INTRODUCTION

Agriculture in Africa is a bit of a contradiction. Africa has 60% – 65% of the world’s uncultivated arable land; it can feed the world. However, while a country such as the Democratic Republic of the Congo (DRC) can feed Africa’s population of 1.3 billion, it struggles to feed its population of approximately 90 million.

The continent imports food of US$41 billion net annually. This figure will reportedly grow to US$110 billion by 2025. Farmers in Africa are, on average, between 50 and 63 years old, depending on whom you ask, while 85% of farming activity takes place on smallholder plots of 2 – 3 hectares each. The youth of Africa are migrating from their farms to the urban areas to find a better-paying job rather than struggle as their parents did. Unfortunately, many eventually find themselves unemployed and disillusioned, living in corrugated iron and wood shacks. Some also migrate to Europe.

Approximately 60% of Africa’s population works in the agriculture sector, while the sector contributes 25% to Africa’s GDP.

There are several reasons for the poor productivity of Africa’s agricultural sector. Smallholder plot sizes limit harvest sizes. The absence of modern irrigation techniques, poor transport infrastructure, absence of modern farming practices, no knowledge of market needs and marketing practices, absence of financing, aged farmers, lack of political will to change, poor supply chain channels and the absence of cold chain facilities, and high post-harvest losses contribute towards the high food import figure. Governmental policies pulling out all stops to remain in power and ignoring the challenges in the agriculture sector have aggravated this situation.

It is, therefore, necessary to industrialize and commercialize agriculture. Furthermore, the agriculture sector must increase its productivity and attract the youth by improving its image and making it “sexy.” Currently, the youth is only involved in marketing and sales, not the farms’ hard side.

Developed nations use artificial intelligence, blockchain, machine learning, and robots to solve agricultural challenges. In Africa, simple, mobile phone-based offerings could produce great results.^[i]

Stakeholders in the sector are embracing digital technologies to make farming more attractive. These technologies can transform Africa. In addition, technology facilitates involvement in the various sub-sectors of the agriculture industry, for investors, suppliers, farmers, and markets. Hopefully, these initiatives will help the farmers address the challenges and constraints they experience and attract the youth to move back into the sector. Below are several initiatives based on digital technology, all aiming to support Africa’s farmers in various ways. However, not all of them have succeeded.

In 2020, agri-tech startups in Africa raised ±US$60 million, which is about 8.6% of the funding obtained by tech startups in 2020. They use technologies like drones, automated irrigation, and soil sensors and set up digital systems to help farmers access markets, inputs, insurance, financing, and knowledge.^[ii]

The two figures below indicate the nature of active digital agriculture services and where they are the most active.

According to a 2019 African Development Bank report, 54% of all digital agricultural solutions were still used by commercial agribusinesses, with many services unaffordable to small-scale farmers.^[iii]

According to the Technical Centre for Agricultural and Rural Cooperation (TCA), quoted by an Oxford Group report,^[iv] smart and precision farming used IoT to leverage drones and sensors to monitor and improve the productivity of crops, livestock, and aquaculture. As stated by GMSA, the challenge was that Africa has few scalable IoT networks. At the same time, many farmers operate on too small a scale to make many of the services commercially viable. Of the 390 active digital agricultural solutions in Africa in 2019, 60% were launched after 2016, and 20% since 2018.

Over 33 million smallholder farmers have used at least one of these services, while 70% of service providers generate revenue. Most smallholder farmers, however, need help to afford these services. While the market revenue is only US$143 million, the potential market revenue in this area is enormous, ranging between US$2.6 billion and US$6 billion.^[v] This trend reflects a growing interest from a rising domestic middle class and an African diaspora looking for alternative investment opportunities.

Figure 1: Active Digital Agriculture Services in Sub-Saharan Africa

(Source: Oxford Business Group, in collaboration with OCP: https://oxfordbusinessgroup.com/sites/default/files/blog/specialreports/960469/OCP_Agriculture_Africa_Report_2021.pdf) 

Figure 2: Top Five Countries by Number of Digital Agriculture Services, January 2020

(Source: Oxford Business Group, in collaboration with OCP: https://oxfordbusinessgroup.com/sites/default/files/blog/specialreports/960469/OCP_Agriculture_Africa_Report_2021.pdf) 

The consolidation of information systems within African markets has been recommended to predict annual consumer demand. However, this information is unavailable, potentially flooding the market with unwanted products and subsequent food waste or scarcity that increases food prices.

There are a few positive trends that can increase entrepreneurial agriculture activity. The growth of retail supermarkets in Africa has increased the number of medium-scale entrepreneurial farmers (between 5 and 100ha), and there is a growing demand for prepared foods. Restaurants are using local ingredients because of rapid urbanization. Finally, the rise of agri-tech can increase access to inputs, knowledge, productivity, and markets.^[vi]

Africa hosts 25% of the world’s farmland but generates only 10% of global crops. As most smallholder farmers operate at just 40% of their potential capacity due to a lack of access to funding, it leads to a vicious cycle that suppresses the productivity of Africa’s farmers. Moreover, low crop yields deny these farmers the collateral for loans at financial institutions. However, tech startups contribute to the growth of Africa’s agricultural potential.^[vii]

In the sections below, this report will briefly discuss a few of the agri-tech platforms available in Africa. The purpose of the information is to show examples of the growing prevalence of agri-tech applications in Africa’s agriculture sector.

AGRI-TECH IN AFRICA

Emerging agri-tech applications (apps) promise to restructure Africa’s agricultural value chains. These apps are either responses to pandemic-related lockdowns and the need for social distancing or to address the challenges created by years of underinvestment in Africa’s agriculture sector. 

However, these innovations face several problems: 

• Input shortages negatively affect the planting and harvesting seasons
• Vague land rights and increasing foreign ownership of prime agriculture land
• Lack of access to funded farms for investors to check on the progress of investments
• Land held under customary land tenant systems, without legal protection through title deeds, making investors cautious about investing in developing the land

The potential to help farmers scale operations in the long term is a significant benefit of these apps. Some agri-tech app operators are exploring the potential to expand beyond their original borders.^[viii]

Agrimatic in Egypt

Agrimatic is an aquaponic agriculture company founded in 2014 in Egypt. The company deals with challenges brought about by factors such as a rapidly growing global population, limited arable land, climate change, and lagging agricultural development, all contributing to food insecurity. 

Agrimatic provides clean agricultural produce by growing fish and plants in a closed system typically found in nature. The plants feed off the treated waste of the fish. Agrimatic produces several fish species and grows plant products like arugula, basil, and lettuce. It aims to address global hunger through higher productivity and soil-less technology to ensure food security and sustainability.^[ix]

D4Ag: Boosting Digital Start-Up Scene in Africa

The Digital4Agriculture program (D4Ag) is an initiative of the German Society for International Cooperation (GIZ) within the framework of the project “Make-IT in Africa.” The goal of D4AG is to promote the digital startup scene of developing and emerging countries. It does so together with (primarily) European technology companies, startups, associations, research & science, and non-governmental organizations. 

IBM joined the Make-IT Alliance in 2017. It will support the D4AG by providing access to weather information and services to Africa’s smallholder farmers to help them better manage and improve their crops, production, and long-term living conditions. With IBM’s digital expertise, D4Ag assists over 36 African agricultural companies in 13 countries to prepare for the digital future.

The project aims at helping local startups reach more customers and develop new markets through basic knowledge in data analytics, interoperability, and business modeling. D4Ag also wants to promote cooperation between startups and platform operators to fully exploit the digital world’s opportunities. In addition, it offers digital coaching services for startups, offering agricultural services to African smallholder farmers.

This digital support will boost sector productivity and entice more youths to remain on their farms. Germany and IBM’s support to increase African farmer productivity will benefit Africa by reducing the outflow of valuable foreign reserves, increasing jobs, and gaining import substitution benefits.^[x]

FarmMate in Africa

FarmMate is a digital application launched by New Holland Agriculture to provide valuable tools and agronomic advice to support farmers in Asia, the Middle East, and Africa in their daily work. The app offers detailed information on New Holland equipment and benefits to farmers. It also provides insights on farming practices, news, and dedicated services that will improve the overall after-sales experience of farmers.^[xi]

The main menu offers four options, i.e., Agronomy Tips, Products, Distributors, and News. The app is customized so that the news, promotions, products, and agronomic information will be relevant to the users in their markets. It also provides insights on successfully growing the most widespread crops in the user’s area. Furthermore, it guides farmers in all the cultivation stages of the most common crops, with advice and suggestions from experts.

FarmMate also provides farmers with valuable tools such as a currency converter, promotions on spare parts and available services, and weather forecasts.^[xii] In addition, as per New Holland Agriculture’s website, the Distributors function enables farmers to find and contact the nearest authorized reseller or service.^[xiii]

Haller Farmers App: Supporting Africa’s Farmers to Increase Productivity

The Haller Foundation, a UK-based charity and Kenyan NGO, developed the Haller Farmers App to help farmers in Africa deal with poor soil conditions caused by unsustainable farming practices and climate change. Other problems addressed include the growing lack of arable land, a lack of agricultural knowledge, and low education levels.

The Haller app leverages mobile connectivity in Africa to promote viable farming techniques to maximize food production and build self-sustaining communities. It has equipped users in almost 50 countries worldwide with affordable, organic, and environmentally friendly agricultural practices.

Besides Haller’s farming techniques, app users learn about youth farming, human and animal conflict management, and conservation. In addition, the app connects like-minded farmers through a global messaging platform that enables them to share knowledge and the Haller team to provide support.^[xiv]

AGRI-TECH IN WEST AFRICA

There are several agri-tech platforms in West Africa.

Agrix Tech in Cameroon

Agrix Tech was founded in 2018 to deal with crop pests and diseases that hamper agricultural productivity. Farmers can use the Agrix Tech app to access the technical knowledge to develop a better crop disease management strategy. In addition, the app has the benefit it uses text and voice recognition technology in several local languages to reach farmers with low literacy levels. It also helps farmers through the agricultural production cycle utilizing advice and task reminders.^[xv]

AgroCenta in Ghana

AgroCenta connects all stakeholders in the staple food value chain on one platform for effective trading. Smallholder farmers in Ghana also obtain market information, storage and delivery solutions, and financial services from the platform.

It uses two integrated digital platforms, i.e., CropChain and LendIt, to address challenges to smallholder farmers requiring access to markets and financial services. Farmers advertise their products on the platform, while large buyers of selected cereals use it to purchase or enter long-term purchase contracts with AgroCenta. Smallholder farmers can use LendIt to access financial services, such as crop insurance, microloans, mobile payments, and pensions from its financial institution partners.^[xvi]

Agripool in Ghana 

In Ghana, crowd-farming firm Agripool links farmers to investors. Rural farmers lack skills and modern farming methods, leading to low yields and lower returns. In addition, it is expensive to access the right kind of land for farming activities, as is purchasing or renting essential farming equipment like tractors, plows, and irrigation sets.

The Agripool platform drives investment in firms and empowers rural farmers by providing training and irrigation services. It allows individuals to browse through available farms and select those they wish to fund.

Online users invest roughly US$62 per unit – each unit measures 40m² with after-harvest returns of about US$11 per unit. One more farmer is employed for every 300 units purchased, while investors get to choose which crop to grow, and Agripool picks the best seeds to plant.^[xvii]

DigiExt in Ghana

DigiExt uses digital technology to empower farm cooperatives to support farmers throughout the agriculture value chain.

It launched in 2017 to support farm cooperatives to grow and sell their produce in the market to processing companies and export agencies utilizing technology-based platforms. Examples of these farm cooperatives and organizations include the African Fertilizer and Agribusiness Partnership (AFAP) and the Peasant Farmers Association.

In addition to supporting growth and sales, DigiExt enables farmers to access credit and gain access to low-cost and convenient ICT-enabled agricultural extension services. DigiExt achieves the latter by gathering data using satellites and drones, gaining weather information, and using soil sensors to distribute production information to smallholder farmers cost-efficiently. DigiExt offers rental services for expensive merchandise like tractors and drones only used periodically.

DigiExt also provides access to a digital marketplace, using match-making algorithms to link farmers with appropriate export and food processing companies.

Processing companies and export agencies register on the platform and provide lists of required crops. The farm cooperatives then utilize DigiExt’s farm management and digital tools to offer products to these companies. As many of the risks are managed by the technology tools and extension services provided by DigiExt, the banks and insurance companies are willing to give credit to the farmers and insure them against risks like weather, pests, and diseases.

DigiExt currently has operations in West and East Africa, where it supports more than 200,000 farmers on approximately 810,000 hectares. It intends to expand into North and Southern Africa.

DigiExt receives fees from farm groups paying for access to its value proposition. They also generate revenue from origination and interest fees from the credit facilities. In addition, banks and insurance companies pay a fee for access to DigiExt’s digital tools for risk mitigation.^[xviii]

BioSave in Ivory Coast

In Ivory Coast, farmers face several challenges, such as not knowing how to use chemical products, which are also expensive. BioSave is a mobile phone app that teaches farmers how to transform organic waste into natural fertilizer and insecticides, helping farmers become more independent. After sorting the organic waste available in plantations (plant leaves, cocoa pods, dry or fresh herbs, animal excrement, etc.), the farmers use the BioSave app to select a type of organic fertilizer that is easy to make themselves, using the available waste. However, the lack of mobile phones amongst the farmers remains a challenge.^[xix]

myAgro: Technology Application in Mali and Senegal

myAgro operates in Mali and Senegal and was founded in 2011.

Seeds and fertilizer, two of the highest costs in a smallholder farmer’s life, are sold differently than any other product as they are only sold in bulk. myAgro’s founder wanted to make buying seeds more like buying other commodities such as sugar and create a system that provides credit to farmers.^[xx]

myAgro has its headquarters in Bamako, Mali, and an office in Senegal. In just five years, the idea of using mobile technology as a savings platform has evolved from a 240-farmer trial to a multi-country program serving over 30,000 farmers. myAgro aims to reach 1 million smallholder farmers and increase their income by US$1.50 per day by 2025.^[xxi]

The myAgro system works as follows:

• It is a mobile lay-buy system allowing farmers to acquire inputs
• It operates via scratch-it cards that represent value
• The scratch-it cards are available at local convenience stores, giving smallholder farmers relatively easy access
• The farmers’ unique mobile numbers act as their account number
• The scratch-it codes are texted to a number to “deposit” their money
• To make a purchase and have it delivered, farmers must text an order command

myAgro believes its model will support structural shifts in how governments and multilateral organizations fund the agricultural sector and how the financial sector provides services to smallholder farmers.^[xxii]

Agrorite in Nigeria

Agrorite is a digital agricultural commodity trading and logistics platform. Its aims at helping Nigerian smallholder farmers to sell their farming products to local and international buyers at fair and competitive prices, which is a significant challenge for African smallholder farmers. Agrorite has aligned itself with the SDGs, with Goal 2, Zero Hunger, as its focus. Agrorite helps farmers with crop yields, financial inclusion, trading, and logistics. To increase transparency and the integrity of the system, Agrorite will be incorporating blockchain on its platform sometime in the future.^[xxiii]

Alosfarm in Nigeria

Alosfarm is a combination of tools, services, and capabilities for farmers, agribusinesses, and enterprises. It is also an all-in-one farm management platform to optimize pre- and post-harvest farming activities. It also collects and aggregates datasets, which can be fed into any destination wanted.

In streamlining pre-harvest farm activities, Alosfarm provides action points about the farming techniques, processes, field support, and updated information to enhance farming knowledge, thereby providing real-time information to the farmers.

In automating post-harvest farm activities, Alosfarm connects agribusinesses, buyers, delivery logistics, and farmers in a seamless interface, minimizing human resource involvement in the procurement processes of the agricultural value chain. It automates the buy and sell of farm produce, streamlining interactions into a process flow, driving post-harvest losses down to zero, and boosting efficiency and profitability.

Alosfarm provides data transmission infrastructure for organizations working with local farmers and real-time agri data and content for farmers in Africa. This collected data can be fed into any desired destination via mobile, SMS, or in one unified web interface.

Its Enterprise Features include automating purchasing for enterprises with complex purchasing functions. Its Partners Integration function enables key businesses like logistics to integrate their procurement process. ^[xxiv]

ColdHubs in Nigeria

Although strictly speaking not an agri-tech app based on digital technology, ColdHubs provides an essential service.

Many smallholder farmers producing fresh produce in Africa do not have electricity or can afford cooling technology. This leads to increased post-harvest losses. Nnaemeka Ikegwuonu established ColdHubs in 2015 to help farmers reduce post-harvest losses.

ColdHubs consists of a solar-powered walk-in cold room for smallholder farmers in farm clusters and outdoor markets to continuously store and preserve fresh produce, allowing farmers to extend the shelf life of fresh produce from two to more than 21 days. The solar panels are linked to a battery storage system, allowing cold rooms to operate off the grid all day.

ColdHubs is available in 22 states in Nigeria. It intends to expand its technology and service to East Africa, Southern Africa, and some western and Francophone-African countries.^[xxv]

Complete Farmer in Nigeria

Complete Farmer believes the lack of funding for smallholder farmers and other stakeholders in the agriculture sector is a major driving force for dependence on food imports. Importing food that can be grown on the continent limits economic growth in Africa.

Complete Farmer contributes to linking potential investors with farmers in need of funding. Integrating the fintech and agri-tech sectors, platforms like Complete Farmer are becoming increasingly popular with investors. 

Complete Farmer’s platform also doubles as a commodity-sourcing platform, where global commodity buyers source agriculture products directly from the farms. This is in addition to expanding access to finance for Africa’s smallholder farmers.^[xxvi]

eFarmers Nigeria

eFarmers Nigeria connects farmers in Nigeria and allied businesses to numerous customers in Nigeria and abroad by offering a free classified ads service. It provides a digitalized farm-based market for advertising products and services free of charge.^[xxvii]

It enables sellers to:

• Post free ads and images
• Receive live updates on market prices and services of agricultural products
• Diversify or increase their service delivery, e.g., offer special discounts
• Get listed on Top Rated Products
• Get product reviews and recommendations
• Receive calls, text messages, and emails from authenticated buyers

Buyers can:

• Buy anything by directly calling or messaging sellers and agreeing on purchase terms
• Receive updates on special deals from their favorite farmers
• Rate and review completed trades
• Share and promote products on social media
• Report sellers if unsatisfied with a product or service

EZFarming in Nigeria

EZFarming is another Nigeria-based agricultural technology startup. It benefitted from a US$150,000 seed funding from 500 Startups, a USA-based accelerator. The EZFarming platform enables farmers to access funding such as micro-loans and easy access to produce buyers worldwide. Participants in the accelerator must exchange a 6% equity stake in their business for funding, mentorship, and hands-on training. In addition, participants also must pay a fee of US$37,500 for participating in the 500 Seed Programme. Since its inception in 2018, EZFarming has worked with more than 800 microlenders to invest over US$800,000 in more than 120 verified and trusted farmers who are scaling fast to become commercial farmers.^{[xxviii] [xxix]}

FarmCrowdy in Nigeria

Nigeria’s first digital agricultural platform, FarmCrowdy, helps smallholder farmers improve their production. These smallholder farmers struggle to obtain funds to improve farming methods and boost their yields. FarmCrowdy addresses this challenge by connecting farmers directly with local investors, thereby generating healthy returns for investors and farmers alike. 

The FarmCrowdy platform encourages Nigerians to participate in agriculture while going about their regular routine. Investors use the platform to select the farms they want to invest, and then pay FarmCrowdy to make the arrangements. They can invest in cassava, maize, poultry, and tomato farms. After receiving funds, FarmCrowdy hires the farmers, leases the required land, and sources seed or buys animals. At the end of the investment cycle, investors can either cash out or reinvest on the platform. 

FarmCrowdy advertises a 20% return bi-annually. Farmers get 40% of the profit, investors get 40%, and Farmcrowdy receives 20%. Farmcrowdy plans to expand into West and East Africa.^[xxx]

To help smallholder farmers with their financing challenges, Farmcrowdy reportedly raised over US$15 million for 25,000 farmers in four years while providing several other benefits. 

FarmCrowdy has the potential to make farming a lucrative option by providing land, capital, and labor. Its model also can entice the youth to take agriculture more seriously. The envisaged returns are significant as well. Africa needs this kind of model to boost the industrialization of its agricultural sector. FarmCrowdy’s model has served as the basis for various other initiatives.

