A startup can generally be described as a young company that is based on a creative idea or offers a new way of doing business, meeting a specific need in the world, and financed by external investors. While the rate of startup success is generally low, when successful, startups can grow into large entities that are influential and or generate large and even billion-dollar revenues. Some of the most renowned entities in today’s world that began as startups include Airbnb, Uber, WhatsApp, Snapchat, ByteDance; the parent company of TikTok, SpaceX, Canva, Pinterest, Instagram, Mailchimp, Netflix, Facebook, and LinkedIn, all of originating in countries such as China, USA, and Australia and outside Africa. One of the most talked about African startups is the Kenyan Mpesa.
In recent years, startups are gaining prominence and significance on the African content. It was reported that in 2020, there were an estimated 6,000 African startups and more than $4.5 billion venture capital was raised, double the amount raised in the previous year. The countries with the highest numbers of startups are Nigeria, South Africa, Kenya and Egypt. African startups cover different sectors including financial, health, education, agriculture, transport and logistics, with financial startups being the most prevalent.
Recent years have also seen an increase in agricultural startups. In this paper, I will describe five agricultural startups that are amongst the most significant and high-impact startups on the African continent. These startups are; AgriPredict, Hello Tractor, AgriProtein, FarmCrowdy, and ColdHubs.
1. AgriPredict
Effective pest and disease risk management is essential for the success of agriculture, without which farmers can lose produce, the quality of produce can deteriorate, all resulting in loss of revenue, food, and export earnings. In Africa, the changing climate, particularly the warmer temperatures, appear to have increased the severity of pest and disease challenges. Examples of pests that are causing havoc in African agriculture include the fall armyworm, the Banana bunchy top virus, and maize lethal necrosis. These pests are causing massive damages across the continent, for example, the fall army worm is estimated to destroy more than 400 000 hectares of crop, worth $3 billion annually.
AgriPredict is a Zambian app that provides farmers with access to accurate, real-time pest and disease identification and management advice. Using this app, a farmer can upload an image of the pest, disease affected part of the crop. Using machine learning, AgriPredict then identifies the pest or disease on the image and suggests the most effective control method, and the nearest agricultural dealer. This information is then sent directly to the farmer, giving the farmer an opportunity to address the challenge timeously and effectively. This real-time service gives farmers a chance to detect and control pests and diseases early, hence, reducing the likelihood of crop damage and losses. This app could be highly beneficial for rural farmers, who rely mostly on the public extension services system, which is known to be poorly resourced, unreliable and unable to reach often remote, distanced rural farmers.
In addition to pest and disease risk management, AgriPredict also provides information about the weather, a critical service that increases a farmer’s preparedness particularly during this era of climate change, which is characterized by unpredictable weather patterns.
2. Hello Tractor
While the benefits of farm mechanization in increasing productivity and incomes are widely appreciated among African farmers, machinery, including tractors, is expensive and therefore out of reach for many farmers, especially smallholder farmers, who are responsible for most of the continent’s food production. As a result, some farmers hire tractors for certain stages of production, a process that is often difficult and expensive, with farmers having to search and bargain with tractor owners.
In 2014, an innovative Nigerian digital app called Hello Tractor was created to connect farmers with tractor owners, hence making tractors more readily accessible to farmers. Hello Tractor works in a sort of Uber-fashion, benefitting both the farmer and the tractor owner substantially. Using Hello Tractor, tractor owners register and hire out their tractors to farmers in their vicinity, generating income. The tractors are fitted with a monitoring device, which allows the owners to keep track of the location and activity of the hired tractor, hence facilitating an off-site, real-time monitoring option. The monitoring device keeps track of the number of hours worked and the condition of the tractor, allowing for fair, and transparent transactions between the farmers and the tractor owners. For tractor owners, this opportunity also ensures optimal use of their tractor equipment. For smallholder farmers, tractors are now just a click-away at affordable prices, hence, making tractors more accessible as and when required, reducing the costs and time spent searching for a tractor. Farmers register on the Hello Tractor app. They pay an initial fee and book a tractor for the date they want. When hiring, farmers can also pool together, saving costs. Hire prices are set according to the hours worked and the type of work done, which removes the need for bargaining or changing prices, creating a fair and transparent business environment.
By increasing farmers’ access to affordable tractors, Hello Tractor is making farming easier, increasing productivity and farmer incomes, especially for smallholder farmers who cannot afford their own tractors. Because of its positive impact on the smallholder farmer, Hello Tractor has been widely adopted. It is now used in more than 10 countries including Kenya, Nigeria, and Tanzania, and has served about 500 000 farmers to date.
3. AgriProtein
Food waste is a massive global challenge that has severe negative environmental impacts. It is estimated that, annually, more than 1 billion tonnes of food are thrown away as waste worldwide, with the main final destination being landfills. When this organic waste rots, it produces methane, which is one of the most potent greenhouse gases and largest contributors to climate change.
In 2008, founders Jason and David Drew from South Africa, came up with AgriProtein, a revolutionary concept that breeds and uses the Black Soldier Fly to recycle food waste and create a range of new, beneficial products that would also offer solutions to other challenges.
