Small farms produce close to 80% of the food consumed in sub-Saharan Africa and in some parts of Asia, contributing significantly to food security in those regions. They play a key role in developing sustainable food systems, resilience against climate change and providing real jobs to rural youth.
The adoption of and access to agricultural technologies such as data-driven precision farming, energy-efficient technologies, real-time market information, water management technologies, reliable cooling and supply chain solutions, tech-enabled financial and insurance services for farmers, are pivotal for achieving profitable and sustainable integration of smallholder farmers in the agribusiness value chains.
90% of the market for digital services that support African smallholders remains untapped and could be worth more than €2 billion, per industry reports. In particular D4Ag (“Digital for Agriculture”) should play a central role in helping African smallholders to shift from subsistence agriculture to business agriculture.
At Bamboo, we expect to see four major trends within the next years, in the African D4Ag space:
- Data: Availability and use of valuable agriculture data at scale, with a special focus on affordability of such data by small holders for them to be able to use efficiently D4Ag tools;
- Innovation with a focus on solutions based on remote sensing, artificial intelligence (AI) and internet of things. The current level of tech penetration is very low, and we see a strong leapfrogging potential for solutions based on these technologies, like the use of AI for disease prevention.
- Investment: there is an acceleration in investments in D4Ag in Africa with numerous new funds attracting investors and large commercial players, including impact investors like Bamboo Capital Partners. Those funds are collaborating with a growing network of local incubators, building a strong ecosystem.
- Infrastructures: there is no spread of technology without infrastructure, like telecom operators, which already play a key role in the AgTech penetration in Africa.
We understand that these trends can only be truly impactful, when making women and cooperatives part of the equation.
Women make up 43% of the agricultural labour force and produce 60% to 80% of food crops in poorer parts of the world. However due to unequal access to technology, capital and infrastructure for women, they produce less on the same amount of land. Providing equal access can improve the lives of women, families and communities, while also addressing global warming by avoided deforestation, through increased yield of women smallholders.
Farmer’s cooperatives will play a central role in the use and training of new D4Ag solutions, as they can provide training for their members in order to use D4Ag.
With over a decade of experience in impact investing in emerging and frontier markets, Bamboo aims to generate lasting impact and improve the lives of the world’s most marginalised communities while delivering strong financial returns.
Bamboo, in partnership with Injaro Investments, manages the ABC Fund, a €100m impact fund aimed at catalysing private capital into the underserved segment of agribusiness value chains in developing countries, primarily in Africa. It provides small loans and equity investments to smallholder farmer organisations, agri small and medium enterprises and rural financial institutions. The fund was initiated in 2019 by the International Fund for Agricultural Development with initial funding from the EU, the African, Caribbean and Pacific Group of States and the Luxembourg government.
Bamboo is also currently launching two VC tech-for-impact funds in Africa and in Latin America and the Caribbean, looking at next-generation tech businesses that generate a positive social or environmental impact at scale. BLOC Smart Africa and BLOC Latam focus on agritech, among other verticals.
The ABC Fund, BLOC Smart Africa and BLOC Latam are three of the six impact funds of the SDG500 initiative, a groundbreaking partnership launched during the World Economic Forum in Davos at the end of January. This initiative is dedicated to financing the Sustainable Development Goals and raise $500 million to invest in hundreds of businesses in emerging and frontier markets.
Above: Real-time market information and helping women are important planks of the initiative