Farmgate Africa in Nigeria

Farmgate Africa (FGA), a subsidiary of the Farmcrowdy Group, recently launched as a technology-driven trading marketplace for agriculture commodities. It bridges the gap between rural farmers and processors, allowing buyers to purchase commodities directly from farming clusters using technology.

The FGA platform reportedly builds relationships between farmers and processors, aggregating commodities bearing in mind the unique specifications of buyers. Nigerians can fund the process of buying and selling what farmers have already harvested, allowing farmers to sell their produce to major buyers through FGA’s portal.

Its business model eliminates several layers of intermediaries, thereby optimizing market access to African farmers and improving their income by at least 30%.^[xxxi]

Farmer in Suite in Nigeria

Farmer in Suite is similar to FarmCrowdy. Its founders believe Nigeria’s agriculture system is constrained by subsistence farming, poor access to agribusiness innovation systems, very few extension workers, and lack of access to finance. Rural farmers need access to funding, farm inputs, and farm extension services to increase domestic food production. The vision of Farmer in Suite is, therefore, to provide investment solutions to help absentee farmers make a return on their investment.^[xxxii]

The “Farmer in Suit” platform gives farm sponsors an opportunity to “own” farms and generate a profit while going about their other businesses. They can monitor progress on their farms using the web from anywhere in the world. The platform’s main points are as follows: ^[xxxiii]

• The investor becomes a farmer, monitors the farm’s progress, and generates a guaranteed profit on the farm investments by sponsoring rural farmers
• This process creates local employment and empowers the rural farmers to increase productivity and their livelihood, increasing Nigeria’s domestic food production, and fighting global food security challenges

Typical farms available for investing include maize, poultry, and soybeans.

Joining Farmer in Suite has the following impact:^[xxxiv]

• Profitable investment: Farm sponsors enjoy profit sharing between 8 – 25% of investment
• Empowering Farmers: Their farmers can keep their jobs and optimize their lands to increase productivity and improve their livelihood
• Food Security: Investors support Nigeria’s domestic food production and food security
• Social Impact: Farmer in Suite provides school kits for poor children in rural areas for every block of farms sponsored

Growcropsonline.com^[xxxv]

Growcropsonline allows busy people to farm. They believe anyone can own and run a farm online using mobile phones or laptops. The investor simply chooses a crop, the location, and the land size and pays for it online. The investor receives a certificate as evidence of the details of the investment booking.

During planting, weeding, herbicide spraying, and harvesting, investors are prompted to pay online for these services. They are also entitled to visit their farm parcel at any time through a Pre-book Appointments System. During the visit, the farm manager is available for inquiries. The farming process is insured, so investors do not lose money.

The investor can at any time request a valuation of the farm and can sell their interest in the farm.

After harvest, the investor will receive the produce or send it for processing and selling.

reQuid in Nigeria

reQuid aggregates profiled investment opportunities in Nigeria. They partnered with Redwoods Capital Limited to profile available investments, assess the risk, and verify the insurance coverage. They make this information available to prospective investors. Investment products include cucumbers, fish, lettuce, poultry, and soybeans, to name but a few.

The investments are available in smaller units to be more affordable for low-income earners. Investors can also sell their investments before the maturity date. While it costs nothing to invest, there is a 3% fee for liquidating investments before maturity.

The duration of investments varies but is generally between three to twelve months. 

There is no limit on the number of times one can invest or liquidate one’s investments. Returns vary but can be significant.^[xxxvi]

ThriveAgric in Nigeria

ThriveAgric links smallholder farmers to funding opportunities, using data to increase farmer yields and connect them to lucrative markets. They allow investors to fund these farmers and get predictable returns upon harvest. They worked with over 11,000 farmers in 12 states in Nigeria. Amongst others, their farmers raised over 750,000 birds. ThriveAgric’s goal is to reach out to 1 million farmers in Africa over the next few years.^[xxxvii]

ThriveAgric believes it can solve Africa’s food shortages, develop farming communities, and use technology to increase yields and productivity. Their extension workers use an app that provides up-to-date information, and their farmers get automated messages. As a result, their farmers get as much as twice what their average yields would have been.

This process works as follows:

• The investor creates an account using email
• The investor chooses a farm(s) and the quantity they want and pay the subscription fee online
• The investors get multimedia updates from events on the farm that assists them in offering support on the production process
• Upon successful harvest, the produce is sold, and the revenues are distributed to the subscribers. 

Note on agri-tech platforms in Nigeria

According to an article by Michael Ajifowoke in Techcabal on 22 February 2022, Covid has played havoc with a number of these agri-tech platforms. Those under duress include Agrorite, Farmcrowdy Farmsponsor, reQuid, and Thrive Agric. New SEC rules in Nigeria have also led to most of the biggest platforms in the space leaving crowdfunding. Under the new regulations adopted in January 2021, crowdfunding can only be raised through an online portal operated by SEC-registered intermediaries, which must have a minimum paid-up capital of ₦100 million (US$240,000) and a current Fidelity Insurance Bond valued at 20% of the paid-up capital.^[xxxviii]

AGRI-TECH IN EAST AFRICA

Farm Capital Africa in Kenya

Farm Capital Africa (FCA) was created in 2014 to support the millions of small-scale farmers in Kenya who were locked out of the country’s formal economy. The goal of FCA is to generate wealth through investing in profitable business ventures in the underfunded agricultural sector. FCA uses the internet to raise funds and mobile money to disburse to agripreneurs — primarily youths and women. They connect these farmers with investment groups that can help them access funds to scale their agricultural ventures. FCA, therefore, participates in a profit- and loss-sharing arrangement between the agripreneurs and the investor. The company also provides input financing to small-scale farmers by partnering with local agrovets (places where farmers can buy agricultural and veterinary products). On joining the program, they pick inputs from the agrovet on credit and pay upon harvest.^[xxxix]This is effectively the same model used by cooperatives in other parts of Africa, such as in South Africa.

FarmDrive in Kenya

FarmDrive addresses the lack of access to finance for smallholder farmers in the formal financial ecosystem. Financial institutions are unwilling to provide farmers with the financing to boost their productivity. While these smallholder farmers need capital to help grow their farms beyond the subsistence level, banks only lend to larger commercial farmers with credit histories and collateral.

Banks can use FarmDrive’s innovative alternative credit-scoring model to assess the creditworthiness of farmers and allow more to access financing while still protecting banks against defaults. Farmers can use FarmDrive to apply, receive, and repay their loans using their mobile phones. Its role is to bring together all the available information on smallholder farmers.^[xl]

FarmDrive has positioned itself as a data analytics firm targeting financial institutions keen on lending to smallholder farmers. It recently also partnered with a large telco in Kenya – instantaneously expanding the number of smallholder farmers in its network from 3,000 to more than 100,000.^[xli]

FarmSmart in Kenya

FarmSmart is an application launched in Kenya at the end of October 2019. The mobile application will send essential, sustainable, and climate-smart farming knowledge to Kenyan farmers. It also provides tailored recommendations for farmers based on location, soil type, season, and irrigation access. FarmSmart aims to empower anyone to be an agri-entrepreneur.^[xlii]

Hello Tractor in Kenya (also in Nigeria)

Access to agricultural equipment is problematic as it is expensive. The Hello Tractor platform enables farmers to request affordable equipment services while providing enhanced security to tractor owners through remote asset tracking and virtual monitoring. This allows tractor owners and manufacturers to expand their markets, reaching previously inaccessible customers.

The solution links tractor owners, smallholder farmers, banks, and dealers. While most smallholder farmers struggle to purchase a tractor, they can pay for tractor services. 

It is an Internet-of-Things (IoT) solution that supports improved efficiencies, profitability, and transparency in the tractor contracting market. Their solution is a tractor monitoring device installed on the tractor, connecting it to the Hello Tractor cloud. Once connected, the device transmits relevant data across its ecosystem. The device is fitted with an international SIM card for higher connectivity but can store activity data locally if no connection exists.^[xliii]

The Tractor Owner app incorporates several tools to improve the business and operations of tractor owners. Accessing new customers, increasing efficiencies, and enhancing oversight lead to higher revenues, lower costs, and increased trust and transparency.

M-Shamba in Kenya^[xliv]

M-Shamba is a solution for the smallholder farmer using the power of mobile telephony. M-Shamba has embraced the latest emerging technological tools like AI, Machine Learning, the IoT, and Blockchain to create sustainable solutions for the farmer. Their solutions entail the following: 

• Interactive Voice Service: an easy and effective way to disseminate information to the smallholder farmers in rural areas
• Virtual Call Centre: M-Shamba’s call center platform makes the use of a call center cheap and straightforward
• Interactive SMS: SMS on agronomy, weather forecasts, climate change adaptations, enterprise development, etc.
• Customized Mobile Applications: M-Shamba can customize apps on GIS, surveys, monitoring, evaluation, trade, learning, and financial inclusion for their target audience

M-Shamba has also launched the following programs:

• Digital Literacy: Imparting digital skills to the rural population
• Market Access: Links farmers to markets by identifying markets and supporting farmers to meet the quality demands
• Farming as a Business: Farmers receive resources and tools to enable them to create enterprises on their farms instead of farming as a lifestyle

M-Shamba’s homepage indicates the following performance levels:

• Smallholder farmers supported: 68,546
• Land covered: ±162 ha
• Commodities traded: US$12 million
• Number of farmer cooperatives collaborated: 90

Pula: Digital Insurance for Smallholder Farmers

Pula was founded in 2015 in Nairobi as a micro-insurer for smallholder farmers to build and deliver scalable insurance solutions for Africa’s 700 million smallholder farmers. It specializes in digital and agricultural insurance to help mitigate the risk of these smallholder farmers. 

Farmers can improve their farming practices, increase their income, and deal with climate risk and changes by accessing a range of digital products and agricultural insurance through Pula. Its business model is based on creating an affordable insurance solution for smallholder farmers as an alternative to the costly traditional insurance providers.

Pula leverages machine learning, crop cuts experiments, and data points related to weather patterns and farmers’ losses to customize tailor-made products for specific farmers. Their model considers various risks such as drought, pests, diseases, and flooding.

Pula has reportedly already assisted over 4.3 million smallholder farmers in Africa. It was named the “InsurTech of the Year” at the African Insurance Awards 2020. Pula recently secured US$6 million in a Series A funding round to scale up its operations in 13 African markets and expand into Asia.^[xlv]

Sarafu: Cryptocurrencies for Kenyan Farmers

Sarafu is a cryptocurrency that works like vouchers that enable users, like farmers, to sell products and buy input materials such as seeds and fertilizer. Will Ruddick, an American economist, developed the cryptocurrency through his Kenyan non-profit, Grassroots Economics. It works like a “voucher” that can be exchanged for goods or services of other users of the currency. People with a Kenyan mobile phone line can enroll. Users are given 50 Sarafu for free. After that, they earn coins by selling a product or service to another user.

Sarafu is a community inclusion currency, or CIC, allowing people to give or take credit without depositing money in a bank. The Sarafu coins will be based on agriculture production across Kenya.

Community-focused cryptocurrencies reportedly have the potential to expand into the rest of Africa. They give communities the ability to monetize resources in a way that they cannot do with cash.^[xlvi]

Using IoT at Twiga in Kenya to Boost Food Production

Liquid Telecom recently partnered with Twiga Foods to increase agricultural productivity through precision farming. Kenya’s rapidly expanding Internet of Things (IoT) network will enable this initiative. The new system will initially be employed at Twiga’s Takuwa farm.

The system applies four different types of agricultural sensors to capture data in the field and convert it to digital form. These sensors provide critical information to the Twiga agronomy team:

• Farmers can use the most effective farming methods for irrigation and the application of pesticides utilizing real-time data obtained from a smart weather station
• Water quality sensors provide specific metrics to optimize fertilizer application and data on temperature, humidity, rainfall, and wind speed
• Soil probes measure moisture levels and temperature to provide precise information on soil quality and irrigation needs at the roots of specific crops
• Borehole water meters

Applications of IoT have the potential to transform agricultural productivity, leading to greater food security and improved farmer incomes in Kenya. Numerous processes have already been automated across the farm production cycle.^{[xlvii] [xlviii]}

Kilimo Fresh Agriculture Digital Platform in Tanzania

Kilimo Fresh is a B2B produce distribution platform in Tanzania that connects smallholder farmers and produce buyers to a fair and reliable market. The platform enables buyers to access better-quality and fresh produce directly from farms at affordable prices and deliver it directly to their locations. It provides farmers with stable pricing and direct access to the market for their crops, also eliminating food waste.

Challenges such as dealing with intermediaries, low margins, lack of market information and demand visibility, and food waste led the developers to form Kilimo Fresh in 2018 to solve these problems for other farmers in Tanzania.

The company currently operates in two regions in Tanzania, i.e., Dar es Salaam and Dodoma, supplying their daily fruits, vegetables, and grains. They intend to expand to Zanzibar and Arusha, and other East African countries, especially Rwanda.^[xlix]

AGRI-TECH IN SOUTHERN AFRICA

Aerobotic in South Africa

Aerobotic is a data analytics company founded in 2014 and optimizes crop performance for farmers globally using aerial imagery and machine learning algorithms. Aeroview is the cloud-based pest and disease management application of Aerobotic. Farmers use Aeroview to inspect threats and view farm analytics data on a machine-learning-enabled platform. Their service is available in 18 countries across Africa, Asia, and Europe.^[l]

Livestock Wealth in South Africa

Livestock Wealth connects online investors with investment opportunities in the agriculture sector. First, investors buy the young asset, either livestock or plant-based. Next, the asset grows in the farmer’s care, and then the farmer buys back the asset once it has fully grown at harvest; the investor benefits from the sale.

There are various classes of assets available. They include free-range oxen, pregnant cows, macadamia nuts, and connected garden products. Since its start, it has attracted more than 3,600 investors, who have invested more than R100 million. More than R30 million of profits have been paid out to investors. More than 70 farmers have been impacted.^[li]

TonnUp in South Africa

TonnUp recently launched an online trading platform to support farmers in marketing and selling their agricultural produce to disrupt the South African commodities market. The developers aim to help farmers get a fair price for their produce by empowering them to “dictate the pricing, marketing, and distribution of their products.” The company directly connects buyers and producers to ensure that all stakeholders get a fair deal.

The founders of TonnUp believe the platform helps farmers get maximum value for their products, while buyers can make more informed purchasing decisions. The process creates a transparent and efficient market. The farmers can list their products on the platform, while buyers (millers and processors) can bid on the products and preferred delivery locations. The platform has reduced the admin and paperwork involved in the process. It facilitates the cash-flow process to ensure farmers receive their payments and buyers receive their stock as quickly as possible.

The initial focus of TonnUp will be on grain, but it will eventually expand into other commodities such as oil cake, fertilizer, soya, and sorghum.

As less than 25% of the 16-million-ton market is traded in a formal market, it leaves a massive opportunity for platforms such as TonnUp. It is conceivable that the market is large enough for more platforms like TonnUp to tap into this opportunity.^[lii]

AgriPredict in Zambia

A lack of timely agricultural data for farmers in Africa affects their yields. AgriPredict addresses this challenge by linking farmers with access to information to help them identify diseases and predict pest infestations and weather conditions. 

While AgriPredict can alert farmers on detecting a disease or pest infestation in a specific area, farmers can photograph a suspected diseased plant and have AgriPredict provide a diagnosis, treatment options, and the location of the closest agri-dealer in the area. AgriPredict also connects farmers with markets where they can receive a fair price for their products. The app is available on smartphones.^[liii]

eMsika in Zambia

In Zambia, the ratio of agriculture suppliers to farmers is 1 to 7,000, which forces farmers and agri-dealers to travel long distances, losing valuable time and money. 

eMsika helps farmers find, buy, and receive agricultural inputs in a fast, reliable, and convenient way and creates access to markets for their produce. It is an e-commerce store for farmers, listing over 300 products in 10 different categories of agricultural input. Their clients can source inputs and contact suppliers in their local language. They also serve areas in the DRC, Mozambique, Namibia, and Zimbabwe and plan to expand across the continent. They have six suppliers in several agricultural sectors, such as livestock, poultry, and horticulture, in addition to a database of 500 farmers and 200,000 affiliates.

Farmers can also sell their produce at fair prices. eMsika has introduced a call center for farmers to access knowledge on products before purchasing them. In addition, it has introduced m-commerce features that supplement the use of its website for all customers in areas of no or limited internet.^[liv]

Musika in Zambia

Musika leverages mobile technology to offer two services. Musika Solutions is an app-based agriculture marketplace for farmers to buy inputs at a discount from its partners. Musika Express is a commodity and agro-alerts platform that aggregates agricultural data to provide users with daily price updates from the markets, disease alerts, and weather updates. Farmers can also carry out trend analysis per commodity for up to five years. Musika currently reaches 10,000 farmers.

The revenue models of the two services are simple. Suppliers can list their products on Musika Solutions for a monthly fee. Musika also gets a referral fee for each product sold on promotion. Musika Express is an ad and subscription-based platform, and suppliers pay to place ad campaigns on the site. It is currently free for farmers, although they will pay a monthly fee in the long term.^[lv]

EcoFarmer in Zimbabwe

Farmers in Zimbabwe buy inputs, sell their produce, and maintain insurance policies via mobile phones. EcoFarmer, a mobile platform developed by Econet Wireless, provides micro-insurance for farmers to insure their inputs and crops against drought or excessive rain via SMS and voice-based messages on their mobile phones. The services cover a broad range such as weather information, using fertilizer, treating crops against pests, buying inputs, selling their produce, and accessing a wide range of applications such as funeral policies for their families, all via mobile phones. These digital services help farmers increase their productivity, profits, and resilience to climate change.

Econet recently partnered with the Zimbabwe Farmers Union (ZFU) to offer the ZFU EcoFarmer Combo, an information and financial service, to more than 1 million ZFU members. The members receive agriculture tips based on their farming area and weather-based indexed crop insurance.

BLOCKCHAIN IN AGRICULTURE IN AFRICA

According to a Ventures Africa article by Adekunle Agbetiloye,^[lvi] Africa’s technological-agricultural synergy is not yet at its peak. He believes that more technology is required to transform Africa’s agriculture sector. One such a technology is blockchain technology. In addition to its role in cryptocurrency, blockchain is applied in various sectors such as transportation, lottery businesses, politics, and agriculture. The content below is derived from this article.

Blockchain technology was used to transform Zimbabwe’s beef export market. The country experienced an outbreak of a tick-borne disease in 2018 that decimated its cattle herds. At the time, Zimbabwe’s cattle sub-sector contributed US$50 million annually to the wealth of the country. This contribution and Zimbabwe’s credibility as an international beef exporter suffered significantly from the outbreak. Zimbabwe lost revenues as it could not sell beef to its lucrative markets in Europe and the Middle East due to a lack of a traceability system. In 2021, a blockchain-based cattle traceability system brought end-to-end visibility to the cattle supply chain in Zimbabwe. Tracking the medical history of cattle on a tamper-proof blockchain ledger helped renew trust in Zimbabwean cattle farming and re-established Zimbabwe’s beef exportation credibility.^[lvii]

Other uses of blockchain in agriculture include the following:

• In the agricultural supply chain: Agriculture products are tracked transparently from production to delivery. Consumers can source information regarding the origin of food and data on harvesting, processing, and production by scanning a QR code.
• In agricultural trade: Transaction processes are simplified, and common ground for small-scale farmers is created. Blockchain enables transparent peer-to-peer transactions in the sector without an intermediary, which reduces the cost of agriculture products.
• In Nigeria, Agrichainx is a blockchain agricultural platform that helps farmers, retailers, distributors, and manufacturers to connect seamlessly and interact with each other.
• Smart contracts are blockchain-based in which the contractual clauses are executed without human intervention. In agriculture, they are used for finance and insurance, green bonds, and land registration and verification.
• Smart contracts also provide better insurance programs for farmers as they use sensors to make the process transparent and minimize the risk of false claims.^[lviii]

CONCLUSION

The examples referred above are not an exhaustive list of the available agri-tech apps available within the agriculture sector in Africa.

The number of African countries embarking on agri-tech strategies is growing, including Ghana, Kenya, Nigeria, Rwanda, Senegal, South Africa, Tanzania, Tunisia, Uganda, Zambia, and Zimbabwe. These countries achieved their successes by integrating technology in the value chains. Technological innovations in agriculture are crucial for developing productivity, optimizing yields, and reducing waste.

