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The African Development Bank and the FAO Investment Centre hosted the final in a four-part webinar series on Transforming Agriculture in Africa Through Digitization.

Panellists representing farmers, government and the private sector discussed the future of digital agriculture in Africa – from the use of digital financial technologies, known as FinTech, to the bundling of digital services for farmers. 

Previous webinars focused on setting the stage, looking at the main actors involved in Africa’s digital transformation, as well as data-driven solutions for advisory and planning, and data-driven marketplaces for African agriculture.

FinTech

Digital technologies are fundamentally changing the delivery of financial services in rural areas – addressing obstacles that have held back the broader penetration ofcredit, savings, payments and insurance.

The first wave of innovation in digital finance was driven by digital payments. Africa has been a global leader in the use of mobile money in rural areas, starting in East Africa but rapidly spreading across the continent.

A second wave has been driven by the growing availability and integration of data from different sources, and by the improved ability to analyze this data to assess risks and improve the supply and quality of products and services.

Panellists explored some of the more promising FinTech services in Africa, the risks and barriers to adoption and what the public sector can do to enhance the availability and quality of such services.

Thanks to mobile banking, farmers no longer have to travel long distances carrying cash but can make quick and secure transactions from the comfort of their own farms.

Remote-sensing, geodata and portable scanners can be used to collect data and track the performance of fields and farms – enabling the design of new and better financial services and products, including insurance.

Combined with other data sources, geodata can feed into enhanced credit scoring models, facilitating access to credit for farmers with little or no collateral and former record keeping. 

New data sources and technologies can also enable better risk management and low interest rates for farmers. While geodata allows for better product design and monitoring on the ground, mobile payments guarantee quick insurance pay outs to farmers. 

Panellists cited the importance of enabling policies to help farmers transition from a cash-based ecosystem to a more digital one – and adapting those policies to a constantly evolving environment.

They also pointed to the need for strengthening farmers’ financial and digital literacy as a prerequisite for widespread adoption, as well as effective policies and tools to protect poorer consumers.

Partnerships between financial institutions and mobile network operators can open up opportunities for greater financial inclusion, moving beyond mobile payments into savings and credit and other services.

Building trust

Building trust is essential. Farmers need access to accurate and timely data to make the right decisions. Satellite imagery and geodata, for example, must match the reality on the ground.  

The influx of digital technology platforms can cause fatigue and scepticism among farmers. Long-term buy-in can be difficult if farmers are not able to see how FinTech services meet their needs and translate into increased profitability. 

Peer-to-peer knowledge sharing can help drive the adoption of FinTech services. Product design also needs to be farmer-centric and solutions localized. Simple technologies like Interactive Voice Response (IVR), Short Message Service (SMS) and Unstructured Supplementary Service Data (USSD), especially with the option to use local languages, can contribute to greater uptake among farmers.

Panellists spoke of the need for end-to-end digital platforms that address the whole value chain, from farm to fork, with end users able to provide feedback on technologies. Digital insurance tailored to farmers’ specific needs could be an entry point for digitizing agricultural value chains.

How data is stored, shared among organizations and maintained will be critical in the coming years. Open interoperability is key to building better risk, credit and insurance models. But comprehensive protection frameworks – covering consumer protection, transparency, data sharing and privacy issues, disclosures – need to be in place, along with the means to operationalize and enforce them.  

Kenya’s example

Kenya has become a hub for digital agriculture transformation, spearheaded by the country’s experience with mobile money (MPESA) and strong Government commitment. The success of mobile money, for example, has created demand for network connectivity, resulting in expanded mobile coverage.

Human capital is key – Kenya Agriculture and Livestock Research Organization has 300 staff with Ph.Ds. – and digital literacy is improving, especially among younger Kenyans. Most farmers are already using SMS, USSD and IVR technologies.

The country also boasts strong farmer groups and cooperatives at national and local level – crucial for the aggregation of inputs, knowledge sharing, market access and negotiation. When combined with digital technology, these cooperatives could be a good way to accelerate and scale up digital solutions. 

As Kenya’s model suggests, there are clear roles for the public sector, AgTechs and FinTechs and lead farmers in promoting the adoption of digital technologies. 

The public sector, for example, has an important role to play – from creating farmer registries and profiles, to investing in roads, electricity and reliable internet connectivity, to promoting open data platforms and increasing digital literacy training.

Quality assurance is also vital. Governments, as third-party entities, need to ensure that digital services and goods are value for money and ideally suited to farmers. 

Bundling services, way forward 

Farmers need more than one digital solution, but most solutions have yet to reach scale. Bundling digital services – FinTech, digital marketplaces, digital advisory services – into one package could be the way forward.

Bringing in the right partners is important to provide a package that is context-specific and relevant to what farmers actually want and need. 

FAO Senior Economist Carlo Bravi, in his closing remarks, said that while he thought the digital transformation of agriculture was “a mostly private sector-driven phenomenon, we’ve learned during these webinars that a strong government drive and governance of the process also produce significant benefits.” 

Scaling up public-private partnerships for digital solutions and diversifying business models to reduce risk and increase returns can go a long way toward realizing Africa’s digital agriculture transformation. 

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Presenters and panelists

Kemi Afun-Ogidan, Digital Agriculture Flagship Coordinator, African Development Bank

Carlo Bravi, Senior Economist, FAO Investment Centre

Frank Hollinger, Senior Rural Finance Officer, FAO Investment Centre

Elizabeth Nsimadala, President, East African Farmers Federation 

Ben Tsikudu, Digital Financial Services Policy, Ministry of Finance, Ghana  

Takura Chimbuya, Business Manager, New Business Innovation and Ventures, Standard Bank

Thomas Njeru, Co-Founder and CFO, Pula

Boniface O. Akuku, Director ICT, Kenya Agricultural & Livestock Research Organization

Antony Kanyoko, COO, eGranary

Ben Njenga, Co-Founder, Apollo Agriculture