What it takes now

Artificial intelligence, big data and blockchain are the hottest topics of our time. The digital transformation of the African agricultural sector is ready for take-off. What will it take for the future of technology to hit the ground running?

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A businessman in Uganda: Here are sold modules for photovoltaics Foto: picture alliance/imageBROKER

By Heike Baumüller

Dr. Heike Baumüller

Dr. Heike Baumüller is a Senior Researcher at the Center for Development Research (ZEF), University of Bonn, operates and coordinates the accompanying research for agricultural innovation (PARI).

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Center for Development Research of the University of Bonn

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The potential for digitalization to transform African agriculture has been gaining traction over the past 15 years. Digital technologies are a fast-evolving field and the arrival of each new technology sparks renewed enthusiasm. Starting with mobile phones in the mid-2000s, today the debate has moved on to advanced technologies such as artificial intelligence, big data and blockchains. So is digitalization of smallholder agriculture in Africa indeed becoming a reality? And what does it take for digitalization to take off on a large scale?

 

Discussions on infrastructure for information and communication technologies (ICT) no longer revolve purely around access. Most people today are covered by 2G networks. Research being undertaken in Nigeria, Ghana and Kenya in the framework of the Program of Accompanying Research for Agricultural Innovation (PARI) has shown that both governments and private sector have played a significant role in expanding and reducing the cost of access. Governments have prepared the ground through policy actions such as liberalizing their licensing regimes for mobile network operators (MNOs), placing requirements on MNOs to share infrastructure, implementing universal access funds or co-financing infrastructure. The private sector took advantage of the spaces created to heavily invest in infrastructure, including sea cables, fibre optic cables and telephone masts.

 

Current state

As a result, access to mobile phones among end-users is now widespread. However, we still see large discrepancies in terms of quality, stability and speed of mobile networks as well as affordability of ICT services. Indeed, in all three countries, networks are not operating to their full potential and the capacities of sea cables are underused. Last-mile infrastructure that links users to the network remains the main bottleneck, as illustrated by current trends in internet use. Data on internet usage collected by the South African think tank Research ICT Africa mirror those of the early days of the mobile phone, i.e. internet use is more prevalent among young, wealthy, educated, urban male users while urban-rural and gender divides persist. Infrastructure quality and cost are partly to blame for these gaps. The broadband market is still very concentrated which could go some way towards explaining the high costs. Other factors include differences in literacy levels and purchasing power of rural customers, high transaction costs as well as cultural norms that shape the control over mobile phones and household decision-making.

 

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Daily life in Burkina Faso: A rice trader shows her mobile phones. Foto: Jörg Böthling/GIZ

Nevertheless, the rapid expansion of mobile networks even into rural areas has led to a proliferation of ICT-enabled agricultural services (ICT4Ag) in Africa since the late 2000s. In Kenya, Nigeria and Ghana, the expansion was driven by the establishment of innovations hubs that offer a space for start-ups to develop their ideas which they can then pitch to the growing number of ‘angel investors’ or at one of the numerous competitions. In parallel, technical skills of developers improved through new university courses or dedicated training institutes. Kenya is at the forefront of this trend, not least due to the widespread use of mobile money which greatly facilitates the provision of services that require monetary transactions. According to the RIA survey, 83% of Kenyans now use mobile money while the share in Ghana stands at 54%. In contrast, mobile money is not yet used widely in Nigeria, primarily due to regulatory issues that prevent the liberalization of the market.

 

A review of existing services in the three countries highlights some interesting trends. ICT4Ag services are becoming increasingly complex. Most of them offer multiple services (such as information provision, access to input or output markets, supply chain management or financial services) and address multiple stages of the value chain. While the provision of information still dominates the services on offer, they are now often combined with services that aim to facilitate farmers’ access to markets. ICT-enabled supply chain management tools as well as innovative financial services, such as crowd-funding, are also gaining momentum. However, detailed information on these services is difficult to find, including on pricing, number of users and, importantly, impacts, which makes it difficult to assess their reach and effectiveness.

 

Anecdotal evidence suggests that most ICT4Ag services remain limited in their scale and struggle to become financially viable. There are several reasons for that. Service providers are affected by existing infrastructure gaps already mentioned above. Access in particular to mid-level finance for service providers also remains an issue. While start-ups can access funding through angel investors and competitions and large business through formal loans, financial resources to enable companies to move from more start-up to medium size are often difficult to obtain.  In addition, most services are mainly target at farmers directly, which on the one hand offers a potentially large market, but on the other hand makes marketing very challenging and costly and limits the sophistication of the services that can be offered.

 

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Malawi: The solar array is charging the battery of the mobile phone. Photo: Jörg Böthling/GIZ

Looking ahead: Strategies for advancing digitalization in African agriculture

Invest in rural connectivity, last-mile infrastructure and electricity to enable the widespread use of digital technologies and in particular smartphones.

While smartphone adoption is still relatively low in Africa, in particular in rural areas, it is expected to increase rapidly in the coming years. The GSM Association projects that adoption rates will almost double to reach 67% by 2025 across Africa. Phone companies are increasingly recognizing that low-income countries are the most important growth market for smartphones and are developing lower-cost technologies that cater specifically to that market. Efforts will need to be made to ensure that this does not remain an urban phenomenon among wealthy households.

 

Take advantage of social media to engage with farmers and the youth.

Social media is driving internet use in Africa, esp. among the youth. According to the RIA data, two thirds of internet users in Kenya and just over half in Ghana and Nigeria are on social media. Similarly, data from the Global Web Index shows that internet users in the three countries spend on average 3 hours a day (or three quarters of their internet time) using social networks and messengers. Thus, social media could be used as an effective channel to engage the youth, disseminate information, facilitate learning among peers, create marketing networks and change the image of agriculture from a subsistence to a business activity.

 

Integrate ICT4Ag services on digital platforms:

ICT-enabled agricultural services are numerous, disjoint and mostly small. Digital platforms can provide a means to aggregate and integrate these services which can then be accessed through a single interface. Thereby, the different services can complement each other, allowing service providers to specialize rather than trying to solve all issues with one service. Such platforms can also reduce transaction costs for marketing individual services. Importantly, they offer opportunities for quality control of ICT4Ag services to enable users to evaluate which services are in fact effective and best suit their needs.

 

Provide a start-up friendly business environment.

Such an environment needs to include elements already mentioned above, such as access to mid-level finance, innovation hubs, infrastructure investments and a space for open and fair competition among mobile network operators and ICT-enabled service providers. Additional investments in education will also be key, including mainstreaming ICTs in schools as well as creating dedicated courses as part of vocational training and tertiary education.

 

Recognize that for digitalization to benefit smallholder farmers, ICT4Ag services do not necessarily need to be targeted at smallholders.

In many instances, farmers can also benefit indirectly, for instance through more efficient supply chains that use ICTs to manage deliveries from smallholder farmers, through better equipped extension agents that use digital technologies to service their farmers, through the use of big data to plan investments in storage, markets and roads, or through more secure land titles documented in blockchain-based land registries.

Über den Autoren

Heike Baumüller

Dr. Heike Baumüller

Dr. Heike Baumüller is a Senior Researcher at the Center for Development Research (ZEF), University of Bonn, operates and coordinates the accompanying research for agricultural innovation (PARI).

Center for Development Research of the University of Bonn

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