Africa’s agri-tech industry remains underdeveloped with colossal potential. By focusing on the upstream and downstream players, value can be unlocked by leveraging the utilities of modern technology. The players are using the spectrum of technology to solve the pain points of the various players. 

The applications and platforms listed above support the increase in agricultural productivity and address the challenges of food insecurity in Africa. Significantly improving productivity can assist Africa in saving on its annual net food import bill of US$41 billion. Import substitution can also enhance the balance of payments and create more jobs in the process.

Some experts view digitalization as a game-changer, modernizing and transforming the economics of Africa’s agriculture while attracting the youth to the agriculture sector and enabling farmers to optimize production. Agri-tech also supports farmers to make their crops more resilient to climate change. Using digital solutions, farmers can reportedly increase yields ranging from 23% to 73%, with revenue increases of up to 37% percent. Furthermore, the sector can use agri-tech to increase farmer productivity and market access, in addition to providing the location of the most appropriate markets on any given day.

Utilizing mobile technology in the agriculture sector is a rapidly growing phenomenon and is only constrained by the imagination of the developers. However, it does seem that applications linking investors to farmers (mostly tapping into crowdfunding) and opening opportunities in the market in a seamless value chain are becoming increasingly popular. 

Some, like Agrorite, focus on market growth to help the farmers get more profitable opportunities. All of them have the added benefit of addressing the challenge of food security. In Nigeria, FarmCrowdy has become a benchmark for other applications to either copy or use as a point of departure for additional developments. It seems the Farmcrowdy model that links stakeholders in the sector and creates access to markets has been emulated in several countries throughout Africa.

Increasing cheap smartphones in Africa, improving access to broadband internet, reducing the cost of data, and improving education levels will increase the impact of technology on Africa’s agriculture sector. Hopefully, these improvements will increase food security and encourage the youth to embrace agriculture as a career option.

We see initiatives to use smart agriculture and modern fertilizers to increase food production yields. However, food security will remain a challenge for some time, given the population growth, the high urbanization rates, and the conversion of agricultural land into suburbs. Smallholder farmers that produce significant quantities of food in Africa are the target of many of these initiatives. However, more needs to be done to ensure these critical stakeholders’ productivity and future viability. The average age of a smallholder farmer in Africa is over 50 years (can be as high as 63). This demographic does not bode well for African food security unless something is done to alter the pattern. 

Agri-tech, including technologies such as drought management, crop protection, and yield enhancement, can contribute substantially to employment (including jobs for youth), wealth creation, and improved health and nutrition in Africa. The rapid pace of growth in drones, automated tractors, artificial intelligence, robotics, and blockchains is transforming agriculture. Smart farming and technological innovations boost productivity, but more education, connectivity, and funding are required. Connectivity in the rural communities also needs to be enhanced by providing additional spectrum.

Utilizing technology such as IoT and automation to improve agricultural productivity is essential to improving food security in Africa. Boosting yields through optimized production techniques is a well-understood path to this goal. Yet Africa’s food import bills are a shockingly high and largely unnecessary use of scarce foreign reserves, given the potential of the continent to produce its food. Low yields are a severe constraint to achieving food security. Automation is not the only technology that will boost food security. Farmers should also reach out and embrace solutions such as better-quality seed and modern irrigation methods.

Figure 3 below provides a view of the primary and secondary value chain activities in which the various agri-tech apps play a role. From this view, agri-tech’s influence has become quite pervasive.

Figure 3: Presence of Agri-Tech in the Agriculture Value Chain

The author, Johan Burger, is the Business Development Manager of the College for Business and Economics at the UAE University. He also serves as a research fellow of the NTU-SBF Centre for African Studies at Nanyang Technological University in Singapore and the Institute for Futures Research at the University of Stellenbosch Business School in South Africa. Johan can be reached at johan.burger@uaeu.ac.ae. 

This report is an updated version of an article by the author published in AfricaBusiness.com on 15 April 2019. Some of the entities may no longer exist.

Burger, J.H. 2019. Tapping into Digital technology Platforms to increase Agricultural Productivity in Africa. AfricaBusiness.com. 15 April 2019. Available at https://africabusiness.com/2019/04/15/agriculture-productivity-in-africa/.  

Other Sources:

1. Agbetiloye, A. 2022. How blockchain can help transform agriculture in Africa. Ventures Africa.  11 February 2022. Available at https://venturesafrica.com/how-blockchain-can-help-transform-agriculture-in-africa/.  Accessed 15 February 2022.
2. Agbetiloye, A. 2021. 11 Mission-driven agritech startups in Africa you should know about. Ventures Africa. 3 December 2021. Available at https://venturesafrica.com/here-are-11-mission-driven-agritech-startups-in-africa-you-should-know-about/. Accessed 15 February 2022.
3. Ajifowoke, M. 2022. From celebrated platforms to fraud claims: Why Nigeria’s agric crowdfunding fintechs came crashing down. Techcabal. 22 February 2022. Available at https://techcabal.com/2022/02/22/nigeria-agric-crowdfunding-crash/?utm_source=Newsletter&utm_medium=TC_daily&utm_campaign=rip_what_you_sow&utm_term=2022-02-23.  Accessed 24 February 2022.
4. Anon. 2020. IBM supports African agricultural startups. IT-Online. 8 December 2020. Available at https://it-online.co.za/2020/12/08/ibm-supports-african-agricultural-start-ups/.  Accessed 15 February 2022.
5. Anon. 2019. Nigerian Agri-tech startup, EZ Farming clinches $150,000 seed funding. NIPC. 27 August 2019. Available at https://nipc.gov.ng/2019/08/27/nigerian-agric-tech-startup-ez-farming-clinches-150000-seed-funding/?mc_cid=69fb77359d&mc_eid=5996ec09d0. Accessed 15 February 2022.
6. Anon. 2019. Growing African agriculture one byte at a time. Africa.com. 19 July 2019. Available at https://www.africa.com/growing-african-agriculture-one-byte-at-a-time/?utm_source=Africa.com&utm_campaign=c6128c6918-EMAIL_CAMPAIGN_2019_05_27_09_40_COPY_01&utm_medium=email&utm_term=0_12683c81a6-c6128c6918-29147709.  Accessed 15 February 2022.
7. Chetty, I. 2021. SA agritech launches innovative commodities trading platform. Ventureburn. 9 April 2021. Available at https://ventureburn.com/2021/04/sa-agritech-launches-innovative-commodities-trading-platform/.  Accessed 15 February 2022.
8. Chetty, I. 2021. Kenyan insurtech startup secures $6 million. Ventureburn. 26 January 2021. Available at https://ventureburn.com/2021/01/kenyan-insurtech-startup-secures-6-million/.  Accessed 15 February 2022.
9. Coldhubs. nd. The solution: Walk-in, solar-powered cold stations for 24/7 storage and preservation. Coldhubs. nd. Available at https://www.coldhubs.com.  Accessed 15 February 2022
10. CTA and Dalberg Advisors. 2019. The Digitalisation of African Agriculture Report, 2018-2019. June 2019. Available at https://hdl.handle.net/10568/101498.  Accessed 15 February 2022.
11. Delport, J. 2021. What is the Haller App, and how is it assisting farmers in Africa. IT News Africa. 29 January 2021. Available at https://www.itnewsafrica.com/2021/01/what-is-the-haller-app-and-how-is-it-assisting-farmers-in-africa/.  Accessed 15 February 2022.
12. DigiExt. nd. Data-driven farming for smallholders. DigiExt. nd. Available at https://www.digiext.com.  Accessed 15 February 2022.
13. EABW Editor. 2019. Technology uptake going up in Uganda’s Agriculture Sector. EABW Digital. 19 July 2019. Available at https://www.busiweek.com/technology-uptake-going-up-in-ugandas-agriculture-sector/. Accessed 15 February 2022.
14. Elmendorp, R. 2021. Cryptocurrency booming among Kenyan farmers. Voice of America. 26 July 2021. Available at https://www.voanews.com/africa/cryptocurrency-booming-among-kenyan-farmers.  Accessed 15 February 2022.
15. EZFarming. nd. About our agricultural investment company. EZFarming. nd. Available at https://ez-farming.com/about. Accessed 28 February 2022.
16. FarmSmart. nd. FarmSmart: About us. FarmSmart. nd. Available at https://www.farmsmart.co/about-us.  Accessed 28 February 2022.
17. Jackson, T. 2021. Data-driven farming for smallholders. Disrupt Africa. 2 August 2021. Available at https://disrupt-africa.com/2021/08/02/how-ghanas-digiext-helps-farm-cooperatives-develop-and-grow/?utm_source=Africa.com&utm_campaign=11a87324dd-EMAIL_CAMPAIGN_2019_05_27_09_40_COPY_01&utm_medium=email&utm_term=0_12683c81a6-11a87324dd-29147709.  Accessed 15 February 2022.
18. Jackson, T. 2020. Meet Kilimo Fresh, the Tanzanian agri-tech startup that won this year’s MEST Africa Challenge. Disrupt Africa. 5 October 2020. Available at https://disrupt-africa.com/2020/10/meet-kilimo-fresh-the-tanzanian-agri-tech-startup-that-won-this-years-mest-africa-challenge/?utm_source=Africa.com&utm_campaign=d083ebe328-EMAIL_CAMPAIGN_2019_05_27_09_40_COPY_01&utm_medium=email&utm_term=0_12683c81a6-d083ebe328-29147709.  Accessed 15 February 2022.
19. Jackson, T. 2020. “Crowd-farming” startups address vicious cycle and eye wider impact. Disrupt Africa. 3 March 2020. Available at https://disrupt-africa.com/2020/03/crowd-farming-startups-address-vicious-cycle-and-eye-wider-impact/?utm_source=Africa.com&utm_campaign=5c9eb3e690-EMAIL_CAMPAIGN_2019_05_27_09_40_COPY_01&utm_medium=email&utm_term=0_12683c81a6-5c9eb3e690-29147709.  Accessed 15 February 2022.
20. Jackson, T. 2020. Ghana’s Agripool is the latest crowd-farming platform looking to make an impact. Disrupt Africa. 24 February 2020. Available at https://disrupt-africa.com/2020/02/24/ghanas-agripool-is-the-latest-crowd-farming-platform-looking-to-make-an-impact/.  Accessed 24 February 2022.
21. Livestock Wealth. nd. Livestock Wealth: how it works. Livestock Wealth. nd. Available at https://livestockwealth.com/how-it-works/.  Accessed 28 February 2022.
22. McBain, W. 2020. Agritech platforms revolutionise farming investment. African Business Magazine. 11 August 2020. Available at https://africanbusinessmagazine.com/sectors/agriculture/agritech-platforms-revolutionise-farming-investment/?mc_cid=7b7f26d2f9&mc_eid=512a079920.  Accessed 15 February 2022.
23. Mkhonza, T. 2020. Liquid Telecom partners with Twiga Foods to accelerate agricultural transformation in Kenya. IOL. 17 June 2020. Available at https://www.iol.co.za/business-report/companies/liquid-telecom-partners-with-twiga-foods-to-accelerate-agricultural-transformation-in-kenya-49505997.  Accessed 15 February 2022.
24. Monzon, L. 2020. Tech is essential in developing a flourishing agriculture sector in Africa. IT News Africa. 26 June 2020. Available at https://www.itnewsafrica.com/2020/06/tech-is-essential-in-developing-a-flourishing-agriculture-sector-in-africa/.  Accessed 15 February 2022.
25. Ngounou, B. 2019. Ivory Coast: BioSave, an application to promote biofertilizer production. Afrik 21. 23 October 2019. Available at https://www.afrik21.africa/en/ivory-coast-biosave-an-application-to-promote-biofertilizer-production/.  Accessed 15 February 2022.
26. Phakathi, M. 2020. Digitisation could transform African agriculture. IPS News Agency. 2 December 2020. Available at http://agriculture.einnews.com/article/531907500/sGUaap4KYOHWvzRj.  Accessed 15 February 2022.
27. reQuid. nd. reQuid – the Amazon for safe investments. reQuid. nd. Available at https://market.requid.com/about.  Accessed 24 February 2022.
28. Traore, C.T. 2020. Five startups that are transforming Africa’s agriculture. Malabo Montpellier Panel. 6 September 2020. Available at https://www.mamopanel.org/news/blog/2020/sep/6/five-start-ups-are-transforming-africas-agricultur/.  Accessed 15 February 2022.^[lix]

^[i]https://www.reuters.com/article/us-africa-agriculture-tech/africa-bets-on-technology-to-lure-youth-to-farming-idUSKCN1MD1Y6?utm_source=Africa.com&utm_campaign=1db3c0cea5-EMAIL_CAMPAIGN_2018_06_18_02_08_COPY_01&utm_medium=email&utm_term=0_12683c81a6-1db3c0cea5-29147709

^[ii] https://venturesafrica.com/here-are-11-mission-driven-agritech-startups-in-africa-you-should-know-about/

^[iii]https://oxfordbusinessgroup.com/sites/default/files/blog/specialreports/960469/OCP_Agriculture_Africa_Report_2021.pdf) 

^[iv]https://oxfordbusinessgroup.com/sites/default/files/blog/specialreports/960469/OCP_Agriculture_Africa_Report_2021.pdf

^[v]https://oxfordbusinessgroup.com/sites/default/files/blog/specialreports/960469/OCP_Agriculture_Africa_Report_2021.pdf

^[vi]https://oxfordbusinessgroup.com/sites/default/files/blog/specialreports/960469/OCP_Agriculture_Africa_Report_2021.pdf

^[vii] https://disrupt-africa.com/2020/03/crowd-farming-startups-address-vicious-cycle-and-eye-wider-impact/?utm_source=Africa.com&utm_campaign=5c9eb3e690-EMAIL_CAMPAIGN_2019_05_27_09_40_COPY_01&utm_medium=email&utm_term=0_12683c81a6-5c9eb3e690-29147709

^[viii]https://africanbusinessmagazine.com/sectors/agriculture/agritech-platforms-revolutionise-farming-investment/?mc_cid=7b7f26d2f9&mc_eid=512a079920.

^[ix] https://venturesafrica.com/here-are-11-mission-driven-agritech-startups-in-africa-you-should-know-about/

^[x] https://it-online.co.za/2020/12/08/ibm-supports-african-agricultural-start-ups/.

^[xi]http://www.africanfarming.net/technology/infrastructure/new-holland-agriculture-launches-farmmate-app-for-farmers.

^[xii]http://www.africanfarming.net/technology/infrastructure/new-holland-agriculture-launches-farmmate-app-for-farmers.

^[xiii] https://agriculture.newholland.com/apac/en/about-us/whats-on/whats-app.

^[xiv] https://www.itnewsafrica.com/2021/01/what-is-the-haller-app-and-how-is-it-assisting-farmers-in-africa/

^[xv] https://venturesafrica.com/here-are-11-mission-driven-agritech-startups-in-africa-you-should-know-about/

^[xvi] https://venturesafrica.com/here-are-11-mission-driven-agritech-startups-in-africa-you-should-know-about/

^[xvii] https://disrupt-africa.com/2020/02/24/ghanas-agripool-is-the-latest-crowd-farming-platform-looking-to-make-an-impact/

^[xviii] https://www.digiext.com

^[xix] https://www.afrik21.africa/en/ivory-coast-biosave-an-application-to-promote-biofertilizer-production/

^[xx] https://www.myagro.org/about-us/story/

^[xxi] https://www.myagro.org/about-us/story/

^[xxii] https://www.myagro.org/impact/

^[xxiii] http://www.africanfarming.net/crops/agriculture/agrorite-com-unveils-digital-platform-for-smallholder-farmers

^[xxiv] https://alosfarm.com/why-alosfarm

^[xxv] https://www.coldhubs.com

^[xxvi]https://disrupt-africa.com/2020/03/crowd-farming-startups-address-vicious-cycle-and-eye-wider-impact/?utm_source=Africa.com&utm_campaign=5c9eb3e690-EMAIL_CAMPAIGN_2019_05_27_09_40_COPY_01&utm_medium=email&utm_term=0_12683c81a6-5c9eb3e690-29147709

^[xxvii] http://www.efarmers.ng/en/about-us

^[xxviii]https://nipc.gov.ng/2019/08/27/nigerian-agric-tech-startup-ez-farming-clinches-150000-seed-funding/?mc_cid=69fb77359d&mc_eid=5996ec09d0

^[xxix] https://ez-farming.com/about

^[xxx] https://2feetafrica.com/nigerian-agri-tech-platform-connects-farmers-local-investors/

^[xxxi] https://www.itnewsafrica.com/2019/04/farmcrowdy-group-launches-a-agro-commodity-aggregator-platform/

^[xxxii] https://www.farmerinsuit.com/about-us/

^[xxxiii] https://www.farmerinsuit.com/about-us/

^[xxxiv] https://www.farmerinsuit.com.

^[xxxv] https://www.growcropsonline.com.

^[xxxvi] https://market.requid.com/about

^[xxxvii] https://www.thriveagric.com/about-thrive-agric/

^[xxxviii] https://techcabal.com/2022/02/22/nigeria-agric-crowdfunding-crash/?utm_source=Newsletter&utm_medium=TC_daily&utm_campaign=rip_what_you_sow&utm_term=2022-02-23

^[xxxix] http://afkinsider.com/139303/entrepreneur-links-small-scale-african-farmers-with-venture-capitalists/

^[xl]https://www.howwemadeitinafrica.com/kenyan-company-saw-opportunity-link-small-scale-farmers-banks/59201/

^[xli]https://www.howwemadeitinafrica.com/kenyan-company-saw-opportunity-link-small-scale-farmers-banks/59201/

^[xlii] https://www.farmsmart.co/about-us

^[xliii] https://www.hellotractor.com/wp-content/uploads/2018/09/HT-COMMERCIAL-WP.pdf

^[xliv] https://m-shamba.net

^[xlv] https://ventureburn.com/2021/01/kenyan-insurtech-startup-secures-6-million/

^[xlvi] https://www.voanews.com/africa/cryptocurrency-booming-among-kenyan-farmers.  

^[xlvii]https://www.iol.co.za/business-report/companies/liquid-telecom-partners-with-twiga-foods-to-accelerate-agricultural-transformation-in-kenya-49505997.  

^[xlviii] https://www.itnewsafrica.com/2020/06/tech-is-essential-in-developing-a-flourishing-agriculture-sector-in-africa/.  

^[xlix]https://disrupt-africa.com/2020/10/meet-kilimo-fresh-the-tanzanian-agri-tech-startup-that-won-this-years-mest-africa-challenge/?utm_source=Africa.com&utm_campaign=d083ebe328-EMAIL_CAMPAIGN_2019_05_27_09_40_COPY_01&utm_medium=email&utm_term=0_12683c81a6-d083ebe328-29147709.  

^[l] https://venturesafrica.com/here-are-11-mission-driven-agritech-startups-in-africa-you-should-know-about/

^[li] https://livestockwealth.com/how-it-works/

^[lii] https://ventureburn.com/2021/04/sa-agritech-launches-innovative-commodities-trading-platform/.

^[liii] https://venturesafrica.com/here-are-11-mission-driven-agritech-startups-in-africa-you-should-know-about/

^[liv] http://disrupt-africa.com/2018/06/zambias-emsika-helping-farmers-buy-agricultural-inputs/

^[lv] https://www.musika.org.zm/about-us/

^[lvi] https://venturesafrica.com/how-blockchain-can-help-transform-agriculture-in-africa/

^[lvii] https://venturesafrica.com/how-blockchain-can-help-transform-agriculture-in-africa/

^[lviii] https://venturesafrica.com/how-blockchain-can-help-transform-agriculture-in-africa/

^[lix]

2016 has been a year of turmoil for some African countries, while others experienced stability and good economic growth. One reason for the downside phenomenon is the slowdown of China’s economic growth due to its rebalancing of its economy. A second reason, which is linked to the first, is the end of the commodity price super cycle. In Africa, we saw a continuation of several of the trends observed in 2015, such as urbanisation, the growth in the middle class, the continued need for infrastructure development, the prominence of fintech, and political volatility and stability, to name but a few.

The NTU-SBF Centre for African Studies publishes a weekly newsletter. These were studied to pick up on the trends prominent in 2016. Some of these trends are more elaborate than others.

