The Missing Piece for AgTech in Africa

Africa has a booming AgTech scene. Between 2016 and 2019, the AgTech sector on the continent grew by 44 percent year-on-year with over US$19 million invested in AgTech start-ups using digital technologies to build innovative solutions like AI-based analytics operations, drone and satellite services, crowdfunding interventions, and other digital services to meet the growing demand for food and ensure sustainability in the agricultural value chain.

Investment in the space has continued to grow, achieving a record-breaking $482 million in 2021. Unfortunately, global economic conditions, and the high risk nature of agriculture coupled with huge infrastructure gaps have resulted in a downward trend in funding subsequently. In 2023, only $99 million was raised in the first half (H1) as opposed to $429 million of the previous year.

Despite the growth and success recorded in solving a diverse range of needs in the value chain, a bulk of these AgTech innovations only emphasize digitized platforms that help to connect small-scale farmers with buyers. Although digital technology can deliver scaled solutions to the challenges faced in the sector, a weakness of the AgTech ecosystem is the limitation posed by a lack of adequate infrastructure that is required to operationalize interventions and service delivery. As a result, agritech start-ups have less capacity to address the core challenges in the value chain, especially for small-scale farmers.

Viable technology models rely on a vibrant infrastructure network that optimizes technology innovation.

The challenges posed by this infrastructural dearth make up a core aspect of the work of enabling efficient agriculture on the continent. AgTech innovations in Africa that attempt to leapfrog addressing physical infrastructure gaps are severely hampered in their operational capacities either immediately or down the line as the scale is attained. Still, these infrastructure gaps are notoriously difficult to fill, requiring AgTech companies to seek out significant patient capital and necessary partnerships.

AgTech innovations built to match Africa’s current realities need to be hinged on three key pillars of infrastructure, market knowledge, and then technology. Of the three, infrastructure seems to be a key missing piece in solutions that seek to reorganize fragmented food systems in Africa. Small-scale farmers’ ability to benefit significantly from digital technologies still depends on the infrastructure and market structures readily available to support their production activities.

The scalability and sustainability of current and future AgTech solutions in Africa could be dependent on the coupling of infrastructure solutions with innovative technology and localized market knowledge to realize actual game-changing effects for the agricultural sector on the continent.

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