Authors: Hu Si Ying and Nicholas Tan Region Head: Hu Si Ying
Editor: Praharsh Mehrotra
In this article, we discuss the uptake of digitalisation as well as her synergy with the fourth industrial revolution with regards to Sub-Saharan Africa as a region, how it catalyses growth in the region and the benefits brought onto the agricultural industry in particular. The article then proceeds to weigh in on the feasibility of initiatives and finally conclude with additional insights on the matter and the way forward.
Digitalisation has been proved to be a catalyst to the development of countries. This can is evident from the success of the BRICs countries in the early 2000s (Lazanyuk & Revinova, 2019). Even though SSA has been a recipient of the benefits of such efforts. Africa still remains one of the poorest regions in the world, with many countries in the region experiencing a stagnation in growth (Hentz, 1997). Growing literature has also alluded that developed countries stand more to gain from digitalisation, due to the innate quality of physical and capital stock whereby technology-skill mismatch can create large disparities in the output per worker (Acemoglu & Zilibotti, 2001). As such, Africa as a region has yet to experience the full benefits of digitalisation and such effects are highly evident in the manufacturing and agricultural/food industries (Banga & Te Velde, 2018).
Digital Technology and the Agriculture Industry
The agricultural sector in Africa is large which accounts for 15% of GDP on average and employs more than half of the workforce in African countries. This means that the agricultural industry is highly significant to the livelihoods of Africans, and it is also the main source of livelihood for smallholder farmers living in rural areas (OECD/FAO, 2016). Digital technology has revolutionized farming in Africa for the last few decades. Its digital agriculture industry is expanding, with the number of farmers subscribing to digital services growing by 45% in the past handful of years. Revenues of digital farms are approximately around $140 million annually (Abdulai, Duncan & Fraiser, 2019).
It can be argued that there is a need for improvement in productivity of the agriculture industry. By 2050, the world population will reach 9.1 billion people as projected by the Food and Agricultural Organization of the United Nations. Food production across the globe would have to accelerate by 70% to feed the growing number of people. For Africa itself, its population is projected to be 2 billion by 2050, this means that the productivity of the agriculture industry must grow at a faster pace than the world average to avoid prolonged mass hunger (Ekekwe, 2017). As such, the digital era provides plenty of opportunities and innovations that can help the African agricultural sector achieve its full potential.
How is digital technology modernizing the agriculture industry in Africa? It includes anything from the delivery of agronomic information and advice through text messages or interactive voice replies, or smartphone applications connecting farmers to farm input suppliers and buyers. It also entails the usage of satellite systems and drones to track and inform farmer activities, such as the right time to plant, the types and quantities of inputs to use (Abdulai, Duncan & Fraiser, 2019). Sophisticated technologies, such as GPS, robots, temperature and moisture sensors have helped farmers boost their productivity and profits.
The rise of many agtech (agricultural technology) companies have also contributed to the success of modernizing farming. For example, Hello Tractor is a company that uses modern technologies like IoT, artificial intelligence and machine learning to operate its farm equipment sharing application which links up tractor owners and smallholder farmers in Sub Saharan Africa, thus expanding the tractors business and allowing equitable access to tractors for smallholder farmers (Asonibare, 2019). Another example is Zenvus, a Nigerian based start-up, which calculates and analyses soil data such as nutrients, temperature, and plant health to assist farmers in applying the correct fertilizer and irrigate their farms optimally. Their business operation helps improve farm productivity and mitigate resource waste through the usage of analytics to promote farming techniques that are data-driven for smallholder farmers (Ekekwe, 2017). Such innovations have allowed for farmers to be more efficient and address the growing demand for crops.
Challenges and Recommendations
While the agricultural sector faces problems such as high cost, lack of access to inputs, low efficiency and low productivity, digital agriculture technologies can be a viable avenue to address such issues. However, the fact of the matter is that agricultural productivity in the African continent is still relatively low and the use of digital technologies is still insubstantial (Tita & Solomon, 2017). There are different types of barriers hindering the industry from achieving her full potential. One such barrier is the limited connectivity to the Internet particularly in rural areas, making it difficult to achieve technology integration entirely. It is important to remember that digitization and digitalization is not solely a problem faced in the agricultural sector, as it also involves different parts of the economy. Both processes should be predicated on broader goals of economic development and poverty reduction.
A large issue that Africa as a region faces is the lack of investment in infrastructure which can be a deal breaker in technology. Such constraints, such as a lack of consistent power supply, expensive internet fees as well as lack of reliable and stable internet connection further exacerbates the slow digitalisation process in the region. This can be illustrated in reports that SSA as of 2016, has an internet penetration rate that is 10% lesser than that of South Asia (Banga & Te Velde, 2018). Furthermore literature have shown that due to the underlying infrastructural lacks, investments into information communication technologies (ICT) has produced minimal effects on economic growth in area of take up rate of broadband subscription which are proxy for economic growth (refer to figure 1) (Myovella, Karacuka, & Haucap, 2020). Upon further probing into the matter, case studies have been done on the effects of ICT on rural villages in SSA. It was often concluded that despite willingness to adapt and pick-up use of computers etc to acquire innovative processes to improve agricultural yields, villagers were unable to do so as they lacked the necessary literary skills (Kah, 2008). Thus, investments into the education and ICT infrastructures should be done. Since most of the agricultural farms are in rural areas of SSA, and has relatively religious backgrounds (Bissoonauth, 2019), it is perhaps wise for schools to be set up in communities so as to allow for women to easily travel to school. Such efforts will in turn translate to higher human capital that can better utilise the upgraded ICT infrastructure and further improve on productivity.
Secondly, governments have to set up regulatory frameworks and environments that allow for favourable conditions for investments in particular relating to ICT technologies. This can come in the form of lowering the cost of internet service as well as wide-spread campaigns that encourage take-up of digital devices that illustrate the possible economic benefits that it may bring. Past success has shown that deregulation of domestic monopolies, speeds up the process of digitalisation as well as lowers the cost of internet connection, in 1999, where Kenyap passed the information and communication act, which allowed for the establishment of multiple operators in the telecommunication service catapulted Kenya’s digitalisation process and in turn allowed the country to achieve sustained economic growth (Kimenyi, Mwega, & Ndung'u, 2016). Many of the telecommunication monopolies in Africa are state-owned, which are also often cash-strapped and hence, do not have the incentive to provide cheap internet connection (Southwood, 2014). Such environments will allow for a more competitive market that will lead to eventual decease in broadband prices. As such, this helps to further improve the take-up of internet services in the SSA region.
In conclusion, African economies have benefited from digital technologies, clear examples include the Kenyan economy. However, Africa still suffers from wide disparity in digital services as opposed to the rest of the world. Innate problems such as a lack of ICT infrastructure still plague the SSA region and causes Africa to not enjoy the full benefits of digitalisation. That said, it is still wise for African governments to draw out clear economic benefits and goals from digitalisation and set out regulatory frameworks that foster suitable ecosystems. Looking at the agriculture industry, institutional challenges must be readily faced, requiring the synergy and efforts of farmers, entrepreneurs, and governments to ensure the benefits of digital technologies are fully reaped.
Source: (Myovella, Karacuka, & Haucap, 2020)
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