Trend 1: On the political scene, Africa saw a number of elections in 2016. It mostly experienced peaceful political transitions and elections were deemed to be relatively free and fair. This was the case in Ghana (the incumbent, John Mahama lost to the challenger, Akufo-Addo), Zambia (the incumbent, Edgar Lungu, won) and Uganda (the incumbent, Yoheri Museveni, won). Gabon’s elections were won by the incumbent, President Ali Bongo Ondimba, but were disputed by the challenger, Jean Ping. The difference in the number of votes was just 6 000. This led to a short period of violence before law and order was restored. This trend of political transition or relative peaceful continuation, is contrasted by the situation in Gambia, where the incumbent president, Jammeh, refused to vacate his office after losing to the challenger. President-elect Adama Barrow stayed in Senegal where he was inaugurated and a military force from ECOWAS convinced Jammeh to give up the presidency. In the DRC, Joseph Kabila now gets to rule until elections will be held in 2018. The elections were supposed to be held before late December 2016, but apparently, the DRC was not ready for the election, and would only be able to do so in 2018.

It is interesting to note that the Ibrahim Prize for Achievement in African Leadership has again not been awarded in 2016. As a matter of fact, it has not been awarded in 5 of the 10 years since it was launched in 2006. But as Mo Ibrahim points out, any African leader bent on wealth accumulation can do much better than what the prize provides.

Trend 2: With new president John Magufuli, we are seeing Tanzania taking on Kenya to become the powerhouse of East Africa. This has created growing diplomatic tension between Kenya and Tanzania. Magufuli has also been accused of pushing Tanzania’s priorities at the expense of the EAC. First, Magufuli declared that Tanzanian companies should not import from Kenya anything that can be bought in Tanzania. He also tightened the stringent work permit requirements for foreigners working in Tanzania. In May, Tanzania announced that it would reduce the amount of electricity it buys from Kenya by 67%. Magufuli also convinced Uganda to build its oil pipeline through Tanzania instead of through Kenya. Rwanda then announced that it was going to develop its railway line through Tanzania, as this was cheaper and shorter than the route through Kenya. Tanzania is also building a big port to rival Mombasa. In addition, Tanzania pulled out of a trade deal that the EAC was negotiating with the EU, where after Uganda and Rwanda also pulled out of the deal. This has left Kenya on its own.

One could also see Magufuli’s actions as an attempt to wrest away regional leadership away from Kenya. This kind of “destabilisation” activity might be good for Tanzania in the short run, but it could be seen as a “beggar thy neighbour” approach. If it leads to retaliation by Kenya, it will destabilise the whole region. Kenya’s President Kenyatta cannot be seen to be weak in the face of such “aggression” by Magufuli.

Magufuli’s first visit to Kenya late October 2016 can therefore be interpreted as an attempt to smooth relations between Kenya and Tanzania. Hopefully the leadership aspirations of these two countries will not be to the detriment of the region. It is not inconceivable that Tanzania could indeed take over as the regional leader and become the gateway into East Africa. The exploitation of Tanzania’s gas reserves has not fully kicked in at all, and could bring about a major turnaround in its economy. The same goes for the exploitation of its newly developed uranium mine. The future looks bright for Tanzania!

Trend 3: The Nigerian economy is struggling after being hit by the global crash in oil prices. Although President Buhari has done well in his strategic foreign affairs approach, it is the economy that struggled in 2016. The currency is quite volatile, inflation is problematic, and foreign currency (US$) is unavailable. SMEs and entrepreneurs are struggling, and unemployment is increasing. Nigeria’s economy sunk deeper into recession towards the end of 2016 as inflation hit an 11-year high of 18.3%, driven by a dollar shortage that has drastically hit Nigeria’s capacity to import. Crude oil exports also fell to an average production of 1.63 million bpd, a 0.87% dip from 1.69 million bpd in the second quarter.

President Buhari has tried various strategies to restore the Nigerian economy to health, such as identifying 5 key sectors Nigeria must focus on to revive the economy, i.e. agriculture, power, manufacturing, housing and the health care sectors. He has also developed a “Made in Nigeria” approach. While Nigeria has traditionally had a strong slant towards the West, Buhari has turned towards China for financial support.

The ongoing rebel attacks on oil infrastructure in the Niger Delta have done Nigeria no favour. Two major militant groups, the Niger Delta Avengers and Niger Delta Greenland Justice Mandate, blew up gas plants and oil pipelines in efforts to gain independence for the region, pushing the country’s oil production to the lowest in 20 years.

Nigeria’s response to the naira’s slump has contributed to a bad situation. To protect its foreign reserves, Nigeria banned the importation of many goods. It initially tried to prop up the naira by fixing it against the US$, but was forced to abandon the peg in June 2016. It is still struggling to overcome the currency scarcity. A wave of multinational firms, e.g. Sun International and various airlines, have left Nigeria, citing forex concerns. It is this situation that will eventually define the presidency of Buhari, and history will not be kind to him. It is a pity as he started off quite well at a macro and strategic level, with his foreign policy initiatives promising so much.

Trend 4: South Africa’s political scene in 2016 reminds one of a soap opera. This has spilled over into the economic field, with various ratings agencies seriously contemplating downgrading South Africa’s debt to junk status. Jacob Zuma seems to be the archetype of Gloria Gaynor’s song, “I will survive”. He entered the presidency with close to 800 charges of corruption against him, and had the charges dropped. He did this be “capturing” the National Prosecution Authority. Granted, these charges have to be reinstated, given a recent high court verdict. The upgrade of his homestead at Nkhandla created another uproar. As did his firing of the Minister of Finance, Nene, in December 2015, and replacing him with an unknown backbencher, David van Rooyen. He was within days forced to replace van Rooyen with Pravin Gordhan, the man he replaced with Nene.

The Constitutional Court in 2016 ruled that he had not executed his constitutional duties in the saga around the Public Protector’s ruling on his Nkhandla homestead. The latest report was on the extent of “state capture” and the Gupta family. Various ministers were said to have been appointed on the recommendation of the Guptas. A lot of this led to a serious drop in support for the ANC in the local elections of 2015. Will the support of the National Executive Committee of the ANC backfire against the ANC at the 2019 national elections? Zuma has blamed the situation on foreign entities that wanted to destabilize South Africa. He is portraying himself as a victim. While the middle class in South Africa will not buy this, unfortunately a large number at the bottom end and in the rural areas, will. It will also be interesting to see whether Zuma will shuffle his cabinet to get rid of those ministers that supported the notion for him to step down.

It was under Zuma’s term of office that the UN ranked South Africa as the most corrupt country in the world – not a badge South Africa and the ANC can be proud of!

Trend 5: Africa seems to be ramping up its activities in the motor vehicle manufacturing sector. Countries involved include Ghana, Nigeria, Uganda, Kenya and Ethiopia. Uganda, Ghana and Nigeria have all developed home-grown transport solutions, frequently quite sophisticated. It shows upon the need for the development of the required professionals in the sector. Uganda’s Kiira Motors has produced eco-friendly vehicles, including a two-seater electric car, a five-seater sedan hybrid that uses both lithium batteries and gas, and a 35-seater solar-powered bus.

Ethiopia’s vehicle sector also got a boost when South Korea’s Kia Motors signed a deal with a local company, Belayab Motors Plc, in 2016 to start assembling cars in Ethiopia. It is important for Kia to penetrate the African market, and they are also looking at the prospects of opening similar plants in Algeria and other countries.

Trend 6: Africa saw major developments in the field of technology. The growth of mobile phones and services across Africa has brought many Africans into the digital age and connected them to the Internet. With one of the world’s fastest growing middle classes, Africa has seen multiple opportunities emerge for both local and global retailers from this digital growth.

Tanzania and Togo both built 3D printers from e-waste. In February 2016, Tanzania’s Buni Hub created Africa’s first-ever 3D printer from e-waste. WoeLab in Togo also announced an e-waste-based 3D printer of its own.

Fintech continues to grow and develop, with M-Pesa still dominating the sector. Banks are becoming involved, as they run the danger of being disintermediated should they not. There appears to be an app for almost everything: herding cattle in Kenya (i-Cow), private security in Ghana (Hei Julor!), remotely monitoring patients in Zimbabwe (Econet) and in Uganda, an Uber-like service (Yoza) connecting dirty laundry to mobile washerwomen. Others include MFarm, MHealth, and various financial applications that use M-Pesa as base platform (M-Akiba, M-Kopa, M-Shwari), etc.

Countries such as Rwanda have taken active steps to ensure their citizens have access to the Internet at an affordable rate to transform their agrarian, lower-income economies into one that is both knowledge-based and middle-income. Rwanda has also acknowledged they need to build the capacity to promote, develop and host content locally, and that in addition to establishing infrastructure, they must also foster learning and education, addressing the necessary skills for internet adoption to encourage uptake and ultimately closing the digital divide.

The rapid change in mobile technology and Internet availability, has ushered in a fresh debate around “Smart Cities”, focusing on the kinds of connectivity that will unify the entire ecosystem and improve how Africa lives. Rwanda, Kenya, South Africa, Nigeria and Ghana are countries where the “Smart City” concept has taken root.

E-commerce represents a small, but rapidly growing segment of the African retail market. The growing popularity of online shopping is driven by increasing internet access and smartphone ownership, busy lifestyles, a preference for convenience, nightmare traffic jams, bad roads, and a lack of parking. Digital marketing and social media is also growing strongly in Africa, supporting the e-commerce trend.

Barclays Africa recently completed the world’s first trade finance transaction (between Ireland and the Seychelles) using blockchain technology. Bitcoins are being used innovatively, e.g. SA’s “The Sun Exchange” launched a P2P lending platform that taps into the bitcoin community and helps them fund solar energy projects in Africa. Given the high costs associated with the massive African remittance market, bitcoin is also seen as a credible alternative to the conventional financial institutions.

Trend 7: Energy in Africa is a scarce commodity, representing only 3% of global electricity consumption. More than 620 million people have no access to electricity. This undermines the economic and social development of Africa, fuels political instability and can even have an influence on the creation of failed states. Given the importance of energy to Africa, the president of the AfDB has identified electrifying Africa as one of his “High 5” priorities.

Renewable energy in Africa has become quite prominent and is growing strongly, with costs reducing significantly. Ethiopia is actively pursuing hydro and wind energy, while Morocco has recently commissioned the world’s largest solar plant. Tanzania has agreed to purchase 400MW of Ethiopia’s hydro-power processed electricity. This deal will boost economic integration and strengthen multilateral ties between the two countries, and create more economic integration with Kenya. Ethiopia is building several hydro-electric power plants, including the GERD (Grand Ethiopia Renaissance Dam).

Kenya is the scene of solar PV mini-grids. It has also opened the world’s largest geothermal plant last year, and is building another plant which is expected to come online in two years. Kenya is also building Africa’s biggest wind energy farm to generate a fifth of its power.

Other countries that are tapping into renewable energy in a major way, include South Africa, Zambia, and Rwanda, to name but a few.

Generation sources include solar power, hydro-power, thermal power, wind power, biogas, and methane gas.

Trend 8: It seems that economic power and investment opportunities in Africa has moved from West Africa to East Africa in 2016. Some authors commented that “Africa Rising” is being replaced by “Africa Tilting”. East Africa is increasingly driving growth in Africa as they benefit from cheap oil, slowing inflation and lower interest rates. The economies of Kenya, Rwanda, Tanzania and Uganda were all set to expand more than 5% in 2016. Nigeria, struggling with weak crude prices, power outages and currency mismanagement, faced a 1.8% contraction. South Africa is set to stagnate due to political and labour turmoil and weak demand for its minerals.

East Africa is also reaping the benefits of an improved regulatory regime and increased investment in transport links and telecommunications.

Ethiopia, amongst others, presents a big opportunity for pharmaceutical manufacturing as nearly 85% of the Ethiopian demand is covered by imports. Other consumer-focused companies are also establishing manufacturing facilities for products currently being imported. The Ethiopian government is promoting industrial parks throughout the country. Positives for Ethiopia include relatively cheap energy and an upgraded transport infrastructure.

Trend 9: In Africa in 2016 we saw a continued growth of urbanisation and a growing middle class, with a continued trend in economic growth in some areas. These all present a good reason for retail and consumer companies to continue to expand and look for opportunities in SSA. This will stimulate the growth in the number of malls. Given the increase in business executives visiting Africa, we also see a growth in the number of hotels.

This pace of urbanisation (4% per annum) and a high incidence of poverty pose a serious challenge for East African policymakers. Inadequate urban infrastructure is facing further stress from rapid population and economic growth, resulting in the rapid growth of informal settlements on the edge of cities. The settlements are under-serviced, lacking basics like clean water, adequate sanitation and modern energy. Rapid urbanisation across Africa presents an opportunity for increased industrialisation and development, but governments will need plans and integrated strategies if they want urbanisation to lead to growth.

High population growth in urban centres in Uganda, for example, has put pressure on providers of electricity, water and telecom services, even as costs of land put off local investors. This growth is attributed to massive rural-urban migration by the youth, driven by the search for jobs and more comfortable lifestyles. This has created challenges for different sectors. Telecommunication firms have had to increase investments in new capacity sites, but many consumers still suffer problems of poor network quality, dominated by frequent dropped calls. Mobile money transfer services are focused on expanding their footprint in urban areas because they offer higher revenues than rural areas. Strong urban population growth has equally exerted pressure on utility companies to increase new connections, minimise loadshedding and cut power losses.

Urbanisation can spur development, but it is more likely to compound Africa’s structural challenges. Making cities inclusive, safe, resilient and sustainable, is going to be no easy task.

Trend 10: Given the problems associated with the end of the commodity price super cycle, Africa’s economies have started to industrialise and diversify their economies away from a preponderance on oil. Amongst others, they are looking at stimulating tourism.

Ethiopia’s tourism revenue jumped 20.7% in 2015 to a record high of $3.5 billion from $2.9 billion in the previous year, lifted by an increased number of foreign tourists. This was more than what its more tourist-established neighbours, Kenya and Tanzania, earned last year combined ($2.77 billion). The number of visitors to Ethiopia increased by 136,000 to 910,000 in 2015, as the country hosted several high profile international business conferences and exhibitions.

The hotel industry will enjoy a boom in SSA in the next 3 years, with East Africa leading. Tourism, diplomatic and non-governmental activities in Kenya, Rwanda and Ethiopia are leading the growth. Marriott International opened an outlet in Kigali, Rwanda in 2016, its first hotel in SSA and the first international hotel to set base in Rwanda. Other leading hotel chains that have targeted Africa, include the Hilton, Starwood, Carlson Rezidor and Accor. The industry’s estimated growth is 30% for 2016, making it one of Africa’s best performers. Africa’s fast-growing middle-class is pulling investors to tailor-make midscale hotels to accommodate them.

Trend 11: Regionalisation is a continuing trend in Africa. 2015 saw the signing of the Tripartite Free Trade Area (TFTA). The TFTA will bring together 3 major regional entities, i.e. COMESA, EAC and ECOWAS. Excluded are major West African countries such as Nigeria, Ghana, Senegal, as well as North African countries not included in COMESA. In total, the TFTA will consist of 26 countries, represent close to 60% of Africa’s GDP, and provide a market of more than 600 million consumers. It is foreseen that the TFTA will boost intra-African trade from 12% to 30%.

The CFTA, which is expected to be in place by October 2017, will bring together all 54 African countries with a combined population of more than one billion people and a combined GDP of more than US $3.4 trillion. With the CFTA, African leaders aim to create a single continental market for goods and services, free movement of business people and investments and expand intra-African trade. The CFTA is also expected to enhance competitiveness at the industry and enterprise levels in Africa. The CFTA has the potential to boost intra-African trade by 52.3% between 2010 and 2022, which is crucial to accelerating structural transformation in Africa.

From a macro perspective, the AfDB’s President, Akinwumi Adesina, has identified regional integration as one of his “High 5” priorities. Various challenges mean that the chances that the CFTA will start delivering on its potential by the end of 2017, are slim. The principles underlying regional integration, however, are laudable and both the TFTA (as the precursor to the CFTA) and the CFTA itself needs all the support they can get.

Trend 12: Infrastructure development in Africa remains a serious focus area. Africa needs US$93 billion annually to meet its needs. This includes roads, rail, ports, airports, housing, energy, water, offices and retail outlets. Both the actual development and financing remains a challenge.

We have seen local and international OEMs and leasing companies investing billions in African rail infrastructure to increase their presence in Africa and benefit from the huge growth potential in Africa’s rail sector. All studies conclude that if Africa had an integrated rail network system, the cost of doing business would be reduced substantially since distribution hubs would be linked to production centres.

Transporting goods from main centres to distribution points has led to a number of problems: traffic congestion and fatal road accidents, deterioration of road infrastructure, time lost to slow pace of transport, and higher costs. Transporting refrigerated goods and people is also problematic and costly. Rail would greatly reduce the effects of these problems. In Tanzania, Rwanda, Kenya, and Ethiopia, to name but a few, extensive projects are underway to improve the rail systems.

According to Deloitte, there has been a dramatic fall in infrastructure spending in Africa of $51bn from 2015 to 2016. Global economic headwinds, low growth and lower commodity prices have all contributed to this. Projects included human settlements and associated water, sewerage, roads, electricity, schools and health infrastructure, and not just large construction works such as energy, dams, mines, ports and oil and gas facilities. Several large mining projects have also been suspended. Underinvestment in water infrastructure in Africa is a growing cause for concern, given the growth of megacities in Africa and the political and social pressure this will eventually place on governments

Trend 13: One of the strategies Africa’s economies have latched on to, given the slowing down of their economies, is that of supporting locally made products – “Made at Home.” Buying imported products rather than local products has been quite popular, especially as far as global brands are concerned. In Ghana, they are now looking at manufacturing the Ghanaian car. In Nigeria, you have the ban list – if you can manufacture it in Nigeria, you cannot import it (or get foreign exchange approval for it, at least). Buhari is also punting his “Made in Nigeria” strategy. Targeting consumers and producers to buy the locally manufactured product is long overdue. SA’s deputy president Cyril Ramaphosa also punted the localisation of goods and services as a solution to the triple challenges of unemployment, inequality and poverty, saying it was integral to growing and sustaining South Africa’s economy.

Trend 14: Many retailers and wholesalers are targeting Africa. One lesson they have learnt is that they need to find a source of local supply as soon as possible. Various commentators have made the point that although the “Africa Rising” paradigm was under pressure, it by no means meant that the opportunities had dried up. Given the state of the road and rail infrastructure, as well as problems at some of the ports (all which are business opportunities in their own right), it makes sense to plan for a more efficient supply side. Shoprite, a South Africa food retailer, has been quite successful in its expansion drive into Africa as they try to obtain local suppliers as soon as possible. There is a caveat in dealing with Africa: do your homework, understand the market, and get your supply chains up and running in as an efficient way as possible. And do it right the first time. Distribution is the name of the game!

In addition to countries such as Nigeria, Ghana has also become a focus point of African retailers such as Shoprite, Massmart, Woolworths and Edcon. Reasons include its rapid economic growth, its rising disposable income and the growth of the middle class. Other international fashion brands such as Bata, Nike, Puma and Mango have also entered the market to serve Ghana’s middle class and its affluent elite. Yet, the market share of the formal sector remains small. Deloitte indicated that 96% of all retail transactions in Ghana are carried out in the informal sector.

Trend 15: We are increasingly seeing African governments boosting entrepreneurs in their countries. Entrepreneurship in Africa is seen as a key to stimulate economic growth. It has yielded huge returns, and represents great untapped potential to drive Africa to its next phase of development. A large youth population and a lack of comprehensive employment plans in many African countries precipitate the high rates of unemployment.

Various examples confirm this trend. In Tanzania, small and medium entrepreneurs have been urged to grab opportunities offered by the fish sector to boost their incomes. There was a shortage of over 400,000 tonnes of fish in Tanzania, a gap that the private sector could use as an opportunity to increase their incomes.

Ethiopia saw the launch of a fish farming project in 2016, aimed at improving the food diversity at a cost of US$400,000. A self-sufficient food system is being established to withstand the burdens of drought, and the project is one such an intervention. After the completion of the project, the residents and unemployed youth will acquire skills on how to fish for commercial and consumption purposes and benefit from jobs created for the business.

In addition to entrepreneurial support in Ethiopia, there are also several projects in Somalia, Uganda, and Zimbabwe, to name but a few.

