Innovation and technology are fundamentally changing the way we produce, trade and consume agri-food products around the world. This dynamic is driving opportunities to increase productivity, efficiency and sustainability in agricultural supply chains, demonstrating real promise to address many of the obstacles to global food security.
Technological change and its applications have become an integral part of the innovation package often termed “agriculture 4.0” whereby technologies observe, measure, record, analyse and respond to data gathered in food systems in order to maximise output, minimise inputs and optimise information flows.
Simultaneously, Africa is embarking on greater integration with the recent ratification of the African Continental Free Trade Agreement, which will provide opportunities to create jobs and spur economic growth. With roughly 25% of total African agri-food exports and 16% of agri-food imports traded within Africa in 2017, there is considerable untapped potential to increase intra-regional trade.
For a continent that faces the greatest challenges in achieving food security – and is increasingly food import dependent – the combination of digital technologies and trade integration can help African countries boost their agricultural sectors and leapfrog economic development.
Digital technologies have huge potential for agricultural transformation in Africa
Digital technologies have already demonstrated huge potential for agricultural transformation, and facilitate trade in Africa.
Examples of agricultural technologies being implemented on the continent range from land registration programmes using distributed ledger technology (DLT); precision agriculture projects such as in Mozambique where low-cost drones are used to advise farmers on production decisions; and pest and disease management projects including CowTribe in Ghana that uses mobile phones to deliver animal vaccine and management information to last mile farmers.
In addition, digital trading can facilitate access to new markets. Ecommerce platforms are well underway in Africa with an estimated 264 operational ecommerce start-ups that are connecting producers to consumers and integrating rural communities. With a high proportion of micro-, small- and medium-sized enterprises (MSMEs) as well as smallholders, the continent is in need of solutions that increase market opportunities for these firms and farmers.
Digital trade finance has been identified as having great potential to help close the US$1.4-1.6 trillion global trade finance gap, in which Africa accounts for approximately US$100 billion. Digital solutions can also enable increased access to trade finance for MSMEs, which are typically most affected by this financing gap.
Smart contracts and DLT can provide a single platform for all parties to exchange trade information digitally, auto-execute contracts and payments in real time and record an immutable transaction history. These technologies help reduce the high costs of trade finance by improving process efficiency and risk mitigation techniques, which are often key bottlenecks to MSME lending.
Africa was at the forefront of digital trade finance when a pilot transaction was executed on the Wave blockchain platform by Barclays Africa to send cheese and butter from Ireland to Seychelles.
Digital trade certificates can also facilitate trade by eliminating paper documentation, reducing fraud and enabling faster border procedures, all of which reduce costs.
The International Plant Protection Convention (IPPC) ePhyto Solutions is one example that helps governments and companies trade plants and plant products by providing a harmonised and standardised approach for the exchange of electronic phytosanitary certificates. Ghana and Kenya are already using ePhyto, with many other countries in the region expected to follow soon.
Enhanced traceability in agri-food value chains through the use of DLT can also help improve food safety. Product data collected and stored on a shared database like DLT provides an auditable production history that can be used to prove compliance with food standards and manage food safety risks. Better product traceability also provides consumers with detailed information on how their food is produced, incentivising more sustainable and responsible agricultural supply chains.
Capturing this potential entails strong entrepreneurial ecosystems
Capturing the opportunities for agricultural transformation derived from emerging technologies and regional integration in Africa will require strengthened enabling environments that promote productive and inclusive economies.
Governments must help create entrepreneurial ecosystems that attract capital, incentivise business development, spur domestic innovation and promote the adoption of and access to scale-neutral technologies in agricultural supply chains.
Such ecosystems should be underpinned by features vital to their success like access to finance, physical and digital infrastructure, policy and public sector support and human capital development.
Technological adoption requires access to finance to build physical and digital infrastructure for the uptake of technologies among domestic firms. Building digital infrastructure includes investments in rural areas for enhanced connectivity, starting with affordable and reliable electricity, mobile networks and broadband coverage to bridge the digital divide. Access to capital – public and private – is also key for technology start-ups in African countries to build viable businesses in agricultural supply chains.
Policymakers in Africa should see digitalisation as a core component of development strategies and formulate long-term visions for the adoption of agricultural technologies.
This includes establishing regulations on technological use, data flows, competition and access. Fiscal incentives can further facilitate access to technologies in local markets, in addition to spurring domestic digital innovation and business development. Cutting red tape in often burdensome administrative processes such as registering property, establishing a business, and issuing licenses and export certificates can also enable technological uptake and trade.
Moreover, long-term strategies for strengthening human capital in the digital space are essential. Education covering digital skills and innovation begins in secondary schools and universities across Africa. Tertiary curricula that offers a focus on the interaction between digital technologies, finance, trade and agriculture – in addition to business development – will help supply a skilled workforce and build specialisation and knowledge to develop innovative homegrown solutions and stimulate entrepreneurship. In addition, digital training programmes should be considered for all agricultural supply chain actors, including farmers, traders, customs officers and regulators.
While some technologies may currently be unattainable for agricultural transformation and trade in Africa, it is important to start developing digital ecosystems that will help future generations of farmers and entrepreneurs succeed and favourably position the continent for the opportunities that lie ahead.
Mischa Tripoli is Economist, Trade and Markets Division, at the UN Food and Agriculture Organization (FAO).