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On World Food Day, Renew Capital Reflects on Famine Mitigation
By Julienne Gage | Sat Oct 15 2022
At the intersection of academia, technology and investing, ag experts and companies come together to address shortfalls in food production and distribution, as well as potential growth.
Whether she’s comparing satellite imagery to the crops she's traversing with farmers by foot as she heads up the Africa section of NASA's food and agriculture program, talking to her restaurateur-turned-farmer mother about her yields in Uganda, or teaching classes at University of Maryland, in the United States, 2020 Africa Food Prize winner Dr. Catherine Nakalembe is constantly thinking about how civil conflicts, the war in Ukraine, trade barriers, disruptions to last-mile delivery and climate change are contributing to a looming famine which could become the worst East Africa has seen in decades. She’s also thinking about the communities behind the related data she’s analyzing.
“These are actual people who have worked so hard, and everything gets completely scorched by the sun or washed away by the rain,” she told Renew Capital. “There are these tools that you could use to predict, to give some sort of guidance, some sort of early warning— two weeks, four weeks, six weeks before.”
Used in consultation with government agricultural divisions and farming cooperatives across Africa, her team’s research and tools do precisely that. She applauds the efforts of other African researchers, scientists, and organizations in building out solutions that leverage the insights from satellite data and feed into the goal of greater food production and access.
On Sunday, the United Nations Food and Agriculture organization will observe World Food Day 2022 with the motto “No One Left Behind.” Renew Capital is taking that day to reflect on how its own work as an Africa-focused impact investment firm can contribute. Renew Capital operates on the premise that the private sector can spark innovation and competition; create more sustainable jobs; lower consumer costs; drive policy change and greater trade; and ultimately have positive, more equitable impacts on the lives of diverse communities. Last month, the firm closed a package of tech and tech enabled companies that included investments in Inputi and Quest Digital Finance’s Akellobanker, two digital platforms from Uganda embracing and implementing the kind of innovation Nakalembe wants more people to be able to access.
Investing in Small Farmers and Rural Entrepreneurs
Inputi is an online marketplace, aggregator and distributor for farm inputs. Through versatile digital platforms, it delivers quality crop and livestock inputs such as fertilizers and pesticides to 1,000 rural agro shops, 20 dairy cooperatives and 12 meat cooperatives, sending them directly to buyers or to regional agro and vet shops at a fixed transportation cost. Inputi is projecting 50% growth in the coming year and, with investment from Renew Capital, it hopes to profile and aggregate input dealers, farmers and farmer groups to provide linkages in trade and to financial institutions and insurance firms.
“We cannot eliminate famine caused by climate change, but we can mitigate that by improving food distribution systems,” Inputi chief executive officer David Lukwago told Renew Capital. “The private sector plays a critical role in building efficient, effective and sustainable means to move food from one point to another point where the food is needed. Sustainability can be achieved if the private sector is fully empowered and brought to the table of food security.”
Nakalembe believes an input platform like this one can be faster and more efficient than systems coming from the government because they are less encumbered by bureaucratic red tape and are driven by consumer demands.
“You could explore one thing and try it for a few months, and if this doesn't actually turn out to be working really well, a company has that flexibility to reevaluate their model,” she said, noting that regular outreach into the communities through organizations such as farming cooperatives can be key to building trust and setting up a system where both sides inform each other of latest trends and best practices in their business models. In fact, she noticed in her own in-person field visits that farmers thrive on opportunities to share with each other about what crops are proving to produce the highest yields or offer the most nutrition.
Eventually, Inputi hopes to do exactly that. As it stands, farmers are essentially telling suppliers what fertilizers or pesticides they need by what they end up requesting, something that in time could lead to higher quantities of organic inputs, Lukwago says. At the same time, they’re trusting that the platform will give them reliable information about when those inputs will hit the agri shop closest to them so that they don’t waste precious time and fuel trying to get there, only to come up empty-handed. Early warning sign data is also on the horizon, and that could be instrumental in helping farmers shift what to grow or how much to store, versus how much to send into the broader market.
Over the coming 10 to 20 years, the next one billion people will be on the African continent, said Lukwago, referencing the region’s rapidly growing population. “Demand for food is going up but food productivity is actually declining. The only way to solve this problem is to bring technology onto smallholder farms to help us leapfrog all these other broken pieces along the value chains.”
But it’s impossible to move forward with buying many inputs without the credit to do so. That’s where products like Akellobanker come in. Run by Ugandan tech company Quest Digital Finance, this platform helps savings and credit cooperatives (SACCOS) and micro-finance institutions to digitize reporting and accountability records that de-risk small farmers, making it easier for them to obtain formal bank accounts and the larger options for credit that come with them.