Trend 16: Agriculture is still a major sector for employment and industrialisation. It employs most of the labour force and contributes to 25% of GDP, with smallholder farmers producing up to 80% of the food in SSA. Sustained agricultural productivity growth since 2005 has helped push down poverty in places like Ghana, Rwanda and Ethiopia. It is also clear that those countries that have clear and unambiguous business-enabling policy frameworks that provide for diversification and industrialisation, are much better off than those that have depended on commodity exports. The whole value chain of the agricultural sector must be addressed as it provides many opportunities for value-adding.

However, the sector’s potential remains mostly unrealised, largely due to a lack of access to financing. Commercial bank debt is available, but microfinancing remains vital. However, they are still unable to fund the larger and long-term loans required for effective agricultural value chain development, and their interest rates are unaffordable to farmers. Other platforms, such as Kenya’s M-Changa and SA’s Thundafund, have also popped up.

Aeroponics and aquaponics are emerging as new technologies to bring food to urban environments. The advantages of aquaponics over traditional farming methods, for instance, include the efficient use of resources – water, fertiliser, infrastructure and land. Growing food in urban environments, close to where people live, reduce the need for infrastructure and reduce the carbon footprint of the produce. Reliable energy sources and skills remain challenges, however.

Trend 17: Informal cross-border trade constitutes the majority of informal activity in most African countries. In the SADC, informal cross-border trade makes up between 30 to 40% of total intra-SADC trade, with an estimated value of $17.6 billion. Around 75% of people trading across African borders are women, who are vulnerable to abuse. 43% of Africans in COMESA are involved in this form of commercial activity. It contributes to economic growth, job creation and food security for the majority of the region’s population. Informal trade is essential for poverty reduction. It creates jobs and contribute to food security. Intra-African trade costs around 50% more than trade across borders in East Asia, and is the highest of intra-regional costs of any developing region. Africa has therefore integrated with the rest of the world faster than with itself.

Trend 18: Africa remains one of the world’s most attractive growth opportunities for PE investors. Since the early 1990s, the number of PE funds active in Africa has swelled from 12 to more than 200, while funds under management have risen from US$1bn to upwards of $30bn. Most PE funds and principal investors tend to invest only in minority stakes, and they mainly focus on a limited pool of profitable companies with annual revenue of more than $100m and proven track records.

In addition to the lack of financing for companies in Africa, only about 0.11% of registered companies in Africa are listed. PE investors are known to have said they are faced with a lack of bankable projects. Others again have said that there are enough candidates for those with the right risk profile. This provision is probably the differentiating factor between the 2 schools of thought. One problem, however, is that PE investors look for exit opportunities after about 5 to 7 years. This is problematic for those who require longer-term capital. The lack of bourses on the continent complicates matters for the SMEs. This does create a situation that benefits PE investors, as they can pick and choose. In Africa, it seems they prefer to not get involved in projects where African governments are involved, for the simple reason that many governments do not inspire trust.

Trend 19: Africa has the potential of becoming the world’s factory. Labour in China has become expensive. The USA’s Phillips-Van Heusen Corporation, which owns the Tommy Hilfiger and Calvin Klein brands, believe they can increase their global production in Africa due to the partnership between the industry, government and the donor base to invest in the training of workers and to ensure the facilities are set up appropriately. Companies such as H&M and Tesco are sourcing garments there as well. Labour is abundant, well educated, and cheap, while work-permit visas for foreigners are relatively cheap, and electricity prices are low. The governments are willing to make investments in infrastructure, and boost the development of industry-oriented educational institutions.

Trend 20: Terror groupings in Africa remain a source of concern. Boko Haram in Nigeria and Al Shabaab in Somalia are still active, although their activities have been more subdued than in 2015. In the case of Boko Haram, the concerted activities of the governments of Nigeria and Cameroon have reduced the number and scope of their atrocities. Nigeria, however, has seen a new player becoming very prominent. The Niger Delta Avengers (NDA), a splinter group of MEND (Movement for the Emancipation of the Niger Delta), has been attacking the oil pipelines of the oil companies operating in Nigeria, putting the production of oil in Nigeria under pressure. The latest development towards the end of 2016 was a threat from the NDA to the oil companies to leave destroyed oil infrastructure until such time the Nigerian government meets its demands.

Trend 21: Africa is increasingly moving towards China. This is not a new trend. Western governments and multinationals have played a significant role in Africa’s growth in the past with the EU being Africa’s biggest trading partner. However, Africa is looking increasingly to the East for investment and expertise. Asia-Africa trade has been growing exponentially in the past decade. Alongside China’s ‘One Belt One Road’ initiative, more Asian economies are now showing interest in boosting their African investments, attracted by rising urbanisation and consumerism across Africa. Trade between Asia and Africa is not without its challenges. However, Africa is demonstrating resilience – its key drivers for growth remain intact, i.e. attractive demographics, urbanisation and a rise in consumerism. Côte d’Ivoire, Tanzania, Kenya, Senegal, Rwanda and Ethiopia are just some of the African economies currently performing well. Given uncertainties in Europe’s posture towards Africa in the wake of Brexit, and uncertainties of the Trump administration following his election as the US president, Africa’s relationship with Asia is expected to evolve. Asia has awakened to Africa’s potential and a number of countries are tapping into the opportunities. These include China, Japan, India, South Korea, and Malaysia, to name but a few. Their support also comes without strings attached, making them more attractive than support from the West.

The author, Johan Burger, is the director of the NTU-SBF Centre for African Studies, a trilateral platform for government, business and academia to promote knowledge and expertise on Africa, established by Nanyang Technological University and the Singapore Business Federation. Johan can be reached at johan.burger@ntu.edu.sg.

Sources:

From the weekly newsletter, Friday@Noon, published on the website of the NTU-SBF Centre for African Studies. Sources are as indicated in these newsletters.

The Espinaca Journey

At the age of 24, Lufefe Nomjana from Khayelitsha, Cape Town, in South Africa, came up with a plan to add spinach to foods consumed daily, like bread. He realised that a lot of people in his neighbourhood were obese, yet malnourished! They consumed a lot of food that although it filled their stomachs, did not provide nourishment to their bodies. It was typically cheap food that had high volumes. This created all kinds of lifestyle maladies, such as diabetes and even cancer.

The idea Lufefe had when he started this innovation was to bring about change in the lifestyles of the people in the township of Khayelitsha, within the metropolitan area of Cape Town. Unemployment in South Africa is at a high figure of 26%. However, in so-called black townships such as Khayelitsha, it could be as high as 60%! In addition to this, most of these unemployed would be between the age of 18 and 35. This seriously affected the job prospects of this group of the population.

Lufefe realised this, and also realised, for various reasons, he had to change his own lifestyle. He also realised that by doing that, he could make a contribution towards changing the lifestyle and habits of the people in his community. However, all he had was a bunch of spinach, R40 in his pocket, a neighbour’s oven, and an idea.

Lufefe subsequently decided to develop a recipe for spinach bread. He got the neighbours to lend him their oven, and baked his bread. Every morning he would wake up early, make the dough in a bucket and bake the bread in a neighbour’s oven. People won’t always buy spinach, but bread is consumed daily. Lufefe mixed spinach into his baked goods so that people would receive the health benefits of the spinach in their normal daily lives. He is against normal bread, but the spinach-enhanced bread was much healthier!

Lufefe also decided to not use normal plastic bags, as they contribute to pollution and are eco-unfriendly. He subsequently obtained PLA bags from Green Home. These PLA bags are eco-friendly and are biodegradable. The bags look like clear plastic bags, but are made from renewable plant materials instead of oil. They do not contain any toxins and the production of PLA plastic bags creates much lower greenhouse emissions than those made from conventional plastic, as they are made of corn starch.

Green Home, the provider of the PLA bags, were so impressed with Lufefe’s mission to provide nutritious and affordable daily bread in an eco-friendly way, that they decided to provide the bags to him at cost.

When Lufefe speaks more about this concept, one realises that to him it is more than just a bread. It is a healing tool and a cleansing material, yet a tasty product developed right there in Khayelitsha.

Lufefe realised that he needed a constant supply of spinach and that he did not have the means, time nor inclination to grow the spinach himself. He therefore convinced people growing spinach in a community garden to grow his supply for him. In this way he made a good contribution to supporting people in his community.

Initially Lufefe had to walk up to nearly 25km a day delivering his bread. As the bread became popular, he ran a Thundafund campaign to generate funds to purchase delivery bicycles and bread baking machinery. The Espinaca Innovations delivery team now delivers bread locally on bicycles. Lufefe is now selling healthy products, promoting a healthy lifestyle and minimising the carbon footprint of the bakery. This helps Lufefe to deliver his tasty goods to regular customers faster and efficiently.

“We were ‘bread on bikes’ – we delivered bread on the doorsteps, and also educated people on how to live healthy in Khayelitsha.  The bicycle was symbolic of a healthy lifestyle. The spinach bread was symbolic of healthy eating. The current setup is a dream come true. It might seem small to others, but for us it is a dream come true. In the short term, we are looking at expanding through a franchise model.”

A container transformed into a modern-day bakery is where all the baking magic happens.

Lufefe also keeps his prices comparable to government bread. People in Khayelitsha can therefore experience the health benefits of eating additive free spinach bread at no extra cost. An additional benefit of the bread is that it lasts longer than normal bread – it stays fresh for a considerable longer time.

He created his delicious spinach bread to provide a convenient and economic way for families to consume healthier food on a daily basis. Being health-inspired, Lufefe wanted to transform the eating habits of the people from Khayelitsha and South Africa at large. Being a vegetarian, he has put in the hours in creating delicious and healthy meals, such as his now famous spinach bread and gourmet muffins.

The spinach bread is in the Top 10 of overall bread sales in Vangate Mall, and Top 5 in Khayelitsha Super Spar. It is also available at the Spar in the trendy Cape Quarter in Green Point, Cape Town. In addition, Lufefe has also started supplying the spinach bread to hotels like the Table Bay Hotel and the Lord Charles.

Today Lufefe is moving forward with his company, Espinaca Innovations. He recently (February 2016) signed a contract to supply five Pick ‘n Pay Family Stores with Espinaca bread. Other businesses he provides products to, include 7 Spar shops and the Wellness Warehouse in Cape Town. He also caters for events, both public and private.

His goal is to also supply spinach pizza bases, spinach rusks, spinach rolls and dominate the bakery industry with healthy products. “The aim is to be the best, not the biggest,” he said. Other products currently include the following: organic spinach bread, gluten-free spinach & Rosemary bread, gluten-free spinach and Basil bread, spinach & feta muffins, spinach juices, spinach smoothies, low-carb spinach & Kale cookies, and 0% carb pasta (organic).

Communities in which Espinaca operates include Khayelitsha, Gugulethu and Cape Town.

Protecting his Idea

Coming up with a unique business idea is challenging. Protecting that idea from being stolen is even tougher.  Lufefe added spinach to bread, calling it “spinach bread”, formally known as Espinaca, which is also the name of his company. He added honey, rosemary and basil for extra flavour.

When Lufefe pitched his idea at a pitching session hosted by the UCT Graduate School of Business in Cape Town, he won an award for best business idea. He realised that he had a unique idea and bigger companies were starting to approach him with different offers.

He feared that someone else might steal his idea before he had even had the chance to turn it into a profitable business. “A lot of companies wanted to partner with me, some wanted to get a piece of this idea, so I had to protect it,” he says.

Lufefe subsequently went to the Companies and Intellectual Property Commission (CIPC), a body under The Department of Trade and Industry, who gave him a temporary patent, which would allow him to apply for the 20-year patent, something he is currently working on. For Lufefe this means that spinach bread cannot be commercially made without his consent. This protection from the government will last for 20 years.

Lufefe Nomjana the Entrepreneur

Lufefe Nomjana is one of South Africa’s most celebrated young entrepreneurs. After creating spinach bread, he quickly found international fame as the “Spinach King.” But the journey of the entrepreneur wasn’t always easy. After being exposed to the “wrong side” of life, he found his way back to his “purpose” and eventually started the company, all to leave a legacy for his family.

He was born in the Eastern Cape, and grew up in the town of Butterworth. His mother was a single parent. “I looked after myself and my younger brother as far as clothes were concerned as my mother did not earn enough. At the age of 14, I worked for a supermarket. At 17, I moved to Cape Town. I had my own shack and lived in Belair. I worked at a scrap yard. With my friends we abused alcohol and smoked marijuana. I eventually got fired for stealing from the scrapyard. Thereafter I moved to Khayelitsha, where I stopped using alcohol and smoking marijuana – I was now committed to living a clean lifestyle.”

“My mother then also came to Cape Town, which allowed me the opportunity to finish school. I started a business buying clothing and selling it in Khayelitsha. It got me to understand how entrepreneurship worked. I also sold insurance – this really helped me to understand the art of selling.”

Lufefe started to volunteer to work in the community garden, where he worked with spinach. It was here that he got the idea of Popeye, the comic character, and spinach. He developed the business idea to address the problems of the community as far as hunger, unemployment and health was concerned.

Initially he had no idea how to bake bread, but he learnt how to do it. He also learnt about all the dangers inherent in it as well.

At first his business struggled as the people in the community did not understand the product. In Khayelitsha, people were not concerned with health. Price was the issue where food was concerned. Therefore, he first needed to educate the people before he could sell to them. His dream became one of changing and impacting the community, to drive society to better lifestyles, and to improve people’s lives through healthy food. Lufefe therefore does not just sell bread. He talks to his clients about food and healthy lifestyles. Education is a big part of what he does.

The business also works with local early childhood development centres. Lufefe provides them with spinach seedlings, they grow the plants, and he buys them back from them. He sells bread to the centres at a reduced rate. Slowly but surely, people are warming up to the idea of healthy eating.

According to Lufefe, his focus at the business is to ensure the production is done properly. Supply chain management is important, and distribution is critical. He has to ensure that the quality and taste of the bread is consistent.

“I teach my employees as much as possible about everything. This is so that they can go on without me being there. The process of baking spinach bread is unique and requires specialist skills.”

In May 2016, Lufefe was contracted as a guest lecturer at the University of Cape Town Graduate School of Business executive education. He also lectured to a group of French International MBA’s and they invited him to teach in France in 2017 for 2 weeks. Locally in South Africa, he has been approached to lecture at Mangosuthu University in Kwa-Zulu Natal.

The driving force behind his activities has always been about creating a legacy, wealth creation and increasing the net worth of the business. He strives towards remaining focused and disciplined. He sees his current progress as a process of converting his skills, experience, findings, challenges and his story to wealth creation and growing his legacy. He is adamant that his descendants would not need to beg to make a living.

Accolades for Lufefe Nomjana and Espinaca Innovations

In 2012, Lufefe graduated from the Raymond Ackerman Academy. In 2013 he was selected among 50 entrepreneurs as one of the Top 10 most promising South African Entrepreneurs. In February 2014 Espinaca was featured in the Forbes Magazine as one of the innovative business concepts in Africa to look for. Lufefe himself was featured as a young and innovative entrepreneur. In September 2014, Espinaca Innovations was a finalist in the Cape Talk Small Business Awards.

In 2015, Lufefe Nomjana was invited to the Discovery Vitality Summit in Johannesburg to discuss the business of health. This resulted in an offer from Virgin Active South Africa to install a Spinach King health food restaurant with an outdoor gym. This was to be launched on 20 January 2016 in partnership with Kuai Restaurant, the health food giants in South Africa. Moreover, Espinaca recently agreed to be the official catering partner for a range of its products, i.e. Spinach & Kale Juices, Spinach Banting cookies and sandwiches for Mindful Revolution, a company that conducts mindfulness workshops for corporates.

In October 2015 Lufefe was one of the 7 African young food innovators that was selected to represent Africa in Italy through the Slow Food Network (a UN initiative). He was delegated to discuss the future of the food system at a world annual conference. In November 2015, Espinaca won a Premier’s Entrepreneurship Recognition Award (PERA) (in the Western Cape), as well as the best Agro-Process Business of the year 2015.

Espinaca has also recently collaborated with the Department of Health in bringing health awareness to the limited resourced communities. The idea is to promote healthy eating and healthy lifestyles and also bring practical solutions through experts to reduce the number of chronic and cardiovascular diseases. This recognition humbles him, and inspires him to do even better in all that he does. Being innovative to him has become second nature and this is a tool that Khayelitsha and South Africa needs. The journey to success can never be meaningful when we do not leave a legacy.

Lufefe does indeed touch many lives in many ways. The results are clear and many people have a testimony about Lufefe and how he does what he does. He talks to approximately 20 MBA groups from abroad every year about his entrepreneurial journey. Elements of his character that stand out include his humility, his passion, and his willingness to learn!

Goals for The Future

In 2016, Espinaca Innovations opened up a Spinach King healthy fast food store at the Khayelitsha Mall. A partnership between Espinaca, Virgin Active and KCT (Khayelitsha Community Trust), Espinaca wants to offer healthy foods made from organic spinach served in biodegradable packaging to the community of Khayelitsha. He would like to expand this concept into other areas as well.

By 2018, Espinaca wants to open a second bakery and expand its distribution into other regions of Cape Town. He will continue to do so until everyone in South Africa is eating Espinaca’s products.

Lessons from Lufefe’s Journey

His business model is simple yet efficient. His target customer is the health conscious consumer, initially in Khayelitsha, but now much broader. In addition, retail chains have also become his customers. His value proposition is the idea of a healthy lifestyle, together with daily nourishment. His distribution channels include a direct delivery force, as well as supermarket chains such as Spar, Pick ‘n Pay, and now even health fast food stores. He “locks in” his customer by living the lifestyle he preaches and by educating them. His revenue model is mostly product sales driven (bread, muffins, etc.), although he is also looking towards a franchising model.

His key resources are his brand, his supply of spinach, his bakery, his products, and his distribution network. Key activities include procuring spinach, baking, sales and marketing, distribution, and educating his consumer base. His key partners are his spinach suppliers and his distribution network, consisting of food retail companies. They are also his customers. His key costs are his ingredients, staff, and electricity.

From the case study, it is clear that it is not about where one starts in life. Lufefe rose above his situation of substance abuse and initial lack of education to develop a successful business. He had an idea that drove him. Guy Kawasaki speaks of “make meaning” in his well-known book, Art of the Start. This is about having an idea that will get you up in the morning and keep you going, even when circumstances are against you. This idea was not about making money, but about feeding his community with healthy food and providing jobs.

His business started off with R40, a bunch of spinach and a neighbour’s oven. Most people would not have started at all. However, Lufefe had the end in mind, and did not let himself be deterred by his initial lack of resources. This proves to many that we can all achieve what we want when we are ready, regardless of the lack of resources.

Being a philosopher at heart, helped him to understand the principle behind the use of bicycles, which to him represented a healthy lifestyle, as well as that eating spinach was symbolic of healthy eating. This was part of the meaning his spinach idea had for him. With bicycles, you cannot travel faster than what you pedal. This directly translates into the principle you are the driving force of your life. While you at times will get the wind from the front and your journey will slow down, there will also be times that you will get support with the wind from behind, and your speed will increase.

Lufefe is someone with a passion. His excitement about his product is contagious and every person whom he meets cannot but help to get excited about the product as well. He finished his school education and exposed himself to entrepreneurial activities, such as selling clothing and insurance. This contributed to his knowledge of running and developing his spinach product business. His training at the Raymond Ackerman Academy is further testament of his belief that education was important to the entrepreneur.

He understood that distribution was crucial to the growth of his business, and made sure that his regular clients got their bread early every morning. Great service was not a nice to have, but crucial for business success.

Lufefe understood that his idea was up against the circumstances of his community. They were poor and primarily unemployed. To get them to buy a product that they did not understand, he first had to educate his customer segments. He did this relentlessly and has himself become a vegetarian. Educating your customers has always been an important element in business. Lufefe clearly understood this principle. He has gone beyond just teaching his customers, and is now educating aspirant entrepreneurs, both locally and abroad. What an amazing journey!

Lufefe’s ability to see the bigger picture has moved him to get exposed to large corporates such as Spar, Pick n Pay, Virgin Active, etc. Getting this exposure has helped him in his quest to grow his own business knowledge and his business per se. He has taken to heart this exposure and is expanding his business to include franchises and fast health food stores. Although he started off with an extremely humble beginning, he dreamt big and is still dreaming big!

This article was also posted on AfricaBusiness.com as well as NTU-SBF Centre for African Studies.   

