Out of the 20 nations deemed most susceptible to climate change, a staggering 16 are African, as reported by the Notre Dame Global Adaptation Initiative.
In a recently published extensive Africa agrifoodtech investment report spanning over 50 pages, light was shed on the strategic investments pouring into the region’s dynamic food and agriculture startup community.
Despite a downturn in global venture capital markets in 2022, Africa’s agrifoodtech sector surged, securing a record-breaking $636 million in investments. However, the first half of this year witnessed a slight dip, possibly attributed to the tightening venture capital markets. It underscores the critical importance of sustaining investment in the region’s food and agriculture industry.
The impact of climate change has reverberated worldwide, but Africa bears a disproportionate brunt. Out of the 20 nations deemed most susceptible to climate change, a staggering 16 are African, as reported by the Notre Dame Global Adaptation Initiative.
Climate change is an enduring contributor to the escalating food security crisis across the continent, which has intensified over the past year, according to the World Food Programme. In East Africa, acute food insecurity surged by 60% in 2022, exacerbated by the fourth consecutive year of erratic rainy seasons and the worst drought in four decades.
Tragically, 22 million individuals in Ethiopia, Kenya, and Somalia face heightened levels of acute food insecurity due solely to the drought.
The situation in West Africa is only marginally better, with a 40% increase in food insecurity in 2022. Local conflicts, economic burdens from the aftermath of the COVID-19 pandemic, surging prices, and the Ukraine conflict have all contributed to this crisis.
While technology cannot be a panacea, digitizing farmers, retailers, and stakeholders along the supply chain can enhance efficiencies and broaden market accessibility. This, in turn, will bolster the availability of higher-quality food for the region’s inhabitants. Presently, investors exhibit notable interest in technologies like marketplaces and fintech due to their scalability and direct impact on farmers and informal retailers.
Regrettably, there’s a notable dearth of investment in traditional farmtech startups specializing in software, sensing, data analytics, and biological domains. This is unsurprising, given the challenges of adoption and affordability in Africa’s predominantly smallholder farming communities. Nonetheless, these areas are vital, particularly for climate change adaptation, food security, and sustainable livelihoods.
Agriculture constitutes nearly 20% of Africa’s GDP, with approximately 70% of Africans employed in the sector. However, much of this is subsistence farming, and the region still heavily relies on imports like wheat, palm oil, and rice to sustain its populace.
While crop yields have seen an increase, they remain the lowest globally and fail to keep pace with the continent’s burgeoning population. Per capita agricultural production is on a decline, according to the FAO.
In conclusion, data analytics tools can empower farmers to navigate increasingly erratic weather patterns and enhance productivity. Biotech tools hold the promise of boosting yields while reducing greenhouse gas emissions.
The potential for innovation in categories like Novel Farming Systems or Robotics remains largely untapped. Though there may be hurdles in deploying these tools, startups have shown a willingness to offer financing options for their acquisition.
Encouragingly, there are over 300 investors actively engaged in the sector, and a surge of interest from new funds, resources, and international backers is palpable.
The Africa agrifoodtech investment report expresses gratitude to partners—the Bill & Melinda Gates Foundation, FMO Ventures Program, and Mercy Corps Ventures—whose support was instrumental in making this report possible.
For those eager to explore opportunities in the region and connect with partners, the invitation to reach out stands. The commitment remains steadfast in delivering information and insights crucial for nurturing a robust and impactful agrifoodtech ecosystem in Africa.