Phygital Agriculture: Building Africa’s Food Sovereignty

An online event organized by Manobi Africa and the Islamic Development Bank

Phygital Agriculture Series – Manobi Africa – December 2, 2020

Dakar, Accra, Nairobi, Jeddah, London, Zurich. COVID19 and its impacts on global trade revealed the urgent need to fast-track Africa’s agricultural transformation by strengthening food sovereignty as a critical component of food security, while ensuring the creation of inclusive economic and social value. Organized by Manobi Africa and the Islamic Development Bank on December 2, 2020, this webinar explored emerging innovations in the digital ecosystem, and prospects for their incorporation into phygital agriculture – the next frontier solution developed by Manobi Africa, powering next-gen PPPs to de-risk investments in smallholder agriculture and prepare for the shorter-circuits, more transparent, more circular, and more honorable food systems of tomorrow.

Building on 30+ years of experience in the finance industry, the event moderator Edward George (CNO, Kleos Advisory) quickly set the stage with a keynote address on “The challenge of financing Africa’s agricultural sector”. He highlighted the length and complexity of Africa’s agricultural value chains, the challenges of properly structuring a farm-to-fork, seed-to-shelf ecosystem in a sector starved of financial resources, and the resulting low use of inputs, low yields, and inexorably rising food import bill.

That was a starter for a fireside chat where Daniel Annerose (CEO, Manobi Africa) first reflected on today’s strange situation where it is easier to import food than to produce locally, and where it is virtually impossible for a smallholder farmer to access credit. He indicated that with only a portion of the amount currently spent by Africa to import food, the food sovereignty of the continent could easily be financed, adding that the concept of phygital agriculture was precisely developed to support and de-risk the required transformation of African agriculture. Fadel Ndiame (Deputy President, AGRA) further stressed the irony that even large commodity markets, such as rice, are so fragmented that they cannot unlock development value. He highlighted the potential of orchestration and risk-sharing approaches such as those implemented by Manobi Africa, for revealing and activating intersecting reservoirs of added value (gisements croisés de valeur ajoutée), generate win-win situations for everyone.

Orchestration and risk-sharing approaches generate win-win situations for everyone

Followed two presentations illustrating the practical implementation of phygital agriculture. Pierre Sibiry Traore (Director, R&D – digital agriculture, Manobi Africa and principal in-business researcher, ICRISAT) first offered an overview of agCelerant’s pillars and service bundles, including AIRMAP (Agricultural Investment Risk Mapping And Profiling), BRISK (Basis Risk reduction Instrument and Support Knowledge) and TARGET (Targeting Agricultural Resource Growth, E-sales, and Transformation). Deployed at the start, during and at the end of each agricultural season, each service bundle embeds advanced digital data streams (Earth Observation, IoT, Artificial Intelligence, …) into a proximal business service ecosystem that holistically de-risks agricultural investments and orchestrates value creation for smallholders, bankers, insurers, off-takers, and input suppliers altogether.

Ougfaly Badji (Senior Agribusiness and Agroindustry Specialist, IsDB) presented how a Multilateral Development Bank engages member countries on the path to food sovereignty, with focus on the Regional Rice Value Chains Program. RRVCP is a USD 300 million investment by IsDB with BMGF’s Lives and Livelihoods Fund and other investors targeting 2 million producers in 10 countries. Anchored in a value chain approach it aims to accelerate and sustain self-sufficiency, contribute to food sovereignty, identify priority and additional investments, and enhance involvement of the private sector, job creation and regional market share in the global rice trade. RRVCP selected Manobi Africa’s agCelerant to sustainably structure and orchestrate the value chains, creating social and economic value for all stakeholders.

A genuine African solution, capable of critically adapting digital systems to highly diverse environments

I haven’t seen something like that in the past 30 years” said Stephan Kunz (Head of Business & Investment at GIZ), speaking of agCelerant and its foundational concept of phygital agriculture. He expressed his full conviction about the holistic approach, which he described as a genuine African solution he had always dreamed for, capable of critically adapting digital systems to highly diverse environments by breaking down the value of data and making it understandable and concurrently exploitable by various value chain stakeholders through personalized interaction. GIZ is already working with agCelerant in the rice and cotton sectors, with a strong focus on rural youth employment through agCelerant Academy, and on linking smallholder producers with the agro-industrial sector.

Mario Wilhelm (Head, Middle East & Africa Public Sector Solutions, SwissRe) indicated that awareness, access, and affordability constitute the 3 biggest challenges faced by the insurance industry when working with agriculture. Commenting that “looking back, most of the insurance projects targeted at smallholder farmers in the past 10 years have actually failed”, he further highlighted that insurance cannot scale alone and requires bundling with other services such as credit, seeds and inputs, aggregation etc. With the unit cost of insurance production geared towards middle-upper classes making it mostly non-affordable for smallholder farmers, he believes that digital technologies will significantly reduce these costs at the same time as they improve access – instantly making a business case for the insurance industry.

Landry Ahouansou (Investment Director, IFU) explained that phygital agriculture is of high interest to IFU and presents a clear opportunity for investors and banks. Investors being in fact buyers of risk, phygital agriculture and its data streams would help them measure risk, de-risk the value chain to the extent possible, and then price the remaining risk and risk control instruments such as insurance. One significant opportunity presented by the approach is the much-needed networking synergies to control sourcing, storage facilities, and all the logistics which can generate an added value and make the whole system viable. He further confirmed their interest in financing the proposed concept of guarantee fund to help banks issue loans to SMEs, citing similar ongoing experience with the Danish Ministry of Foreign Affairs.

A financial architecture that creates value for all, including smallholder farmers

Fadel Ndiame stressed that for impact at scale, cooperation was essential between public investment, evidence-based policies, and delivery platforms to both provide analytical capabilities and articulate a vision of success for all. “What Daniel & his team bring is amazing because it gives not only a global perspective, but you also know what is localized [where].” Building a financial architecture that creates value for all, including the smallholder farmers, by giving them visibility around market, resources, technology, returns on investment and the risk they are taking is an engineering challenge to be met to provide access to finance, quality seeds, pre- and post-harvest mechanization, to protect market growth and achieve trust and predictability.

Panelists commended IsDB’s leadership in promoting the restoration of Africa’s food sovereignty, starting with the rice value chain, and investing in phygital agriculture. There was a shared agreement that fragmented approaches are not viable and that a systemic initiative developing transparent data architectures around a holistic, orchestrated vision of agricultural value chains compliant with industry standards was the opportunity of this generation