In recent years, there has been a surge in the agtech startups in Africa since 2018. Funding in the agtech sector has also risen to 121% between 2016 and 2017 according to the 2018 Disrupt Africa Report.
Since then a Briter Bridges report listed more than 280 agtech ventures in late 2019, a huge increase from 2017. During the Covid-19 pandemic, the agtech industry did not show any sign of slowing down. According to Techcrunch, Factory Africa’s Founder is independently incubating 18 agtech startups in 2021. Between 2018 and 2020 a Disrupt Africa statistics shows that agtech funding was increased by 300%.
Despite the massive growth, Africa still ranks behind the Americas, Europe, and Asia by value as regards global investment in agrifoodtech. According to AgFunder, Africa has only been able to overtake the Oceana region recently. This is because Africa has 25% of global agricultural land. A McKinsey report in 2019 also stated the fact that Africa has 25% of land available for agriculture globally. A McKinsey 2019 report also stated the fact that there is every potential that the agricultural economy will triple in size. The Food and Agricultural Organization projected that the agricultural section in sub-Saharan Africa to grow by an amazing five-time increase between 2015 and 2030.
The majority of the innovation in the agricultural industry emphasize platforms that help to connect people or assist them to create scale between small scale farmers. This development includes Hello Tractor which is expected to be the Uber of farm equipment and seems not to have started having an impact since its inception in 2014. Other startups like Komaza, Agrocenta, and the Nile, a recent South African startup are platforms that focus on linking farmers to each other, to their consumers/buyers, and to their market. One only has to look at the typical length of the agricultural value chain to see the “value” in that.
The Nile tries to be disruptive by reducing buyers’ effort in trying to find fresh produce, to eliminate the need to always go to a physical marketplace at the first step of the value chain, and reducing the time required for the produce to leave the farm and getting to the consumer. It may be difficult for it to conquer the existing players in the industry who have been middlemen for the trade of larger commodities.
Aerobotics has been used by several agtech startups in drone technologies, however, the underlying software that Aerobotics is developing seems to be impressing investors and customers. Investors led by Naspers enjoy Aerobotics and raised $17 m in series B round totaling an investment of $27 m. Also, Komaza has raised funding with its centralizing network for small-scale farmers specializing in forestry. Generally, startups that integrated technology has seen lots of success.
The modest but growing success on the continent does not seem to be focused, with any particular direction, on climate change. A lot of the current agtech startups in Africa claim to focus on sustainability, however, they do not have much to show for this claim with the majority of the development occurring outside Africa and that fact that our planet is phased by drastic climate change evens, there is the ability for startups to provide services that either enhance the sustainability of farming practices or assist to prevent them against future extreme weather.
Africa is evidently lagging behind other continents. This may mean that there are opportunities for startups. As the Klarna case has shown where lots of startups offer almost the same service such as Sezzle and Afterpay, there is room for different startups to duplicate functions on different continents with the current knowledge of a particular ecosystem and a case study to use as a blueprint.
African startups may not be leading in technology however, it certainly does not take away the clear opportunities available for African entrepreneurs and investors in the industry who focus more on local problems and the chances of solving them.
