30th May 24

Key Emerging Trends in African Agribusiness

As we move through 2024, the African agribusiness sector stands at the brink of a transformative era. The sector is buzzing with innovation, technology, and a growing awareness of sustainability. As the continent strives to meet the increasing demand for food security, agribusinesses are at the forefront of this evolution, embracing emerging trends to foster sustainable growth. This article explores the key trends that are shaping the future of African agribusiness.

Digital Agriculture

African agribusinesses are leveraging digital tools from precision farming and data analytics to blockchain-based supply chain management to enhance efficiency and productivity. Mobile applications are empowering farmers with real-time insights into weather patterns, crop management, financial access, and market prices.

An example is innovative agribusiness, Hello Tractor that uses its IoT technology to connect tractor owners and smallholder farmers in Sub-Saharan Africa through a farm equipment sharing application. This application provides equitable and timely access to tractor service to farmers, enabling them to earn more and grow more. The company, has already serviced more than 250,000 farmers since the beginning of 2017. The Hello Tractor platform enables farmers to request affordable tractor services to plant 40 times faster and 2.5 times cheaper than conventional manual methods. The benefits of tractor services for farmers include: planting on time, 63% average savings and upwards of 3 times increase in yield.

Source: Scenario.co.za

Sustainable Practices
Sustainability is a driving force in African agribusiness. There is a growing emphasis on environmentally friendly and socially responsible practices, from smallholder farms to large-scale enterprises. Agribusinesses are adopting regenerative agriculture, vertical farming, organic farming, and eco-friendly packaging solutions. Examples include:

Conservation Agriculture: Practices like minimum tillage, crop rotation, and cover cropping to enhance soil health and reduce erosion.

Agroforestry: Integrating trees and shrubs into agricultural landscapes to sequester carbon, improve biodiversity, and provide additional income sources.

Water Management: Implementing efficient irrigation systems and water-saving techniques to reduce water usage and ensure sustainable water resources.

Renewable Energy: Utilizing solar, wind, and biogas energy sources to power agricultural operations and reduce reliance on fossil fuels.

Organic Farming: Avoiding synthetic chemicals and fertilizers to promote ecological balance and preserve soil and water quality.

Agribusinesses are aligning with these practices to meet the increasing consumer demand for sustainable food choices.

Source: puregreensaz.com

Agro-Processing and Value Addition

Agro-processing is playing a vital role in transforming raw agricultural products into value-added goods. By adding value through processing, Africa can maximize its agricultural potential by creating jobs throughout the value chain, from farm-level activities to processing, distribution, and marketing. Through value addition, farmers and businesses can access new markets, both domestically and internationally, which can lead to increased profitability. Additionally, the adoption of advanced processing techniques and technologies is essential for improving efficiency, reducing waste, and enhancing the competitiveness of local products.

Source: nairametrics.com

When looking at food processing, most food products have been proceed in some way. There are three types of processing methods:

  1. Primary processing: includes simplest of processes such as washing, peeling, chopping, ageing, butchering, shelling, gutting and milling of grain into flour.
  2. Secondary processing: involves conversion of primary processed products into complex food products. An illustration of this is utilizing flour to make the batter and prepare the mixture to make bread. Different models incorporate ageing grape juice with wine yeast to make wine and using ground meat to make hotdogs.
  3. Tertiary Food Processing: has considerable scope of prepared to-eat nourishments, like frozen pizzas and bundled snacks. The expression “handled food” ordinarily alludes to food items produced through tertiary food preparing during new food industries.

For reference, this is a list of Agro-based industries.

FinTech and Innovative Financing

Agri-Fintech operates at the intersection of agriculture and financial technology, focusing on financing, marketing, and logistic solutions within the agricultural industry. It transforms farmers’ access to rural credit, solves payment challenges in cash-based economies, and scales the understanding and mitigation of industry risks. The global agriculture market grew from $12.2 trillion in 2022 to $13.4 trillion in 2023, indicating a significant market potential for Agri-Fintech solutions, however there is still a financial gap to be filled to ensure the growth of African agriculture.

To address this gap, innovative financing models have emerged, offering alternative pathways for agricultural start-ups to secure the necessary capital. Examples include:

  1. Crowdfunding Platforms: involving raising funds from a large number of individuals, typically through online platforms.
  2. Peer-to-Peer Lending Platforms: connect borrowers directly with individual lenders, bypassing traditional financial intermediaries.
  3. Agricultural Development Funds: such as those established by development finance institutions (DFIs) and multilateral organizations, focus on addressing specific agricultural challenges in Africa.
  4. Venture capital (VC) and private equity (PE) firms: provide equity financing to early-stage and growth-stage agricultural start-ups. These investors seek high-growth potential and typically take an active role in the development and management of the invested companies.
  5. Impact Investment Funds: focus on generating both financial returns and positive social or environmental impact. They may leverage blended finance approaches, combining public and private funding sources, to maximize impact and attract additional capital.

The future of Africa’s agrifood sector is indeed bright. As we navigate through 2024, these emerging trends are setting the stage for a more efficient, inclusive, and sustainable agribusiness landscape. The continent is poised for an agrifood revolution that promises to uplift economies and communities.

Agri Frontier stands at the forefront of agricultural transformation, pioneering tailored solutions for the dynamic landscapes of Africa’s agribusiness sector. Contact us for tailored advisory for your agribusiness needs.

By Mercy Mumbua

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