How Agricultural Technology Can Increase Economic Growth in Sub-Saharan Africa

By Alexander Ayertey Odonkor  and Emmanuel Amoah-Darkwah

Sub-Saharan Africa’s agricultural sector is based on a diverse range of terrains inhabited largely by smallholder farmers. The dominant agricultural sector accounts for an estimated 23% of sub-Saharan Africa’s gross domestic product, as a recent study1 by McKinsey and Company reveals. The region has a population of 950 million, approximately 13% of the world total, and this is projected to increase to 2.1 billion by 2050, almost 22% of the global population, as indicated in an OECD-FAO2 report. More than 60% of the population of sub-Saharan Africa are smallholder farmers but the region’s full agricultural potential is yet to be exploited. Hunger is on the rise, with 22.8% of the population being undernourished. A report by the Food and Agriculture Organization of the United Nations indicates that more than 90% of the 260 million hungry people in Africa in 2018 were in sub-Saharan Africa3.

More than 60% of the population of sub-Saharan Africa are smallholder farmers but the region’s full agricultural potential is yet to be exploited.

Although sub-Saharan Africa has more than 202 million hectares of uncultivated land4, which is more than the total cultivated area in America, the agriculture sector and other related industries in the United States are worth more than sub-Saharan Africa’s agriculture sector. A report by the United States Department of Agriculture found that agriculture and other related industries accounted for $1.053 trillion, or 5.4% of the country’s gross domestic product in 20175, with the total output of farms accounting for $132.8 billion.

In contrast with sub-Saharan Africa’s agriculture sector, where most farmers use crude tools6, the agriculture sector of the United States continues to evolve with technology; for example,  auto-steer tractors that depend on GPS are being developed, with the goal of improving productivity via automation, among other new technologies7. Engine-powered machines account for a paltry 10% of the total energy used in land cultivation in sub-Saharan Africa, a condition which has barely improved in over 40 years. With a steady decrease in the use of farm machinery, the region has been surpassed by many developing countries.

In 1960, three countries in sub-Saharan Africa, Uganda, Kenya and Tanzania, individually had more tractors on their farmlands than India. However, while the African countries have failed to improve on the use of farm machinery in the past decades, India on the other hand has increased the employment of such equipment to the extent that, in 2005, there were one hundred times more tractors in use on farmlands in India than the total number of tractors in Uganda, Kenya and Tanzania8, as highlighted in a report by the Food and Agriculture Organization and the United Nations Industrial Development Organization in 2008. 

With a growing population and low productivity9 in agriculture, sub-Saharan Africa relies excessively on imported food and other agricultural products to complement the output of the agricultural sector. The region’s imports of food and agricultural products continue to soar; $48.5 billion of agricultural goods were imported in 2014, the second-highest in the world at the time, as indicated by the World Bank. Conversely, in 2014, India had a population of 1.294 billion, exceeding the population of sub-Saharan Africa by more than 300 million; yet India imported only $17.6 billion of agricultural goods10. India’s agricultural sector depends on modern technology. With the cheapest mobile data in the world11, farmers in India rely on the internet to access technological services such as Plantix, a mobile application that provides advisory services to crop farmers. The system has the capacity to identify more than 450 different crop diseases in 50 species of crops, and farmers are able to access a diagnosis and a treatment plan by uploading images of the disease-infected crops via their smart phones. Additionally, farmers in India have access to Digital Green, a development organization with a global outreach that aids smallholder farmers in growing, transporting and selling their farm products to appropriate customers12

With a growing population and low productivity in agriculture, sub-Saharan Africa relies excessively on imported food and other agricultural products to complement the output of the agricultural sector.

The relationship between agriculture and economic growth is knitted into the fabric of the economies of sub-Saharan Africa; even in oil-rich Nigeria and South Africa, which are the two largest economies in the region13, agriculture plays a pivotal role in the growth of those economies. A recent analysis conducted by PricewaterhouseCoopers14 in sub-Saharan Africa highlights an increase in economic growth via agriculture as dependent on three major factors: farmland expansion, yield growth and reduction in post-harvest losses. Technology plays a crucial role in improving all of these factors. Studies15 conducted by the Food and Agriculture Organization of the United Nations show that economic growth from agriculture in sub-Saharan Africa is eleven times more effective in reducing extreme poverty than any other sector, yet most of the youth in the region show little or no interest in securing employment opportunities in agriculture16, as they do not consider agriculture to offer a lucrative livelihood.

The mobile ecosystem in sub-Saharan Africa is currently worth about $150 billion, 8.6% of the African continent’s gross domestic product, and is projected to reach $185 billion by 2023, representing 9.1% of GDP17.  Technology is the ideal catalyst for changing the agricultural landscape and improving productivity and economic growth in sub-Saharan Africa. Job opportunities that require expertise in digital technologies will be created and a new skill set that is more appealing to the youth will be in demand when agricultural activities are intertwined with modern technology.