References

1. Cuba, A. 2016. Espinaca Innovations profile. https://www.behance.net/gallery/32682765/Espinaca-Innovations-profile. Accessed 09 May 2016.
2. Gana, B. 2015. What you can learn from this entrepreneur about protecting your idea. http://livemag.co.za/vip/what-you-can-learn-from-this-entrepreneur-about-protecting-your-idea/. Accessed: 04 May 2016.
3. 2014. GreenHome partnering with Espinaca Innovations. http://www.greenhome.co.za/greenhome-partnering-espinaca-innovations/. Accessed: 04 May 2016.
4. 2015. Season 6 Episode 44 Espinaca Spinach Bread. https://www.youtube.com/watch?v=kAAyA7fBUEY#t=962.1421666. Accessed: 04 May 2016.
5. 2014. Espinaca Innovations. https://www.youtube.com/watch?v=TGYA1ZAhoGk. Accessed: 04 May 2016.
6. Nomjana, L. 2016. Spinach King. Powerpoint Presentation.

Introduction

The Tripartite Free Trade Area (TFTA) was launched on 10 June 2015 in Egypt when the representatives of 26 governments accepted the tenets of the free trade area. This created the largest free-trade zone in Africa, reaching from Egypt to South Africa (BBC, 2015). This article will investigate the TFTA, its challenges and benefits to Africa, and how it will manifest in the larger global context.

Free trade agreements (FTAs) are negotiated so that countries and businesses can benefit from international economic integration and the subsequent eradication of barriers to trade. FTAs create a bigger market, increase competition, but at the same time reward economies of scale, which in turn requires the efficient use of time and resources. The increased competition can stimulate economic reforms, such as the accelerated adoption of existing technologies and stimulation of the development of new ones (Krist & Hughes, 2012).

Historical Development of the TFTA

The TFTA is part of an overarching project to economically integrate all the countries on the African continent. It could also be a major step towards the creation of a pan-continental free trade area in 2017 or later (Zamfir, 2015). As such, it will likely be a major factor in Africa’s development, both economically and politically.

The reality is that economic integration in Africa is not new. Several bodies have existed in Africa to foster regional economic integration: the Southern African Development Community (SADC), the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA), the Inter-Governmental Authority on Development (IGAD), the Economic Community of West African States (ECOWAS), the Community of Sahel-Saharan States (CEN-SAD), the Economic Community of Central African States (ECCAS), and the Arab Maghreb Union (UMA) (Disparte & Bugnacki, 2015). These bodies have all been functioning at various levels of efficiency, with the EAC probably being the most efficient and the most advanced en route to an economic union.

The TFTA has its roots in the Abuja Treaty on the Establishment of an African Economic Community (1994), which provided a detailed roadmap for economic integration in Africa. Until now, transnational economic integration in Africa has mainly taken place at the level of African regional economic communities (RECs), which is in line with this roadmap. The African Union (AU) has recognised eight such RECs (identified above), often with overlapping memberships, as pillars of economic integration. The TFTA can be seen as an inter-REC integration initiative, launched independently of the framework of the AU, but embraced by it as a step towards linking the gap between regional and continental integration efforts, and encouraging the establishment of a continental free trade area (CFTA) (Zamfir, 2015).The TFTA itself was initiated in 2005. The first Tripartite Summit in Kampala, Uganda on 22 October 2008, was attended by the governments of the participating states. Here they agreed on a programme to harmonise trade rules between the RECs (Anyanzwa, 2014). A second summit in 2011 endorsed a project to launch the TFTA (Zamfir, 2015).

The TFTA itself was initiated in 2005. The first Tripartite Summit in Kampala, Uganda on 22 October 2008, was attended by the governments of the participating states. Here they agreed on a programme to harmonise trade rules between the RECs (Anyanzwa, 2014). A second summit in 2011 endorsed a project to launch the TFTA (Zamfir, 2015).

It was generally expected that the TFTA would kick off in December 2014 in Egypt. However, South Africa, a key member of the SADC, pulled out citing inadequate consultations on contentious issues, such as tariff offers and rules of origin. It was suggested at the time that South Africa seemed to have developed cold feet on the TFTA, fearing that the TFTA would open up its market to intense competition from its regional counterparts (Anyanzwa, 2014).

The TFTA includes three of the existing economic communities in Africa, i.e. SADC, EAC, and COMESA. These three RECs have achieved different degrees of integration (Zamfir, 2015), which does provide for a degree of complexity that will make future operations more difficult to manage.

Once ratified (which has to be done by 2017), the TFTA will consist of an impressive 26 countries, a population of 632 million, an area of 17.3 million square kilometres, total trade of US$1.2 trillion, and 60% of Africa’s output (Disparte & Bugnacki, 2015).

Goals and Objectives of the TFTA

The general objectives of the TFTA include rapid socio-economic development in the region, the creation of a large single market with free movement of goods, services, and business people, and eventually a customs union, as well as the resolution of the challenges posed by multiple memberships of RECs. The specific objectives listed in the draft agreement include, in the first place, the elimination of all tariffs and non-tariff barriers to trade. The promotion of trade in services would follow a more gradual approach, based on defining priority sectors for liberalisation and putting in place a progressive services-liberalisation programme (Zamfir, 2015).

Other objectives go beyond trade and include the promotion of investments and the mobility of business people (including foreign nationals residing in a TFTA member state), the cooperation on infrastructure development, and the promotion of an equitable society and social justice. Lastly, goods would be eligible for preferential treatment if they originate in any of the TFTA member states (Zamfir, 2015).

In spite of only existing of three of Africa’s RECs, which could be seen as a major shortcoming, the TFTA does provide for bringing in the Central and West African nations, that are currently excluded from the agreement, at a later date. This would create an even larger free trade zone across Africa (Disparte & Bugnacki, 2015), and enhance the efficiency of economic integration in Africa.

Economic integration is one of the five priorities of Akinwumi Adesina, the president of the African Development Bank (AfDB), i.e. “Integrate Africa”. It addresses the fragmentation of African economies, and will be key to driving industrialization, another of Adesina’s priorities. With Africa’s share of global trade currently at 3%, regional value chains are seen as a stepping stone for growth through a strategic integration into global value chains (Adesina, 2016). To that end, the TFTA will certainly give this process a boost.

Implementing the TFTA

According to Zamfir (2015), the TFTA is based on three main pillars – market integration, infrastructure development and industrial development. The trade negotiations included two phases: in the first phase, they will deal with the liberalisation of trade in goods, by removing tariff and non-tariff barriers, and with ensuring the free movement of business people; the gradual liberalisation of trade in services will be addressed in a second phase (Zamfir, 2015).

While the TFTA’s size may present some advantages, its key economic centres are separated by long distances, an obstacle often exacerbated by poor infrastructure, inefficient logistics, and cumbersome customs procedures. To achieve its objectives, the TFTA must enhance the connectivity and linkages among member states. This requires not just the elimination of all significant trade barriers, but also the facilitation of trade through physical and institutional infrastructure (Andriamananjara, 2015).

Intra-African trade currently only forms 12% of Africa’s trade. It is widely hoped that the TFTA would at least increase this figure to 30%, still relatively modest when compared to Europe, which shows 70% of their trade is within the continent (BBC, 2015). But, in all fairness to Africa, the development paths of Europe and Africa have been vastly different.

The poor state of Africa’s transportation infrastructure does hamper intra-African trade, and should take the blame for the measly 12%. The AfDB estimates that the region requires $95bn in annual investment in infrastructure to meet current needs, of which only about half is funded. Successfully addressing the transport infrastructure would be a major issue for the TFTA (Toesland, 2015).

The TFTA would in all probability benefit those countries with a proven comparative advantage in food and light manufacturing the most, at least in the short run. In the long run, however, the winners will be those countries that know how to harness the trade preferences provided by the TFTA (Toesland, 2015).

While the agreement has been signed, countries in the TFTA can still choose to omit large portions of their tariff schedules from full liberalisation. In some cases, as much as 40% can be excluded (Toesland, 2015). The logic behind this step is to provide member countries with some sort of protection against stronger competitors in Africa.

Challenges for the TFTA

Implementing the TFTA is not going to be easy. Given the size of Africa, the vast differences between the countries (26 currently) in terms of size and development, size and strength of economies, and strength of currencies, one could expect quite a number of challenges that will need to be addressed for the TFTA to have any meaningful impact.

Disparte & Bugnacki (2015) have identified a number of challenges for a successful TFTA. Firstly, a massive scale of effort is required as 75% of the 26 countries need to approve it. These states represent drastically diverse economies and regulatory regimes, all of which need to be bound together.

Secondly, the inertia of the status quo is problematic. The larger, more advanced economies of Africa possess industries and companies that would probably displace or absorb those of the smaller states in Africa. The TFTA could therefore create large-scale economic disruption in the short-term, especially true for states with small economies that currently produce few exportable goods. It could lead to beggar-thy-neighbour policies that will not only set the TFTA back, but also lead to wider regional instability, job losses, and resource crises.

A third challenge is the existence of non-tariff barriers to trade (NTBs).

A fourth challenge is the lack of infrastructure. In spite of its constraining effect, it is hoped that the TFTA will lead to much-needed infrastructure developments, including interconnected systems of roads, bridges, airports, and internet and electricity networks.

The lack of an enforcement entity has up to now undermined the effective functioning of the EAC, SADC, and COMESA. It will also be problematic for the TFTA.

Zamfir (2015) identified a number of additional challenges. There are obstacles of a structural nature, which apply in the case of the proposed TFTA as well. For Africa to benefit in a meaningful way from the TFTA, there would need to be a significant increase in the diversification of production. Should this not happen, Africa would only be pushing around poverty amongst its economies.

In 2012, the AU identified an additional series of obstacles to trade, including restrictive customs procedures, administrative and technical barriers; limitations in productive capacity; inadequacies of trade-related infrastructure, trade finance, and trade information; lack of market integration; and inadequate focus on internal market issues. Cumbersome administrative procedures and corrupt customs officials are also among the main obstacles hindering trade (Zamfir, 2015).

There are fears that the real big winners will be multinational corporations from outside Africa that have settled in big cities and would be provided with easy access to a multitude of markets. Another major problem that has not been dealt with yet, is the potential loss of revenue for governments, as customs duties are a major source of government revenue (Zamfir, 2015).

Another important issue is whether the TFTA will also benefit small, informal traders. Informal cross-border trade has a significant share of trade on the African continent. In the case of the SADC, it is estimated to represent 30 to 40% of total intra-regional trade. However, so far the negotiations on the TFTA have not covered the issue of informal cross-border trade (Zamfir, 2015).

The most important challenge for the TFTA could, however, be implementation itself. Governments could drag their feet on implementing the agreements, as they have already done with the TFTA launch. They may not be effective enough in removing the multiple barriers to trade in the region, or might even maintain them or institute new ones in order to protect their producers. (Zamfir, 2015). Hopefully governments in Africa can be convinced that implementing the TFTA as soon as possible will work in their favour, and that the benefits far outweigh the negatives.

Benefits of the TFTA

Having addressed the extensive challenges facing the TFTA, one might be inclined to walk away, stating the many problems facing the successful implementation of the TFTA. However, there are too many benefits to be derived from a successful TFTA to ignore it.

Larger markets provide for the potential of more cost-effective manufacturing. The consolidation of financing would be another benefit of the TFTA. Larger investors will lead to the liberalisation of the financing sector, greater access to finance and more investors coming to Africa (BBC, 2015). These are formidable benefits that will stand Africa in good stead in its future development.

The TFTA would in essence ease the movement of goods, services and people across Africa. It would benefit the member states, foreign investors, and African citizens by more readily harnessing the potential of the continent’s people, both as a labour force and as a rapidly growing consumer base (Disparte & Bugnacki, 2015).

Zamfir (2015) referred to the increase in trade among the countries involved, some diversion of trade with the rest of the world towards intra-TFTA trade and, most importantly, gains to consumers, as they get access to cheaper and better quality products. A study in 2011 by the UN Economic Commission for Africa (UNECA), found that there would be general welfare gains as a result of the establishment of the TFTA.

Another important benefit would be the increase in industrial production, as aggregate demand in the region will rise and industrial production will realign between countries. This would be dependent on the diversification of Africa’s economies from being commodity-export driven to manufacturing and production driven.

According to Zamfir (2015), the TFTA would also generate new opportunities for businesses through an improved and harmonised trade regime that would bring down their operating costs, while further benefitting from an inflow of FDI into the region. The TFTA would speed up economic growth in African countries and permit them to implement a regional integration strategy that prioritises infrastructure development.

The TFTA’s most important benefit could be its catalytic role in achieving economic integration at pancontinental level – a Pan-African Continental Free Trade Area (CFTA) and Customs Union – as foreseen in the Abuja Treaty. In recognition of this role, the AU drafted a framework for the CFTA in 2011, in which the TFTA is envisaged as a potential model for a new approach towards continental integration. Negotiations about the CFTA would be launched after the completion of the TFTA (Zamfir, 2015).

The Impact of the Big States

The disparities in size amongst the member states are a reality. South Africa, Kenya, and Egypt have been highlighted as the largest economies in each of the three regional economic communities that will join to form the TFTA. According to Toesland (2015), smaller countries stand to benefit from this. The export profiles of these regional power players are good matches for the import needs of their smaller counterparts within the trade zone, due to their relatively diversified economies.

For example, countries like Uganda will have increased access to markets in Kenya to fulfil their mineral fuels, oil, iron and steel import requirements.

Some countries will need fundamental structural reforms to their economies before they can benefit from the TFTA. While Angola predominantly produces and exports oil, refined petroleum is the single largest share of imports. This demand must be met locally and the processing gap must be bridged, for the TFTA to have material influence on intra-African trade (Toesland, 2015). This will place an even larger demand on infrastructure development. The reality is that oil refineries do not come cheap.

The TFTA in Global Context

The launch of the TFTA did not receive as much media coverage as the ongoing negotiations of the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). Also, the TFTA is not considered likely to have any significant effects on the nature of the global trading system, at least in the short run. To further put this volume into perspective, a total trading account of $356 billion is barely a third of that of Singapore (Andriamananjara, 2015).

The TFTA is, however, considered by regional policymakers and some analysts to be a big deal and potentially a game changer for the African trading system. It is expected to be the launching pad for the establishment of the CFTA. The launch has demonstrated the possibility of collective action among 26 very heterogeneous nations and shows the feasibility of harmonizing three very different preferential trade regimes into one unified scheme (Andriamananjara, 2015). This shows that if the political will is present, much can be gained.

However, the actual implementation of the TFTA could still be a long and difficult process. It will require significant consultations with all relevant stakeholders and real political will from regional and national policymakers. Getting all the relevant parliaments to ratify the TFTA by the cut-off date, is also not going to be an easy task.

The Future of the TFTA Going Forward


The question now is how will foreign companies be able to function in Africa and get access to the benefits espoused in this article? What will the impact be for a Singaporean company interested in Africa?

Once the TFTA has been ratified, only companies within Africa or from countries with whom the TFTA has concluded free-trade agreements, will be able to conduct business in Africa whilst enjoying a tariff-free environment. This would include the EU EPAs and foreign companies already in Africa. Examples of the latter include Olam, Wilmar and PIL. These companies have access to the markets they already find themselves in, and would gain access to a much larger market of 630 million people after the TFTA has been ratified. Once the TFTA has been expanded to include West Africa, Tolaram and Indorama would be other examples of Singaporean companies who would be able to benefit from free movement across most of Africa.

Efficiencies and scale are going to be crucial. Given the size of the projected market, over 630 million consumers of which the middle class is growing strongly, there are a number of factors that need to to be prioritised. These include the ability to scale up production and operations, the ability to develop and maintain an efficient supply chain and distribution network, and the ability to accurately assess market demand, to name but a few. Global multinational companies have already demonstrated the validity of these factors, with the latest example being Kellogg acquiring 50% of Multipro in Nigeria for $450 million.

Disparte & Bugnacki (2015) are of the opinion that political commitment to the TFTA will not only boost regional trade, but also accelerate the rate and permanence of foreign direct investment (FDI) to the region. As Africa is already the fastest growing FDI recipient, the continent has stopped being merely a destination for extractive investors. Nairobi’s vibrant entrepreneurial and technical hubs and the development of global African entrepreneurs are signposts of this change.

The successful implementation of the TFTA will solidify Africa’s role on the global economic stage. The economic power it will be able to yield, both as a huge market of 630 million consumers and as a meaningful exporter of produced and value-added goods, will be far more significant than now. This situation will also reduce Africa’s sensitivity to the health of other global economies, such as that of China.

The TFTA population not only represents a rapidly growing middle class, but also a large group of young workers. Should they be developed properly (education and skills development is very important), they would attract even more FDI, which would set off a positive spiral of economic growth, jobs and wealth generation. China’s labour costs are rising relatively rapidly. This opens a door for Africa to take over as the world’s factory. This situation would gain impetus with a scenario where Africa presents a TFTA with the free movement of goods, services and labour, the latter hopefully being highly trained and skilled.

Conclusion

The TFTA is therefore an institution that, despite serious challenges, has the potential to serve Africa well. Economic integration will stand Africa in good stead, providing impetus to the development of its economies and infrastructure. Roads, railways, ports, energy, etc. are all examples of infrastructure that will be improved by the TFTA. It also provides motivation for foreign companies that will want to benefit from the scale of the large market presented. The opportunities are not only for consumer goods developed locally, but also for the development of the infrastructure.

An improved economic situation will improve the socio-economic situation of millions of Africans who live on the poverty line. This improvement will have the additional benefit of undercutting the grounds that terror organisations use to recruit disgruntled citizens. In turn, this will fuel the engine that drives tourism, as Africa has so much potential in this regard.

The envisaged diversified economies will need energy and investments. Whereas in the past potential investors had to be satisfied with national markets, they now have the benefit of a much larger market, reducing the risks of being trapped in one local market. Political risk and market risk will therefore be greatly reduced.

The envisaged more efficient supply chains will reduce risk even further. The costs will be lower, with much less waiting time to clear ports. Once cleared, goods will travel throughout the TFTA much faster and cheaper.

That the TFTA is considered as a forerunner of the CFTA is good news. Bringing on board ECOWAS is crucial for the long-term health of Africa. Nigeria is Africa’s largest economy and its largest population. An FTA without Nigeria will have severe limitations.

All that now remains is for Africa to embrace the TFTA and tap into the benefits thereof. It will require a strong political will to ease out all the tensions within the region involved and to ensure that progress is made on the road to full implementation. It will be a rocky road, but hopefully a road on which for every step backward, there will be 2 or more steps forward.

The author is the director of the NTU-SBF Centre for African Studies of Nanyang Business School, Nanyang Technological University, Singapore.

This article was first published in Africabusiness.com and the link is: www.africabusiness.com/2016/6/16/tfta.

References

1. Adesina, A. 2016. Opening Statement on the Occasion of the 2016 Africa CEO Forum. 21 March 2016. Available: http://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/Opening_Statement_on_the_occasion_of_the_2016_Africa_CEO_Forum_by_Akinwumi_A._Adesina__President_of_the_AfDB_Group.pdf.
2. Andriamananjara, S. 2015. Understanding the importance of the Tripartite Free Trade Area. 17 June. http://www.brookings.edu/blogs/africa-in-focus/posts/2015/06/17-tripartite-free-trade-area-andriamananjara.
3. Anyanzwa, J. 2014. South Africa develops cold feet on tripartite FTA as talks are put back. The East African. 20 December. Available: http://www.theeastafrican.co.ke/news/Tripartite-FTA-talks-put-back–Pretoria-gets-cold-feet/-/2558/2563450/-/5okb8u/-/index.html.
4. 2015. Africa creates TFTA – Cape to Cairo free-trade zone. 10 June. Available: http://www.bbc.com/news/world-africa-33076917.
5. Disparte, D. and Bugnacki, J. 2015. TFTA: Africa’s Crucial Inflection Point. 8 November. Available: http://www.huffingtonpost.com/dante-disparte/tfta-africas-crucial-infl_b_7965650.html.
6. Krist, W. and Hughes, K. 2012. Negotiations for a Trans-Pacific Partnership Agreement.
7. Toesland, F. Free trade zone tops regional agenda. Policy. 5 October. Available: http://www.thisisafricaonline.com/Policy/Free-trade-zone-tops-regional-agenda.
8. Zamfir, I. 2015. The Tripartite Free Trade Area Project Integration in Southern and Eastern Africa. European Parliamentary Research Service. March. Available: http://www.europarl.europa.eu/RegData/etudes/BRIE/2015/551308/EPRS_BRI(2015)551308_EN.pdf.