AgriProtein’s process begins with collecting food waste from restaurants, municipalities, malls, schools, hospitals, and food manufacturers. Next, the food waste is cleaned to remove any non-organic materials such as plastics and bottles, and crushed into a paste. Following that, Black Soldier Fly larvae, feed on paste, converting the food waste to protein. At pupae stage, the larvae are harvested and processed to creating 3 new products; MagSoil, MagOil, and MagMeal. MagSoil, which is used as soil-enhancing compost, is the residue that is left behind when mature larvae are harvested. MagOil, which is used to manufacture fish pellets and petfood, is fat extracted from pressing the mature larvae. Lastly, MagMeal, which is used to manufacture animal protein feed for fish and poultry, is made from crushing the larvae.
Through its innovative concept, AgriProtein offers solutions to more than just one environmental challenge. Firstly, it diverts food waste from landfills, thereby reducing greenhouse gas emissions. Secondly, it has produced an affordable alternative animal protein feed to fishmeal and soya. Replacing fishmeal is important as it means saving millions of fish that would have otherwise been harvested to create fishmeal for animal feed. Because of its economic potential, especially in producing an alternatively cheaper animal protein feed, the insect (Black Fly Soldier) farming concept has become increasingly popular in many countries around the world.
4. ColdHubs
Africa is known for its poorly developed storage infrastructure, particularly cold storage facilities for the smallholder farmers and their markets. It is estimated that up to 50% of perishable produce such as fruits and vegetables, never makes it to the consumer due to spoilage. Such huge losses translate to lower incomes, with farmers estimated to lose up to 25% of their profit and a wastage of resources used to produce the food.
In 2015, in an effort to reduce fresh agricultural produce losses post-harvest and at the market, Nnaemeka Ikegwuonu from Nigeria launched ColdHubs, a unique environmentally-friendly cold storage services solution aimed at providing efficient cold storage services to smallholder farmers, vendors, retailers and wholesalers. ColdHubs built solar-powered walk-in cold storage rooms (hubs) and placed the hubs strategically at markets and farms within the reach of smallholder farmers, vendors, retailers and wholesalers. The food is packaged in reusable crates, and stacked on the floor of the hub. Fitted with solar panels on its roof, each hub measures roughly 32 square meters, and can accommodate up to 150 units of crates, and store between 2 to 3 tonnes of food at a time. The hubs increase the shelf life of stored food by between 2 to 21 days.
To make the services accessible to smallholder farmers, vendors and small markets, ColdHubs charge for usage of the hubs per crate stored and at an affordable daily rate of $0.50c per crate per day. Each crate can carry up to 30kg of produce. ColdHubs are having a positive impact on the Nigerian market, with smallholder farmers and their markets have access to affordable storage, experiencing reduced produce losses, and increased sales, incomes and profits.
Demand for ColdHubs is high and growing immensely over the years, probably because of its fit to the smallholder farmers and markets, and its durability, with a projected lifecycle of 25 years. It currently services more than 5 000 farmers in Nigeria. The number of hubs increased from 25 hubs in 3 states in 2017 to currently 54 hubs in 22 Nigerian states, while the quantity of food stored increased from 40 000 tonnes in 2020, to 50 700 tonnes in 2021.
5. FarmCrowdy
A major challenge for smallholder farmers across Africa, is the lack of capital to finance farming activities. For example, without adequate finances, farmers cannot afford to purchase adequate good quality seed, fertilizers, herbicides, has no access to modern farm machinery or equipment, and cannot invest in good quality irrigation or storage facilities. This affects different stages of the production process, ultimately leading to reduced produce quantities and qualities of produce, and underutilization of agricultural land.
In 2015, a group of Nigerians, founded FarmCrowdy, a digital platform that links smallholder farmers to sponsors who invest in farm activities in return for a portion of the farm profits. To ensure that both the farmer and the sponsor benefit from the arrangement, FarmCrowdy works with farmer associations and sometimes, local authorities to select farmers with potential, followed by rigorous production planning. Throughout the entire production cycle, farmer progress is monitored closely and technical, training and marketing support are provided.
To be a sponsor, one registers on the FarmCrowdy platform. The FarmCrowdy platform provides detailed information about of each the registered farms; including the type of farming enterprise and the expected return of investment, to guide the sponsor’s selection process. After selecting their preferred farm, and making payment, sponsorship funds are used to fund the purchase of required inputs, farm equipment and infrastructure, and to provide training and support for the selected farm. The sponsor is provided with regular online updates on the FarmCrowdy platform detailing sponsored farm progress, and also permitted to visit the farm physically, which gives the sponsor an assurance of their investment. Upon completion of an investment cycle, the sponsor’s initial investment is paid back in full. Thereafter, the profits are split between the farmer, Farm Crowdy and the sponsor who gets their return on investment.
FarmCrowdy is an innovative application that has found a way to solve the financial lack challenges of smallholder farmers, empowering the farmers to reach their full potential, maximize use of farmland and increase farm incomes. To date, it has worked with approximately 300 000 farmers and close to 20 000 acres of farmland across Nigeria. Over the years, FarmCrowdy has expanded, offering many other digitalized solutions to various players along the agricultural value chain.
Conclusion
In Africa, as it catches up with the rest of the world, it is no longer business as usual in every sector of the economy including health, finance, agriculture and transport, as African innovators are using startups to fund their innovative ideas, which were previously untapped due to lack of funding. In this paper, we described some of the most revolutionary startups in the agricultural sector, a sector that is critical to providing food, income and employment to more than 60% of the African continent. The selected startups are only a preview of how startups can be used to solve some of the strongest and most ancient bottlenecks that have hampered agricultural production and environment on the continent, and therefore, serve to highlight the importance of startups on the African continent today and in the future.