Today, there is a familiar narrative one encounters outside of Africa in which food issues on our continent tend to be framed mainly in terms of challenges. But the reality for many young Africans like ourselves is quite different. For us, food is the source of exciting business opportunities—especially for the growing number of small and medium-sized businesses populating Africa’s flourishing innovation economy.
Both of us are part of the region’s rapidly growing and refreshingly youthful middle class, one that’s generating a thriving consumer food market soon to be worth more than $1 trillion. We also are part of a large cadre of young Africans who are launching a wide range of innovative and successful digital startups. Many, like ours, are finding success in the food and agriculture sector.
Mobile apps developed by Ayodeji’s ThriveAgric facilitate access to inputs, technical advice and buyers for 500,000 smallholder farmers in Nigeria. Peninah’s DigiCow app connects 80,000 smallholder dairy farmers in Kenya with livestock vets, artificial insemination providers and feed supply services—and has an additional 150,000 users across other agricultural value chains.
Our common challenge now is generating investment capital in a competitive landscape to help us expand into new markets. Last year, Africa actually ended up as the only region in the world where investment in tech start-ups increased. However, overall, there is still less venture capital (VC) flowing to Africa than to other areas of the world. And forecasts for tech finance, globally and for Africa, were already downbeat for 2023, even before the recent bank turmoil made the outlook that much worse.
Our goal is to help investors continue to see the promise of African tech start-ups, especially those focused on agriculture technologies or “agritech.” That includes elevating interest in agritech investing from development finance initiatives, such as the World Bank’s recently launched early-stage VC fund and a similar effort from British International Investment.
We believe our firms and many others in African agritech have the kind of growth potential that should be a magnet for the world’s venture capitalists. The reason is relatively simple: We are using digital tools to address longstanding impediments to boosting production and income on smallholder farms in Africa at a price that is affordable for farmers and profitable for our companies.
We got to know each other after we were both selected as winners of the 2022 AYuTe Africa Challenge. The contest was launched by Heifer International to accelerate digital agriculture entrepreneurship in Africa with an infusion of “patient capital”—funding that helps companies build a foundation for long-term growth that will attract other investors.
We took different pathways to our agritech ventures. Peninah previously worked in agricultural extension and has an MBA in finance. She started DigiCow because she saw opportunities to use digital technologies to solve problems she encountered as the daughter of struggling smallholder farmers. Ayodeji studied computer engineering in college. Though he had no previous connection to farming, a friend who had started a soybean processing factory in Lagos, Nigeria, encouraged him to apply his tech skills to supporting soybean, maize and poultry supply chains.
We’re connected by a passion for using technology to build profitable businesses that create new opportunities for smallholder farmers and strengthen food systems across the continent. We’ve encountered many other young African entrepreneurs who are on a similar journey.
They include Nnaemeka Ikegwuonu, founder of ColdHubs, which has deployed a network of compact, remotely-managed solar-powered coolers to support produce farmers in rural Nigeria. There’s Jehiel Oliver, founder of HelloTractor, known as the “Uber for tractors” for providing a digital solution to Africa’s dearth of tractors. And there’s also Naledi Magowe and Martin Stimela, co-founders of Brastorne Enterprises, whose apps have provided affordable Internet-based farming services to 1.8 million smallholder producers in poorly connected rural areas.
The investment case for African agritech is easily revealed by applying the same basic due diligence one would use for any potential business venture: look at the problem we’re solving, probe the addressable market, and analyze the potential return. There are many emerging agri-tech companies across the continent that check all the right boxes.
We’re also cognizant of the growing interest in socially responsible or “impact” investing. African agritech is about using investment capital to support home-grown solutions to Africa’s food challenges—solutions that create jobs for young people, enable food self-sufficiency, and help expand access to sustainable, healthy diets for everyone. We see it as a clear opportunity to do well by doing good.
Article by Peninah Wanja and Ayodeji Arikawe. Peninah Wanja is the co-founder and Managing Director of DigiCow, and Ayodeji Arikawe is the co-founder and CTO of ThriveAgric.