A typical example is the case of Rita Kimani and Peris Bosire, founders of FarmDrive18, a start-up that uses data and machine learning to close the critical data gap that usually discourages financial institutions from lending to creditworthy smallholder farmers in Kenya. Since 2014, the start-up has made more than $300,000 in loans available to smallholder farmers, with at least 37% of them being young farmers who are interested in using technology in agriculture. As indicated in a report by the USAID and Bureau for Food Security19 in 2019, accessing credit for agricultural purposes is extremely difficult, especially for young people who, in most cases, do not have the requirements or collateral to access credit from local banks. However, FarmDrive has demonstrated that, with the aid of technology, the youth cohort in sub-Saharan Africa can now access credit from financial institutions that will enable them to invest adequately in agricultural activities.

As indicated by the International Labour Organization20, sub-Saharan Africa has the world’s youngest population. Young people between 15 and 35 years account for about 60% of the total labour force, which continues to grow at 3% annually; 375 million young people are expected to join the workforce by 2035.  A youthful population has many advantages, especially for emerging economies. The World Bank estimates that countries in sub-Saharan Africa could gain an additional $500 billion annually for the next 30 years if appropriate investments are targeted at equipping the young with the requisite skills, education and employment21.

To achieve the projections of the World Bank, the traditional perception that agricultural activities are carried out with excessive manual labour on farmlands should be changed through comprehensive educational systems that resonate well with young people. By considering approaches that leverage social networking and foster peer-to-peer engagement, new agricultural technologies that improve productivity and efficiency can be communicated to the youth in a manner where implementing partners can share the success stories of young people whose achievements in agriculture are worthy of emulation.

Additionally, governments in sub-Saharan Africa should prioritise the mechanisation of the entire food value chain. Adequate investments should be channelled into designing and developing technologies that not only improve agricultural production, but also reduce post-harvest losses and improve the processing of raw materials into high-quality finished products. Studies22 have shown that post-harvest losses for all grains in sub-Saharan Africa amount to $4 billion per year, which exceeds the value of food aid the region has received in the last decade.

As farmers in sub-Saharan Africa continue to store grains in traditional storage contraptions made of mud, grass and wood in their homes, Solar Freeze, an agri-technology company in Kenya, is providing solar-powered mobile cold-storage units to smallholder farmers. These storage facilities have been of immense importance to 3,000 female farmers in rural areas with no electricity, increasing agricultural yield by more than 150% since 2016, to say nothing of the environmental friendly features of the device23. Governments in sub-Saharan Africa should invest more to reduce post-harvest losses by improving essential infrastructure, such as road networks, telecommunication networks, electricity grids and hermetic storage structures, especially in the hinterlands where the farmlands are located.

Ghana and Ivory Coast produce two-thirds24 of the world’s cocoa, yet these two West African countries account for only $6 billion of a chocolate market which is worth more than $100 billion worldwide25. Developing world-class food processing industries in sub-Saharan Africa through partnership with established international corporations has the potential to improve the value of agricultural products on local and international markets. This will eventually generate more income, in contrast with commercialising agricultural products in a raw form, as has been done for many decades.

A consistently low agricultural harvest26 has plagued sub-Saharan Africa for many years, making agricultural productivity in the region the lowest27 in the world. This perennial condition could be worsened by the unremitting effects of climate change28 if appropriate investments are not directed towards increasing irrigation facilities and educating farmers on watershed management. With little or no agricultural infrastructure in most areas, sub-Saharan Africa has an overwhelming dependency on rain-fed agriculture. As a result, the region has the lowest percentage of irrigated farmlands in the world, with only 7.3 million ha being irrigated, representing 4% out of a total of 40 million ha that is well suited for irrigation29.

Research has shown that climate change diminishes agricultural output in poor countries, reducing economic growth30 as temperature increases.

Research has shown that climate change diminishes agricultural output in poor countries, reducing economic growth30 as temperature increases. A 1°C increase in temperature in a given year reduces economic growth by 1.1 percentage points, ceteris paribus. The effect of climate change on economic growth in sub-Saharan Africa is invariable, as a percentage increase in temperature decreases economic growth by 0.13%, everything else being equal. Countries in the region rely inordinately on agriculture, so a decrease in agricultural output has a negative effect on job creation, poverty reduction efforts and industrial growth31.

In adapting to climate change in sub-Saharan Africa, it is imperative for governments to implement policies that provide the necessary resources to farmers, such as climate-resilient crops and wildlife, modern agricultural inputs, improved ways of managing the soil, new business models for smallholder farmers and agricultural diversification.

About the Authors

Alexander Ayertey Odonkor is a chartered financial analyst and a chartered economist with a stellar expertise in the financial services industry in developing economies. He holds a Master of Science degree in Finance and a Bachelor of Science degree in Economics and Finance. Alexander has completed the International Monetary Fund’s (IMF) programme on Financial Programming and Policies.

Emmanuel Amoah-Darkwah is a chartered economist with specialization in economic policy analysis and an ambassador for the United Nations’ Sustainable Development Goals. Emmanuel’s work has been covered by the BBC, Bloomberg, CGTN, CNBC Africa and other major domestic news outlets in Africa.

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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.