods, Apollo Agriculture, Agricorp, and Aerobotics to access the necessary funding to help them scale. This is a valid concern; decentralization of funds needs to happen at some point. 

The journey of the agritech ecosystem is a marathon, not a sprint. Many segments of the agricultural sector still require technology. As a result, new players are expected to flood in. The global population is expected to reach 8.6 billion in 2030 and 9.8 billion in 2050. By the same year, sub-Saharan Africa’s population will have doubled; the region will be home to one in every four people on the planet. This translates to greater mouths to feed. Hence the need for increased productivity. Presently, 60 per cent of the world’s uncultivated arable land is on the African continent, a great investment potential. These indices coupled with a teeming tech-savvy population on the continent show the agritech space in Africa is a yet to be fully explored goldmine. The potential is infinite.

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