Africa is a huge continent, consisting of 55 countries, an even larger number of ecologies, and too many languages and cultures to count. It has roughly the same surface as that of the moon, and countries such as China, the USA, India, Western Europe, Japan, and a few more will all fit into Africa, with a bit of land to spare.

Since starting with the publication of the weekly newsletter on Africa, Friday@Noon, quite a number of prominent trends were picked up.

Trends in Africa

Firstly, Africa’s economy has been growing at high rates over the past few years. Its gross domestic product (GDP) growth is expected to strengthen to 4.5% in 2015 and 5% in 2016. This was after a bit of sluggishness in 2013 (3.5%) and 2014 (3.9%), which can be ascribed to a global economy that remained weaker and some African countries having somewhat severe domestic problems.4 Domestic demand has continued to boost growth in many countries, while external demand has remained mostly subdued because of flagging export markets. Export values of goods were also depressed by lower export prices.4 Africa is therefore in a way the victim of the problems in the developed economies.

So far African economies have been relatively resilient to the sharp fall of international commodity prices. Production of commodities has often increased despite the lower prices, and overall growth has been boosted by other sectors. Nigeria, for example, is highly dependent on oil for its export revenues (approximately 92%), but the primary driver of its GDP are services (57%)6.

Africa is also host to 7 of the 10 fastest-growing economies going into 2015, i.e. Ethiopia, Mozambique, Tanzania, Democratic Republic of the Congo, Ghana, Zambia and Nigeria. Interestingly enough, the overall fastest-growing economy based on GDP from 2001 to 2010 was Angola. In fact, in that time span, 6 of the top 10 fastest-growing economies were of African nations. Africa’s GDP growth rate of 5.7 percent in the decade from 2001 was second only to Asia (7.9%) and outshone Latin America’s 3.3%.5 It must be said, however, that Africa’s growth has been off a low base.

According to McKinsey, Africa’s combined GDP of US$1.6 trillion in 2008 will increase to US$2.6 trillion by the year 2020. This year will also see an estimated US$860 billion of consumer spending in Africa.5

However, the future does have in store the slowdown of the Chinese economy. Commodity export-oriented countries such as Nigeria and Angola have felt the negative affects of this phenomenon, and would need to re-orientate its economies to become more manufacturing oriented. The diversification of economies and the beneficiation of commodities will therefore have to become an urgent matter of policy. As it is, Nigeria has accepted a US$30 billion budget for 2016, which aims to diversify its economy away from oil by boosting the agriculture and mining sectors. 30% of the budget would be allocated for capital expenditure, to be funded through a rise in non-oil revenues.

Secondly, we saw a continuation of FDI in Africa. Here one sees countries such as China, India, Brazil, Japan, Malaysia, Turkey and others (including the USA and the EU) who are investing in Africa in various guises and forms. Some, i.e. China, are interested in resources, while others get involved in other ventures, such as consumer goods. Africa needs this investment as its investment opportunities far outstrips the availability of internal funding sources. Interestingly, South Africa is the second largest FDI investor in Africa. At the latest China-Africa business summit (FOCAC) in Johannesburg recently, the Chinese president committed to develop projects that would enable African countries to beneficiate at the source. This has the benefit of helping Africa to diversify its economies away from commodity exports. In the long term, this will be very good for Africa, leading to import substitution, economic growth, industrialisation, and job creation.

The third point links up with the above trend. Africa is not a poor continent; however, it needs development. It has massive discovered resources (US$82 trillion – oil, coal, gas, copper, platinum, diamonds, gold, etc.).7 Currently, most of these resources get exported as commodities to China, etc. Very little local beneficiation currently takes place. An example is where Nigeria exports its crude oil and then imports the refined product. In this way, it loses the opportunity to create jobs and reduce its vulnerability to oil price and foreign currency volatilities. They are unfortunately by no means the only example. The beneficiation at source touched upon above will help to deal with this. The same is true for Dangote’s construction of an oil refinery in Nigeria, which should be operational by 2018. The development of the gas resources in Mozambique and Tanzania will hopefully also be done in such a way to enable the expansion and diversification of their respective economies.

Fourthly, there are those countries in Africa that have chosen the path to industrialisation and manufacturing. A shining example is Ethiopia, who is actively pursuing a strategy of transforming its economy to be less dependent on agriculture. The purpose of this strategy is to create opportunities for the beneficiation of resources and integrating industry value chains, thereby not only creating value for the country through exports of value-added products or through import-substitution, but also by creating much needed jobs. Nigeria is becoming a hub for the manufacturing of vehicle components for brands such as Toyota and Ford. It is currently also looking at developing its vehicle manufacturing industry, as is Ghana. In this way, Africa hopes to become less dependent on commodity exports and the negatives associated with it. Africa does not have sufficient capital or competencies for this strategy and will need support to help it on its way to a greater degree of self-sufficiency.

Fifthly, Africa has a population of about 1 billion people. This figure is forecast to grow to 1.9 billion by 2050. Within this large group of people, Africa’s middle class is growing in leaps and bounds. According to the African Development Bank, Africa had 350 million people in its middle class in 2011, and this would grow to 370 million by 2014. They define middle class as those spending between US$2 and US$20 per day. Standard Bank of South Africa looked at 11 countries with 50% of Africa’s GDP, and counted 15 million households in the middle class, which is set to grow to 42.2 million households by 2030. Standard Bank defines middle class as those who can spend between US$15 and US$115 a day. Irrespective of the measure used, it is clear that there is a strong growth in the middle class in Sub-Saharan Africa. This group is responsible for the growth in consumerism that can be observed in Africa. Due to this rising consumer awareness, brands have become important for the identity of Africa’s people. We also see a strong growth in the luxury class in Africa, albeit from a low base. This trend will support the increasing entry of luxury brands in Africa.

A further feature of Africa is the move towards urbanisation that is taking place. Africa’s urbanised population, currently at 40% of the population (up from 36% in 2010), is set to grow to 50% by 2035.8 This provides a consolidated and concentrated market, which is easier to access and target. It also provides construction opportunities for construction companies. The projects of the latter have been moving from mining and energy to houses, office blocks, road infrastructure (transportation) and malls. Cities, poorly designed in the past, are now being redesigned and new ones are built (e.g. in Senegal). This phenomenon of urbanisation has led multinational companies to target cities in their expansion strategies rather than countries. An example would be Elizabeth Arden, the USA-based beauty product company who is targeting Africa via its subsidiary in South Africa. A lack of proper rural infrastructure in many countries are a problem for those companies wishing to grow into Africa. Hence the need to develop a city strategy.

The seventh trend of interest as far as Africa is concerned, is its progress as a source of innovation in the field of mobile technology and applications. In Africa, and more specifically East Africa, the M-Pesa application (mobile money) is very well known. Large numbers of Kenyans are using it. Vodacom, the RSA mobile telephony provider, is now rolling it out in South Africa. M-Pesa is being used as a base platform for applications such as M-Akiba. This is used by the Kenyan government to sell bonds to the population at large. Then we have M-Kopa, which is used to sell renewable energy to the poor by means of M-Pesa, instead of them having to buy the expensive capital equipment upfront. In Nigeria we see Paga, whilst EcoCash is being used in Zimbabwe. These applications are by no means the total sum, as we also get M-Farm and M-Health, amongst others.

This trend has the potential of disintermediating banks, should they not innovate their business models to provide for this new technological development. As it is, various banks are responding by partnering with the likes of Safaricom, the parent company of M-Pesa. We now see mobile money applications increasing the proportion of the population that are financially included in the formal system. Up till recently, large numbers were excluded from the formal financial banking systems. This is changing, making it easier to trade.

Mobile money platforms are also facilitating the management of the increasing remittances to Africa from the African diaspora. Up to now, the diaspora have had to make use of unscrupulous players in the African market, which has led to unfair and exorbitant costs to transfer money into Africa.

The eighth issue of importance, given the growth in Africa, are energy systems. More than 600 million Africans do not have access to electricity. Yet Africa has a vast growth potential in renewable energy, i.e. 11 terrawatts of solar power, 350 gigawatts (GW) of hydropower, 110 GW of windpower, and 15 GW of geothermal power. By 2040, it is forecast that renewables could provide more than 40% of all power generation capacity. In addition to the lack of energy infrastructure, Africa also has an inefficient generation, transmission and distribution system, which leads to increasing costs. For example, the average efficiency of the fleet of gas-fired power plants was 38% in 2012. Had the average efficiency been equal to that of gas-fired power plants in India (46%), the unused fuel could have generated 8 TWh (21%) more electricity. Transmission and distribution (T&D) losses also reduce the supply ultimately available to end user sectors by more than 20% in some countries in sub-Saharan Africa. Such high loss rates reduce the reliability of the power supply, which is already insufficient to meet demand in most countries. In addition, high losses increase the cost of the power actually delivered, by as much as US$25 per MWh consumed. All these additional costs, including the T&D infrastructure and retail costs, can add $50-$80 per MWh to the average cost of the consumer.1

Installed grid-based power generation capacity in Africa has been steadily increasing in recent years and reached 158 gigawatts (GW) in 2012. Grid-based power generation capacity in sub-Saharan Africa has increased from around 68 GW in 2000 to 90 GW in 2012, with South Africa alone accounting for about half of the total. Coal-fired generation capacity is 45% of the sub-Saharan total, followed by hydropower (22%), oil-fired (17%), gas-fired (14%), nuclear (2%) and other renewables (less than 1%).2

According to Bloomberg, Africa as a whole was predicted to add about 1.8 GW of renewable energy capacity in 2014 — an addition that amounts to more renewable energy than the continent added in the last 14 years combined. Additionally, over the next two years, South Africa is expected to install 3.9 GW of renewable energy, mostly in the form of wind and solar, while Kenya is set to install 1.4 GW and Ethiopia will install almost 570 MW. Given the potential referred to above, this is but a drop in the bucket, with so much potential left untapped. Morocco has also started with the addition of massive solar plants, as has South Africa.

Another interesting energy and environmental phenomenon is the start of Waste-to-Energy (WTE) plants in Ethiopia. Danish engineering and Chinese labour and capital are being used to build this plant in Addis Ababa. Once completed, this plant will serve as proof of concept in rolling out a number of other plants into Africa. Not only will this project provide employment for a number of local and foreign workers, but it will generate 50 MW of electricity whilst getting rid of waste dumps in the city – a common feature of African cities. We see Johannesburg generating about 5000 tons of waste daily, whilst struggling with landfill sites. This makes it, and several other cities in South Africa and in Africa, excellent candidates to develop WTE plants. Singapore provides a great example of a city using waste to complement its electricity provision. It has recently commissioned its 6th WTE plant, to be built by a partnership consisting of Hyflux and Mitsubishi.

Increasing water scarcity is the ninth trend observable in Africa. At the same time, Africa has massive rivers and access to a long coastline. While desalination is expensive, Africa’s governments could address the issue should they have had a cheaper form of energy. As far as drinking water is concerned, despite strong overall progress, 748 million people still did not have access to improved drinking water in 2012, 325 million (43%) of which live in sub- Saharan Africa. Fourteen countries in Africa are already experiencing water stress; another 11 countries are expected to join them by 2025, at which time nearly 50% of Africa’s predicted population of 1.45 billion people will face water stress or scarcity.

The tenth trend is the lack of access to capital for entrepreneurs in Africa. Venture capital providers in Africa are few. NEST from Hong Kong is one of a few VC’s interested in supporting entrepreneurs in Africa, and have opened an office in Nairobi, Kenya. A small number of Private Equity (PE) funds are now looking at Africa – but Africa needs longer-term capital than PE funds typically are prepared to provide. The PE space in Africa is expanding, creating jobs and fostering economic growth. There is still a long way to go, though, as only about 1% of the US$3.8 trillion of PE in the world goes to Africa. To address this, more venture capital funding is needed to grow smaller companies into the size that PE companies would be interested in. Africa has started to tap into the bond market, issuing eurobonds, as well as issuing so-called diaspora bonds. Africa’s bourses are still under-developed, with less than 1% of Africa’s registered companies listed on a stock exchange.

The eleventh trend of importance deals with the 60-65% of the world’s uncultivated land that is available in Africa, and which is currently underutilized. Instead of exporting food, Africa has to import it. With the right knowledge, agricultural practices and funding, Africa has the ability to feed the world. The DRC can feed 1 billion people, yet struggles to feed its 70 million population. Food security has become a major issue for Africa. Singaporean companies that have already bought into this potential and that are playing a major role in Africa’s agriculture, includes Olam, Tolaram, and Wilmar.

Trend number 12 deals with the phenomenon of African companies investing in their own continent, outside of their national borders. Aliko Dangote’s diversified conglomerate is not only involved in cement and oil in Nigeria, but is also building cement factories and taking interest in mining entities throughout Africa. The latest reported investment by Dangote is said to be in Zimbabwe. Other companies include Sanlam (financial services), Shoprite, Massmart, Pick ‘n Pay, Woolworths, The Foschini Group, etc. (Food and clothing retail); Group 5 (construction); Standard Bank (banking); and Toyota SA and Ford (motor manufacturing). These corporations are deriving a sizeable portion of their revenues from business in Africa, and present a clear indication of what is possible should one understand Africa.

It should be noted that some of these players have not been unwilling to enter into a country, learn from their mistakes, and withdraw. Woolworths, for example, went into Africa, realised they had the wrong business model (franchise), went back into Nigeria with a corporate store approach, and then withdrew again after they realised the cost and revenue element of their business model was not working. However, their model does work in other countries.

A number of these companies are entering Africa with greenfield operations (Shoprite), which they start scaling when they achieve initial success. Others use joint ventures and partnerships (Sanlam), while others use acquisitions (SABMiller).

The thirteenth trend entails the interest shown by large multinational corporations in Africa. These include food suppliers such as Kellogg, Procter & Gamble, Unilever and Kimberley-Clarke. Very recently Kellogg purchased a stake in an African subsidiary of Singaporean-based Tolaram Group in order to benefit from their local distribution channels and supply chain footprint. Global food retailers such as Walmart and Carrefour have also entered Africa. Walmart’s main strategy for its African entrance has been through a majority share acquisition of Massmart in South Africa, to tap into the latter’s large African footprint. This is a continuation of the entry into Africa by Singaporean companies such as Indorama, Olam, PIL, Tolaram and Wilmar.

On the political front, we see a fourteenth trend. In Nigeria and Tanzania, we saw incumbent presidents leaving the political scene peacefully after either having lost an election (Nigeria), or having come to the end of his tenure (Tanzania). These are all very good indications of continuing democracy in Africa. In a similar vein, we see very good signs of good governance in these countries where their new and re-elected presidents, Buhari in Nigeria and Magufuli in Tanzania, have started delivering in a tangible way on cleaning up the pervasive corruption in their countries. In the Ivory Coast, president Quattara was re-elected in a relative peaceful election for a second term as president. One can also count the continued good governance by Macky Sall of Senegal, Hage Geingob of Namibia, and Paul Kgame of Rwanda as positive indicators.

The counterpart of this trend is not so positive. We have seen two confirmed cases of incumbent presidents changing their country’s constitutions in order to have a third term as president. Paul Kgame of Rwanda has gone the route of getting the support of his parliament, and has subsequently obtained the support of the whole country in a national poll. In spite of Kgame being a good administrator, it does create a precedent for others with the same intentions. His move is therefore mostly viewed negatively by Western countries. On the other hand, Pierre Nkurunziza from Burundi has forced through his third term, creating a lot of volatility and instability in Burundi. It seems that Joseph Kabila from the DRC is also planning to force a third term as president. This possibility is already causing instability in the DRC. It is unfair, however, for obvious reasons to mention Kgame on the one hand and Kabila and Nkurunziza on the other hand, in the same breath when talking about this issue.

A fifteenth trend that has become very pronounced, is the exodus of African migrants to especially Europe. These are people in search of greener pastures as they believe that Africa does not have the opportunities for them to achieve their higher aspirations. This migration has reached a scale of such proportions that Europe has offered African countries tremendous amounts of money to keep their population in Africa. This would entail the development of projects that would create jobs and keep Africa’s skilled and competent people in Africa. It would also entail the upgrading of the education and training of Africa’s youth.

A sixteenth trend is the continued effort towards regionalization. In addition to the existing economic communities, the SADC, EAC and COMESA signed an agreement to create the Tripartite Free Trade Area (TFTA) that will incorporate the mentioned 3 communities. The TFTA will consist of 26 countries, 625 million people, and will generate more than US$1 trillion GDP. This will dramatically increase the inter-Africa trade, currently only at 13% of Africa’s total trade. It is speculated that the implementation of the TFTA would increase this figure to 30%. This is still way off the 70% of inter-regional trade for the EU, but a massive boost for Africa. Challenges for the TFTA include political instability, lower commodity prices, corruption, and electricity shortages. These are known problems, though, and have been targeted by African countries. As such, they can even be seen as investment opportunities by the private sector.

A seventeenth trend is the apparent improvement in the security situation as far as Boko Haram in Nigeria and al-Shabaab in Somalia is concerned. When Buhari took over as president in Nigeria, he committed to destroying Boko Haram. Towards late December, he declared that Boko Haram had technically been destroyed. Time will tell whether this was indeed the case. In Somalia, al-Shabaab has split up, with some factions aligning with ISIS, whilst the others stayed loyal to al-Qaeda. The breaking up of al-Shabaab is not necessarily good news, as the splinter groups might become more extremist and active to increase their standing.

Trend number 18 deals with tourism. Hotel development in Africa will grow strongly as international brands such as Marriott, Hilton and Radisson seek to benefit from the strong economic growth in Africa. It is said that about 50,000 rooms spread among 270 hotels in Africa were set for development in 2015. Demand from the growing middle class will contribute to development in sub-Saharan Africa, while the number of business executives conducting deals in Africa will boost the growth of five-star hotels. Nigeria will see the most of this action, whilst Ethiopia is also planning for a strong growth in tourism. Egypt’s tourism has been dealt a severe blow with the shooting down of the Russian plane. South Africa’s tourist trade was initially negatively impacted by their new visa regulations. Fortunately, the government changed the regulations towards the end of 2015, which should see tourism to South Africa picking up again. Overall, this trend is linked to the perceived security situation.

Trend number 19 sees the continued development and increased utilisation of Special Economic Zones in Africa. We see them being used in South Africa, Kenya, Tanzania, Nigeria, and Ethiopia, to name but a few countries. In some of these countries, they have been accused of being too rigid and as such defeat the very purpose of their existence. Kenya recently starting converting their EPZs into SEZs, as the former were not performing as designed. The country was losing out on its taxes to a much greater extent than expected.

The 20th trend is the acceptance of Africa’s geo-political and military importance. It seems that Russia is positioning itself in the eastern Mediterranean, with footholds in the Crimean Peninsula, Syria and Egypt. China, the USA and France have all acquired military bases in Djibouti. China is the new kid on the block as far as their military presence is concerned, but this must be seen as complementary to their economic presence in Africa, which is quite substantial. Possible reasons for the popularity of Djibouti is its proximity to volatile areas in Africa, important sea lanes, and the Suez Canal. China’s presence could be a source of concern to the USA. President Obama’s trip to Africa in 2016 focused on East Africa. There is a clear link between this visit and an attempt to bolster the USA’s presence in the region.

Conclusion

It is clear that Africa represents a source of resources such as agricultural products (food, etc.) and commodities (oil and minerals). It is also clear that Africa as a whole has the energy potential to provide the continent with all the energy it needs, be it coal- or renewable energy driven. It would need an integrated management approach for this to become a reality.

Africa also serves as a destination. It represents a large consumer market with a strongly growing middle class and consumer segment. As such, it is a destination for processed food, electronic technology, construction and capacity building skills, manufacturing skills, ability to generate, transmit and distribute energy (in its various forms), water management skills, and public transportation skills.

It is also clear that the opportunities are not only for the large conglomerates, but also the small to medium enterprises (SME’s).

New entrants into Africa have a range of business models to choose from, such as green field operations, acquisitions, mergers, and joint ventures/partnerships. Patience in Africa is a virtue, as is the ability to learn from one’s mistakes and adapt strategies and business models that at first were not successful. Agility and knowledge of the environment are crucial elements for success in Africa.

Access to capital is a need in Africa that cannot be underestimated. FDI serves some of the need, but many more VC’s and PE funds are required to comprehensively fulfill the needs of African entrepreneurs. Africa also needs to diversify its economies away from commodity exports. This increases the need for development capital.

