How can digital innovations transform agricultural markets in Africa?

Enthusiasm for the potential of ICTs to transform agricultural markets in Africa has motivated considerable investment in market-oriented digital tool development. However, new research shows that progress made thus far has been limited to small-scale experiments that often fail to scale up. The paper provides an inventory of the main ICT solutions and recommendations for scaling.

In sub-Saharan Africa, most food is produced by smallholder farmers far from urban consumers. They participate in weak and fragmented market chains, where farmers don’t have enough information to secure a fair price from traders or make the best use of their resources to meet consumer demand.

Information and communication technologies (ICTs) such as mobile apps, interactive voice response (IVR) systems or satellite images can directly address the information gap and transform agricultural markets, building on positive trends in the region: by 2025 it is predicted that 90% of people in sub-Saharan Africa will be using SIM cards and 64% using smartphones.

As a result, a new wave of digital innovations has spread across Africa that promise to target the fractures in agricultural markets, with some notable successes that have been established at a large scale and shown to have a positive impact on farmers’ livelihoods. Yet most initiatives are limited to pilot programs and there is generally little evidence of the impact of digital innovations.

New research carried out by researchers from IFPRI and CIMMYT under the CGIAR Digital Innovation Initiative has gathered an inventory of digital innovations targeting agricultural markets in sub-Saharan Africa, analyzing how they work and the available evidence for their success. Drawing on a literature review and expert interviews, the authors explain what it will take for digital innovations to reach scale and impact.

Read the paper: ‌‘Digital tools and agricultural market transformation in Africa: Why are they not at scale yet, and what will it take to get there?‘ published in Food Policy Research by Gashaw T. Abate, Kibrom A. Abay, Jordan Chamberlin, Yumna Kassim, David J. Spielman and Martin Paul Jr Tabe-Ojong.

How digital innovations work in agricultural markets

According to the study, there are four broad typologies of digital innovations that use ICTs to reduce information inequalities and inefficiencies in agricultural markets:

Market prices advisories and information services: Services that provide farmers information about the current price of their produce are the most common and widely adopted types of digital innovations in sub-Saharan Africa, some dating back to the early 2000s. These range from simple price tickers placed in markets in Ethiopia (the Ethiopian Commodity Exchange, ECX) to paid-for-apps such as Esoko in Ghana, which one study linked to a 10 percent increase in the prices received by farmers. These solutions work by targeting the information inequalities that can exist between farmers and traders.

Examples

• ECX (Ethiopia
• Sector Information System (Cameroon)
• Agricultural Market Information Center (Zambia)
• Livestock Market Information System (Kenya)
• Agricultural Commodity Exchange Ltd (Kenya)
• Esoko (Ghana)
• Infotrade (Uganda)

Platforms that link farmers to services and consumers: In fragmented markets, farmers may struggle to access seed, fertilizer, pesticides, mechanized services such as harvesters or transport. In some cases, ICT enabled platforms makes it easier and less costly for producers to find critical inputs on time. In others, it creates entirely new markets and entrepreneurship opportunities, for example machine rental services, boosting the rural economy and allowing farmers to reach new levels of productivity. Some platforms directly link farmers to consumers through e-marketing applications, cutting out middlemen and shortening value chains.

Examples

• Hello Tractor (Nigeria)
• SunCulture (Kenya)
• iProcure (Kenya)
• Kobiri (Guinea)
• Lima Links (Zambia)
• Agro Market Day (Uganda)
• Freshsource (Egypt)
• Tekeya (Egypt)
• Hmizate (Morocco)
• NINAYO (Tanzania)

Financial services and transactions: Farmers trading produce through cash or informal contracts face a variety of risks and transaction costs. Several financial services platforms have shown it is possible to digitize transactions in agricultural markets, most famously M-Pesa in Kenya. Again, digital services can create new markets opportunities, such as extending credit or crop insurance options: M-Shwari in Kenya has been shown to increase household resilience to shocks, and digitized markets in Africa were found to function better during the COVID-19 pandemic. Greater accountability and transparency in agricultural transactions can have knock-on effects, for example making it easier to comply with strict European Union import requirements.

Examples

• Akellobanker (Uganda)
• M-Pesa (Kenya)
• Bayseddo (Senegal)
• SmartMoney (Tanzania)
• AgroPay (Ghana)
• AgriMisr (Egypt)
• Enda Tamweel (Tunisia)
• Ari.farm (Somalia)

Data collection services: ICTs, in combination with machine learning and artificial intelligence, also enable the collection of market data on a large scale, for example crowdsourcing information directly from producers and traders or using satellite images to estimate agricultural production in remote areas. This class of tools remains in an early stage, and are usually restricted to extracting information for analysts rather than providing useful insights to users.

Examples

• KAZNET (Kenya)
• DigitalGreen (Multiple)
• Farm.ink (Multiple)
• N-frnds (Multiple)
• Nuru (Kenya)
• Attaisir (Morocco)

What will it take for the digital transformation of agricultural markets?

If there are so many examples of digital innovations that target weaknesses in agricultural markets, what will it take to realize the potential for transformation in sub-Saharan Africa?

The study authors note that most research into digital innovations focuses on small-scale pilot projects, with mixed evidence for their impact on farmers, traders and consumers. There are only a few cases of digital innovations working at scale, and even those are yet to be adopted widely by smallholder farmers.

Although the sector is in an emerging phase, the authors write that the lack of evidence for successful scaling of digital innovations suggests that there are structural supply-side challenges to be overcome, for example a lack of ICT infrastructure and capacities or the complexity of agricultural markets in sub-Saharan Africa. Demand-side issues such as low willingness to pay for digital services is also a current constraint.

To overcome this gap, the authors highlight the need for interventions that go beyond developing technological solutions, such as increasing ICT capabilities among both professionals and farmers, developing ICT infrastructure, developing business models to engage private entrepreneurs in what is often a public sector-dominated space, updating digital policies and promoting alliances between different partners.

To learn how the CGIAR Digital Initiative is working to overcome the challenges of inadequate information, limited capabilities and the digital divide to enable the digital transformation of agrifood systems, visit on.cgiar.org/digital

Top photo credit: Neil Palmer