Smallholder farming in Africa and the opportunities for digital enablement

By Jacques de Vos – CEO, Mezzanine

On the eve of the United Nations’ Micro, Small and Medium-Sized Enterprises day, the importance of SMEs has never been more critical to the economic and social fabric of African nations. The COVID-19 pandemic has wrought unprecedented damage upon the economies of nations across the world, and African nations have not escaped the scourge. Micro, small, and medium enterprises are a critical source of employment in African countries, including in the agriculture sector.

Responsible for 20% of the continent’s GDP and almost 60% of employment, Africa is a net importer of food. However, with many factors posing challenges to farmers across the continent, productivity, yields and income have been greatly reduced. Some 250 million smallholder and subsistence farmers make up the agricultural factor across Africa, yet the majority are without the resources and support they need to reach their agricultural potential. In the wake of COVID-19, nations across the continent have been turning to new forms of appropriate technology to usher in the digitalisation of agriculture.

One such success story is Mezzanine’s Connected Farmer. Mezzanine, a subsidiary of Vodacom Group, provides a digital platform that provides thousands of farmers in Kenya, Tanzania, Zambia, South Africa, and elsewhere with instant access to local services such as credit providers, resellers and insurers. The platform runs on mobile GSM networks and conveniently connects farmers across widely dispersed geographic areas.

Over the course of nearly eight years since its first rollout, Connected Farmer now serves smallholder farmers across several countries on the African continent and has played a pivotal role in the rapid development of a digitalised agricultural sector at a national level. These digital solutions range from essential building blocks like access to markets and information and mobile money payment solutions, as well as digital solutions like eVoucher to enterprise & agribusiness customers to provide farmers and other beneficiaries with vouchers through subsidy programs. Over the past two seasons, for example, Connected Farmer enterprise customers paid more than $4.5 million per season to farmers using the solution to drive financial inclusion through Vodafone’s mobile money solution M-Pesa in Kenya.

Digitalisation offers solutions to various challenges in Africa including climate change, low yields and farming income, lack of access to information, lack of skills and unemployment. The costs and risks of doing business with small holder farmers can often be very high.

A key example of such a challenge is one faced by dairy farmers in Kenya. Traditionally, farmers worked with their dairy cooperative which recorded their tallies measured in litres of milk delivered on a monthly paper-based “milking card”, writing and storing manually until month end, while payments were made in cash or SACCO account. Due to the lack of daily visibility, inefficiencies were rife and disputes were difficult to avoid and reconcile. Safaricom and the Connected Farmer’s SMS-based system digitised all daily tallying and stored information on a client-facing dashboard, which provided a far more accurate system of each day’s produce and totalling up each farmer’s due by automatically adding the amounts reported, sending the totals to farmers via a daily SMS.

To address the digital skills gap in farming, Vodacom Foundation in partnership with UN Women and South African Women in Farming (SAWIF) launched the Women Farmers Programme countrywide in 2019. This programme follows a successful pilot which saw over 600 women smallholder farmers in rural areas of Limpopo and KwaZulu Natal provinces trained in digital literacy so they can take full advantage of the economic benefits offered by the digital revolution and successfully participate in the agricultural value chain.

Digital innovations like these have helped to increase smallholder yields by up to 70%, correlating with an average increase of 40% in farmers’ incomes. With the advent of smart, scalable and bundled digital solutions, the future of agriculture in Africa looks promising. At long last, farmers have entered the digital age with the streamlined access to information, resources and funding they need to sustain their agricultural output and vastly improve the quality of their own lives along the way.

The shift from cash to mobile wallets also had the effect of digitalising a large sector of the agricultural economy in African countries. The additional benefit of taking a fairly opaque ecosystem and making the information more visible and transparent gives leadership the tools to better understand and guide policy to the benefit of the ecosystem. Since then, dairy and crop farmers enrolled on the Connected Farmer platform have been able to participate in an ecosystem of instant access to the products and services they need to improve their communities’ prospects for the future.

An enabling policy environment

To emerge successfully from the COVID-19 pandemic, a multifaceted policy response is required to address the challenges to SME digitalisation to the last mile. To ensure SME resilience, policymakers should promote the digital acceleration of smallholder farms in African countries through the prioritisation of the following measures:

Such policies should be flexible enough to combine a range of measures to reflect the needs of SMEs in all sectors, including in agriculture. the right incentives and support, smallholder farms will be well placed to embrace the new technologies that have the ability to improve their business, and their lives, improving yields and the quality of life of farmers in the process.