Africa’s geo-strategic importance will continue to increase. The major powers are targeting Africa to protect their perceived interests in Africa and the Middle East. Africa can serve as a springboard to project their power into the sensitive areas of the world, such as sea routes and oil fields.

This article contains content from an article in the Business Times, “Bright Future for the Dark Continent” by me, published on 10 October 2015, and available on the website of NTU-SBF Centre for African Studies.

Sources:

https://www.iea.org/publications/freepublications/publication/WEO2014_AfricaEnergyOutlook.pdf – page 41
https://www.iea.org/publications/freepublications/publication/WEO2014_AfricaEnergyOutlook.pdf – page 40
http://thinkprogress.org/climate/2014/10/15/3579982/renewable-energy-africa-iea-report/
http://www.africaneconomicoutlook.org/fileadmin/uploads/aeo/2015/PDF_Chapters/Overview_AEO2015_EN-web.pdf page i
http://one.aon.com/business-growth-africa
http://www.africaneconomicoutlook.org/en/country-notes/west-africa/nigeria/
http://blogs.wsj.com/frontiers/2015/08/31/african-development-bank-head-to-focus-on-power-equality-and-inclusion/

Click to access economiccommissionforafrica.pdf

A friend of mine, Willem van Huysteen, wrote the following Facebook post to his daughters in Afrikaans. The relevance of his post for all of us really struck me. Even if we do not agree with all of his points, we must contemplate and reflect on the happenings in Parliament last night. My one great fear is that we get so embroiled in the events of the evening, that we lose sight and track of the 9 Priorities for the years ahead. The latter are very important and we should all work towards making them a reality. Whether we would be able to do so without a strong and ethical leadership, is another question.

However, let’s hear what Willem had to say to his 2 young daughters.

“I am aware that less than a week ago I said that that I would not be wasting my time this year on Eskom, Telkom and the government. Unfortunately I am somewhat obsessive (I wash my hands about 50 times a day to prevent fingerprints on my iPhone) and know that I do not say something now, I would not be able to do my work.

Like the rest of you, I try and teach my two young daughters to respect the rules of society, to think for themselves, and to question all things. We therefore were all in front of the TV last night to follow the opening of Parliament. It was my less than pleasant task to make something of last night’s events in order for my kids to learn something from it.

Well, Bea and Geta, I have done with my work for the morning, and with the co-operation of Parliament, there is a lot we can learn!

Lesson 1): Why did the cell phones initially have no signal? That is what people and organizations do if they have something to hide. You have seen that it does not help to be dishonest; you get caught out! It also happens at Eskom and Telkom. People who do not know what they are doing, hide, or try to hide, their rubbish!

Lesson 2): “If you can’t stand the heat, get out of the kitchen”. This is applicable to the lady in the yellow dress and the skew glasses. She allowed others to appoint her to a position for which she was not qualified for, and you have seen how unhappy this has made her. You must never present yourself as someone you are not or ever can be!

Lesson 3): If you do not know what to do, hide behind the rules. This is especially applicable to the 2 ladies, the one in the yellow dress and the other one in the black dress, but also to the people in the red overalls. “If everything else fails, refer to the rules and regulations”. This is, amongst others, why General Motors, which once was one of the greatest companies in the world, is now bankrupt. People that like rules, on average do not like to think.

Lesson 4): Mr Jacob Zuma. This is what someone looks like who is totally incompetent for the position he is in. Unfortunately this is also what a coward looks like. You will remember that he never referred to the events in Parliament – that is because he does what others prescribe and it was not his speech. Unfortunately it is also the man that will talk to President Putin of Russia on our behalf, or probably will listen to him. I do not know whether I should be laughing or crying at the thought thereof, but it gives me nightmares.

Lesson 5): Why do people applaud when the president says “cheers”? These are the loyal members of the ANC – people who first think about their survival before they think, if at all. They have elected Jacob Zuma as their leader and is of the opinion that he is the best person in their party for the position of president. They applaud because they are satisfied with the performance of their leader – he has done what they expected of him and has portrayed the correct image of the ANC to us and the rest of the world.

Lesson 6): Why are the people in the red overalls behaving so badly in Parliament? This is what people look like that have no respect for our country’s rules! Unfortunately it is also what people look like that are allowed to act like that by incompetent cowards. In a democracy, the voters get the government they deserve, and in Parliament the speaker and president get the actions and lack of respect they deserve. Please remember that respect is never linked to a title or position of authority – respect is something you can only get through your actions.

Lesson 7): Why were there armed security people in Parliament? I really do not know, but out of my own experience I know that this is how bullies work. If they cannot deal with opposition, violence is the only way they can argue. Unfortunately the people in the red overalls are now going to take weapons to Parliament to protect themselves. We will therefore see a lot of violence in Parliament due to Lessons 2, 3 and 4 above. It will soon be safer to walk in Voortrekker Street in the middle of the night than to be in Parliament!

Lesson 8): What now Dad? I do not have an answer, but what you have seen is a shame and a sign of a total lack of respect for the rights and future of the 2 of you. Fortunately we have seen that there are so many incompetent people in important positions in our country, that there will always be work for people who know what they are doing. We live in a beautiful country with wonderful opportunities and people. Dad will continue to defend our country and its people when talking to people abroad that are waiting for us to implode, but I will never again try to explain or tolerate the incompetence of the ANC.”

On a personal note, I do agree with Mangosuthu Buthelezi’s view on the nature of the EFF’s actions. I also do wish that the ANC elect someone who is capable to provide leadership for us all. They owe it to us!

The context is one where Buddy, an expert in the field of the culinary art, advises failing bakeries on how to turn around their businesses. They apparently apply for help when their businesses are in trouble. Buddy then arrives and consults them. The whole process is recorded and broadcast to TV audiences worldwide.

Watching the series with my wife and son, I realised that the series presented some great business ideas. Here is my attempt at identifying the business lessons from The Bakery Boss.

1. Most of the bakeries are in deep financial trouble before the owners ask for help. While they can tell you precisely how much money is coming in and how much is going out (a good sign!), they do not understand the implications of the numbers. Believe your stats and understand them. It’s no use just knowing them; understand them and the implications thereof! Why wait until so late before taking action? Timeous action will prevent crises actions!
2. On the issue of costs and stats, know exactly what your products cost and how much you can sell them for. Buddy frequently finds a product that is priced way above what the market will pay! What will your market be prepared to pay, and can you make it at a cost that will allow you to make a decent profit? You cannot waste money in your internal value chain! So, put effort into creating a lean and mean operating model.
3. When Buddy arrives and he does his taste exercises of the product, they all disagree with him! They do not want to believe that the quality of their product sucks! Especially the chefs! He then has to go through taste exercises to convince them he is right! It tells me they are in denial. They do not know what the real problem is. It also tells me that they have a vested interest in their existing way of doing things. It tells me there are orthodoxies at work as to what is good. “I know my business!” It tells me that we need to be open to other points of view.
4. They all say, “it is not the product that is at fault”! They then have to be convinced! It tells me that they do not know what their customer is about, what he/she likes! It reminds me that frequently these owners are chefs that love baking. They then look for customers. This smacks of the hammer syndrome! If all you have is a hammer, after a while everything looks like a nail! Be customer focused. Know your customer!
5. The lack of self-knowledge on the product, also tells me that they overestimate the quality of their product – the halo syndrome. Buddy refers to ego and pride! You have to believe in your product if you want to sell. However, if you do not sell, you need to understand that maybe something is wrong. And then there should be no holy grails, no untouchables!
6. Everyone feels his/her product is great. It reminds me of the Dirty Harry syndrome: “If he is so bloody good, why is he so bloody dead?!” Be realistic about your offering. Be confident, but be open to outside feedback. If your product is not selling, something must be wrong.
7. They do not believe Buddy and actually frequently get aggressive towards him. Question: why ask him to help if you do not want to be open to his message? Don’t shoot the messenger; less so when he is an expert and probably your last chance at survival.
8. On the issue of ego and pride, the one chef refused to bake cupcakes. His response was that he had not studied years to become a chef just to end up baking cupcakes! This is a perfect example of hubris! Let the customer decide your value offering, not what you can do and not what your pride tells you to do!
9. At times, they have recipes that their grandfather developed. They then cling to that for sentimental reasons. While this can be good, you need to understand that customer preferences can change over time and that you need to be sensitive to their wants and needs. And the customer is always right. Fortunately it does seem that mostly when the results show that Buddy’s views on customer preferences are correct, the chefs believe him. They experience that aha moment.
10. They do not understand when their business premises do not look appealing. It reminds me of the “physical appearance” concept of the 7P’s. Your environment needs to contribute towards the marketing message! You get used to your “shoddy” setup and then do not recognise that maybe you should have changed the décor years ago.
11. Understand that your business is a system. If anything in the bakery is not up to standard, it impacts the whole bakery. Everything needs to be aligned! And it frequently is not. The exterior, the interior, the product range, the product quality, the operating model, the quality of the tools, the people who serve, all should be in alignment!
12. Leadership is crucial. Some of the owners are perfectionists and great bakers. However, they tend to treat their staff poorly, frequently inadvertently. They do not realise they can only be as good as the staff they use in their stores. They also do not realise that without a great employee value proposition, they cannot have a great customer value proposition. Yelling at your employees will not help. Being a product expert is not enough – you need to be a leader! Get them to be engaged employees! It is the only way. Without this, the whole system will crash – guaranteed!
13. Marketing your business is crucial! You need to know how to tap into the networks to position your business and create a marketing mix that will satisfy your customers. It does mean that going out and chatting to customers and understanding their needs is crucial! As Steve Blanks puts it, you need to be out there! Without satisfied customers and a product that sells, you do not have a business!
14. Be innovative! Change small things that will bring about great changes. It frequently requires nothing more than tweaking your processes, or your product range. Incremental innovation is quite useful and easy to bring about.

Why talk about something such as charisma? Is this not that magical competence reserved for those few of society who were born as these flamboyant leaders? I think not.

After reflecting on the situation in South Africa, I asked myself what made leaders such as Mandela, Gandhi, Tutu, and others, so successful. Come on, let’s face it! When we compare them against some of our current leaders, the incumbents do not look good at all!

Whilst working in the Maxwell Leadership Bible, I picked up the following thoughts by John Maxwell on the traits of a charismatic leader. They are quite profound, yet simple; comprehensive, yet clear. And looking at them, they are not just reserved for those special individuals that society delivers once in a while!

So, I would like to share these traits, after adding a few of my own thoughts.

The first trait deals with having confidence. This was about having poise and optimism. It was about being graceful and elegant. Having a sense of optimism that the present and future will work out. It is about knowing that you can do whatever is required, or knowing how to deal with issues that you cannot deal with on your own. Nobody expects a leader to know everything, but they do expect the leader to know how to deal with issues that they do not know everything about. They do expect the leader to be willing and courageous to admit that they do not have all the knowledge.

The second trait deals with conviction: knowing where you are going and what you have to say. Having the ability to speak from the heart, and saying it with sincerity. Conviction also means you know what you are about, and that you stick to your guns. Your convictions help you make values-driven decisions in the face of adversity. Providing a vision and direction is crucial! So is being honest and having integrity. Much easier said than done! It is so much safer to not rock the boat, to do nothing when others act in ways that go against what we all stand for. It requires courage to do that, and the willingness to accept pushback from those whom you oppose!

The third trait is about connection. It is about being focused on others, be being connected with your audience. It is about having a network of people who trust you, that you can reach out to. It requires you to manage this network, to keep it intact, but in a way that does not seem mercenary! It is also not just about maintaining your network, but also about growing it. It requires you to be genuinely interested in people, to not only obtain energy from them, but also to impart energy to them. It is also about empowering people you connect with! And being trustworthy!

The fourth trait is about compassion. This is about exuding warmth and love. It is about having empathy, being emotionally intelligent and reaching out to people. It is also about being willing to listen to others with your soul, to understand their pain and their troubles. And to speak from your heart!

Maxwell also provides guidelines on how to build charisma.

Firstly he states that you need to love life, to celebrate it and to enjoy the journey. Life is a process and not a destination. Embrace the journey, warts and all. Learn from it, and grow and develop from your experiences. Wake up in the morning and seize the day! Understand that you will fail from time to time, but as someone said, fail small, fail fast, fail cheaply, and grow from the learnings!

Secondly, expect the best of people and treat them well. Challenge them to be the best they can be. Teach and help them to not accept being less than they can be; to be the best person they can be. Also treat people in ways that grow them and demonstrate respect towards them. Honour them in ways that grow their self-esteem. Empower them and energize them. Hold them to their commitments and develop their sense of keeping their end of the bargain. We need to deliver on the expectations created!

Giving people hope is the third guideline. People want to know there is a better future for them, that there is an answer to the problem on hand, that there is a solution for the current dilemma. It does not mean that the leader should give false hope, as they will lose credibility when people understand that have been led up the garden path. It is important to understand the situation and to be realistic about it. But it is also important to provide hope as well. Perceived hopeless situations are not conducive to the general wellbeing of societies. Hope is what people want, and need!

Finally, leaders share themselves. They are vulnerable and real, and share their hearts, wisdom and resources. It requires leaders to let down their defences and let others come close to them. They need to be authentic, the real thing, and they need to be truthful about all things. Any sign of falsehood will create pushback and leave the leader isolated. They mentor and coach others, providing guidance when asked, without imposing their will. The needs of others are the guiding factor.

Looking again at my examples of charismatic leaders, and listening in my mind to my good friend, Christo Nel, my understanding is that we are not born as charismatic leaders, but that we develop the skills. It is also not just about being rah-rah leaders, but about being authentic and real. So, we can be quite and still be charismatic. Jim Collins also states this quite eloquently in his book, Good to Great! We need to be authentic and true to ourselves and others!

It is also important to understand that having charisma is about being the whole package. It is not sufficient, for example, to have a lot of confidence. The end result could be disastrous! History has sufficient examples of such leaders. We do need to be cautious about people who only have this trait, as they can easily lead a nation astray. Wouldn’t this understanding help us to get rid of those who do not meet the requirements, who fall short of expectations, and who are in it for themselves?

What do we need in this beautiful and great country of ours? Leaders with charisma, leaders that can lead us to unlock and fulfil our potential, to live in harmony, to be the greatest we can be! It is now time to stand up and be counted. If we all develop the charisma within us, we will be a nation of leaders! And we can! It just takes a decision and a resolve!

Wouldn’t that be great?!

And sitting here writing this article, my mind jumps to my MBA students of the past 16 years at the USB. You have so much potential. I see the essence of the above in so many of you! Be the best you can be! You owe it to yourself and to society! Don’t sit back just to have regrets 20 years from now!

I had the privilege to facilitate a programme for a group of senior executives from Mauritius and France the past week. We had the opportunity to listen to a group of prominent South Africans on topics such as the SA economy, the status of the social dynamics within the country, and other topics.

Whilst listening to a talk by Rhoda Kadalie on the situation in South Africa 20 years after the start of democracy, I had a feeling of a kind of déjà vu. It made me sad that we do not learn from history. Allow me to explain.

When I look at Germany, the period between 1933 and 1945 comes to mind. What does it say about the German population that they tolerated a Hitler? That they tolerated being dragged into a world war? This in spite of being an extremely intelligent and productive nation? Given my history background, I am aware of all the coercion etc that took place. But there’s a small little voice in my mind that says, still?…

Then my mind flipped to the Afrikaner in South Africa in 1948. What does it say about the Afrikaner that when the rest of the world moved towards democracy, we elected a political party to power that put in place racial policies that were reprehensible, to say the least? This in spite of being an intelligent and productive cultural group? Again, I am aware of the issues in our history that prompted this behaviour. But there’s a small little voice in my mind that says, still?…

And then I look at the political situation in South Africa in November 2014. What does it say about the ANC that it puts in place a president that is clearly more interested in himself than in the good of the country? That they not only tolerate him, but that they actively support and protect him against any endeavour to call him to task for his actions, or lack thereof? I am aware of the issues in the history of this country that will explain his behaviour, and that of the ANC. But there’s a small little voice in my mind that says, still?…

What is clear to me is that we are not identifying these trends and we are not learning from them. And while there is nothing we can do about the German and Afrikaner issues, other than learning from them, hopefully there is still something we can do about the ANC issue. I refuse to believe that there no ANC leaders that do not have the gumption to put their foot down and call the president to order. I refuse to believe that there are no ANC leaders that do not see that protecting the president at all costs is wrong for the future of this country! That do no see that the corruption we read about every day is ruining the future of this country!

I wrote an article a couple of years ago (2010) about the leadership situation in this country. I stated that the ANC owed it to this country to produce leaders in the ilk of a Mandela and a Tutu, given their dominant position in this country. I expressed my concern that things were going in the wrong direction (http://johanhburger.com/leadership-in-sa-on-the-brink-of-the-abyss/). I still am a bit of an idealist, but we need more than idealism to deal with what we have.

Parliament is becoming somewhat of an embarrassment. If it is not the riot police that remove opposition politicians, it is the nature of arguments that is a serious source of concern. I have no doubt that there are those who will state it is healthy for a democracy to have robust debates. I am not sure, however, that what we are currently experiencing is healthy! And we the taxpayers are footing the bill for this circus! That hurts!

And looking at it all, I am asking myself, what does it say about us? And what are we going to do about it?

My youngest daughter battled/still battles with anorexia.  In 2010 she was admitted to a clinic to help her deal with it.  This is a letter she has written to Anna (anorexia), the inspiration for which she obtained from an article in a magazine. It does seem that the story of anorexia sufferers are quite similar, yet we somehow, as parents and family, seem to miss the signs.

One can see the transient moods – from hate and anger, to acceptance, and then to a positive view of the future.

“Dear Anna,

I don’t know exactly when I said hello, but now I’m trying to say goodbye. This is the hardest thing I think I’ve ever had to do, or maybe just as hard as admitting you had taken over my life. I’ve been trying to find out why I let you in, and let you take control. I welcomed you on board because I was convinced you were making me happy. You were making me the person I thought I was meant to be: skinny, yet so strong and proud. But there shouldn’t be pride in having a person like you rule my life.

You told me I could conquer anything by letting you rule my life. You took over and I let you. But admitting this was so hard and, even though I made you feel proud of me, I felt like a failure. You made me feel like I should be ashamed of myself. I gave you everything but got nothing in return. I was willing to die for you… I would have died because of you. And you would have let me. You would have been so happy to see me suffer. And I was willing to make you happy and proud. But it would never have been enough for you. When would you have told me to stop?

I will never forget the day I decided to get rid of you. It was 6 December 2010. I knew that you’d hate me; that I would pay big time for trying to lose you. And I did. I was forced to give up everything: my life, my family, my friends, just to be able to fight you. As if you hadn’t done enough damage already, you had to take away everything else that made me a happy person. I hated you so much for that.

I knew it wouldn’t be easy. I could have given in, but I didn’t think you deserved it. If I wasn’t allowed to be happy, then you certainly weren’t. So I was ready to kick your bony little ass! I’ve been fighting so hard against everything you led me to believe was right. I’ve been fighting you to find out what makes me happy, to find out who I really am, to learn to love myself unconditionally. Each battle was hell and the war isn’t yet over, but you will leave shortly.

I know you hate that I can see a positive side to all the grief you’ve caused me. Sometimes I care. Other times I don’t. Ignoring you when I had to start eating properly was so much harder than dealing with the guilt you still make me feel. You thought you were so strong, but you’re not.

You did me wrong, but I’m grateful. You made me look at my life in a different way. You’ve made me appreciate things I’ve always taken for granted. You’ve forced me to look inside and see who I am. I don’t miss the life we had together. I don’t cherish the months of isolation and torture and fear. But I do cherish what they have taught me. I was so scared to think of life without you, but I’m strong and am only going to get stronger by fighting you. So thank you for making me realize just how beautiful my family is, how beautiful my life can be and how beautiful I am. Once you’re gone, I’ll focus on me and on living the life I’ve been fighting for.

I’ll never forget you. I’m a stronger person for having had you in my life, although I’ve paid a high price. Now I’m letting you go. I don’t regret letting you in, but I think about the other people you’ve taken from this world and I’m grateful you’ve not taken me too.

I don’t hate you, I just hate what you’ve done; and I love what I’ve become.

I mean it when I say ‘Goodbye’.

xx”

As a dad, I am so sad that she had had to go through such an ordeal. As a dad, I am also so proud of the growth and development that I see.