By David Njagi // 20 December 2023

Smallholder farmers in Africa are responsible for up to 70% of the continent’s food production. But over the years, agriculture production has been declining, becoming one of the most pressing problems troubling the continent’s food systems.

This decline is due to a mix of factors, including climate change and increasingly acidic soils, a situation that is pushing families to the edge of destitution, according to Sam Nderitu, director of programs at the Grow Biointensive Agricultural Center of Kenya.

Despite this reality, climate finance for small-scale agri-food systems dropped by 44% in 2020, compared to three years ago, representing just 0.8% of total climate finance tracked across all sectors by the Climate Policy Initiative.

Navigating the problems facing the entire agriculture value chain requires smart innovations that reduce the cost of production for smallholder farmers while battling greenhouse gas emissions and food insecurity, social entrepreneurs argue.

To respond to these challenges, incubators launched the Nairobi Climate Hub last month. The hub is supported by the Global Partnership of the United States Department of State office, with the Kenyatta University and social enterprise incubators, and SNDBX and Halcyon as implementing agencies.

Through the hub, African innovators working on solving the world’s most pressing climate change challenges who struggle to grow and scale their businesses will receive support.

At the launch, partners spotlighted enterprises set to receive grants of between $10,000 to $25,000 through the incubator.

In Nigeria, where there are more smallholder farmers than the entire population of Canada, 74% of the 38 million farmers do not have access to financial services, according to Michael Ogundare, the team lead at Crop2Cash, an agritech startup.

Bankers in the country lend less than 4% to the agriculture sector, creating a $19 billion funding gap, a situation that Ogundare links to farmers not having bank accounts and smartphones.

But Crop2Cash, a digital financial service that engages farmers through their mobile phones and in their local language, is helping farmers open bank accounts in less than two minutes, leading to better access to credit and other financial services for buying inputs such as seeds and fertilizer. It uses the Unstructured Supplementary Service Data, or USSD, feature which can respond to any mobile phone type.

“Most farmers are in rural communities where there is [a] lack of internet access and so doing typical things like sending or receiving money is almost impossible. But our innovation is enabling them to access and pay for climate-smart inputs, seeds and resources, leading to improved yields,” Ogundare said.

In neighboring Ghana, innovators say solving Africa’s declining food production must begin by understanding, affording, and being able to use the technology available.

According to Anaporka Adazabra, the chief executive at the startup Farmio, most technology products being rolled out in Africa are not easy for smallholder farmers to use.

For instance, innovators design mobile phone apps meant for smallholder farmers in the most remote parts of the continent. Most of these regions are not connected to the internet and mobile phones that are compatible with the product are too expensive, she said.

In her country Ghana, 6 out of 10 farmers cannot access irrigation systems, mainly because they are expensive. Yet irrigation is a core part of the solution to tackle food insecurity in the country, she said.

Her startup has developed a mobile greenhouse system that can be easily controlled and timed through a mobile phone app, and which can fertigate plants with additional nutrients on site.

“Providing affordable irrigation systems and making sure you are reaching the very last mile of rural communities is important in making sure that they are getting access to the service they want,” said Adazabra.

Online trading, which allows investing in agricultural commodities, is taking root in Kenya, saving farmers from selling their produce at giveaway prices, said Josephine Adeti, a founder at Radava Mercantile.

Her startup has developed a commodity exchange system where off-takers such as schools, millers, prisons, individuals, and institutions in the rest of the world can buy stored grain through the virtual space.

Farmers take their harvested grain to a warehouse that has the right temperature and moisture for storage. They are then issued with an electronic receipt indicating the quantity and quality of their produce.

They can use the receipt as collateral to access loans immediately as they wait for their stored grain to be bought at a good price, while Radava Mercantile trades the same receipt saved in their system at the commodity exchange, Adeti said.

“When farmers rush to the market the number one thing is that they want money immediately for the produce they have been waiting to harvest for four months. They can use the electronic receipt as collateral to get loans as they wait for us to trade it in the exchange,” Adeti said.

For the first time, food and farming have been incorporated into national climate action plans following a high-level declaration backed by 134 countries at COP 28.

But Daniel Barker, managing director at Halcyon, said the growing commitments being made around climate change may be difficult for entrepreneurs to navigate.

“For African innovators to access funding that comes with the new commitments, they should be adaptable, flexible and fast compared to the traditional models which are risk averse, slow and unresponsive. The climate hub is designed to help them navigate these funding flow challenges,” Barker said.