Akellobanker hopes to eventually deliver bundled products and services to farmers and entrepreneurs and other value chain actors on credit. Renew Capital’s investment will help Akellobanker expand its reach to more than 100 cooperatives serving over 100,000 farmers and micro, small and medium enterprises (MSMEs) in Uganda. Akellobanker hopes to integrate over 350,000 farmers and entrepreneurs into the digital economy and use data to deliver desired products and services on credit.
Breaking with traditional banking and lending, which has a high barrier to entry throughout Sub-Saharan Africa, Akellobanker team lead Jean Onyait says this platform makes the financial sector more accountable to consumers.
“If you look at finance 10 years ago, commercial banks were the owners of financial inclusion. But five years ago, fintech— small financial technology companies—came over and showed banks that we were able to break through places they weren’t reaching,” says Onyait. “That’s breaking a monopoly and creating healthy competition, which goes a long way in reducing prices and making services much more affordable for the local communities.”
Partnering Up for Greater Training and Information Sharing
One of the ways Renew Capital sets itself apart from other investment firms is that it blends money from its Renew Capital Angels network with funding from multilateral institutions and government agencies, such as the U.S. Agency for International Development (USAID) and the Government of Canada, to test different strategies for better business; mobilize capital for SMEs and the missing middle; and ultimately shift policy making toward investment in SMEs as the agents of change in advancing international development goals. At the same time, Renew Capital bolsters this effort by partnering with non-governmental agencies to develop and deliver robust executive business training, private equity training and one-on-one coaching sessions to prepare SMEs to receive financing and grow into market leaders.
The non-profit organization the Alliance for Green Revolution in Africa (AGRA) partners with Renew Capital to provide the firm’s executive training to African women in farming. The upcoming Enhanced Accelerated Women Exec’s Training, to be facilitated in partnership with Renew Capital and AGRA, begins on October 17 and ends on October 21. The five-day training aims to help female agri-business owners learn how to create a disciplined accounting and financing function; how to generate, read and analyze financial statements; and how to manage a 13-week cash flow. It will also help them understand the core components of and the differences between topics such as marketing and sales functions.
AGRA’s Head of Partnership Jennifer Baarn, who works in Africa and represents the diaspora by way the Caribbean nation of Suriname, manages the AGRA Africa’s premium Food Systems Forum. She says these trainings are key to helping entrepreneurs not only navigate their businesses but the entire agri-investment ecosystem in which they are trying to produce and distribute their food products.
Part of her job is to help AGRA stakeholders be they government agencies, multilateral institutions, non-governmental organizations and impact investment firms recognize that private enterprise encompasses a wide array of activities.
“When it comes to private sector, we often think about big multinationals and well-established retail chains. But in essence, everybody who puts their own capital and equity at risk is in the private sector, isn’t it?” she says. “So our small smallholder farmers, small traders and transporters - the middle men, small-skill processors or even vendors on the side of the road with their frying pans full of mandazi (fry bread).”
Investing for Immediate and Long-term Impact
Baarn’s colleague, Jean Jacque Muhinda, a Rwandan agricultural engineer and soil scientist who serves as AGRA’s East Africa regional head, says investments in areas like food production and distribution cancontribute to stabilizing regions even as they are facing internal conflicts.
“Some of these local conflicts emerge because of a lack of opportunity, such as a lack of employment opportunities for young people, a lack of resources and a lack of equity and inclusivity,” said Muhinda.
And while one country in a geographic region or one area within a country may be facing a food shortage, another country or region might have a food surplus. Investments in the right planning tools and last-mile delivery services can help to balance those scenarios. This month, for example, the news media has been reporting on famine in Somalia and parts of Uganda, but the United States Department of Agriculture reported that Ethiopia is now the second largest producer of wheat on the continent, after Egypt.
“I've been reflecting with my organization and my colleagues trying to understand really why we Africans and African countries, especially in East Africa, are affected by a conflict that's taking place 7,000 kilometers away,” said Muhinda, referring to a shortage in grain and wheat imports due to the conflict in Ukraine, one of the world’s largest wheat exporters. “This is a wake up call. In the next four or five years, Ethiopia can be self-sufficient in terms of wheat, rice and oil seed production. It also has the potential for feeding the rest of the countries in the region in a value chain where they have comparative advantage.”
All of these advances align with Renew Capital’s ambitious goal of promoting growth in small and medium enterprises across half of Africa’s 54 countries by 2027.
“With blended finance commitments in place to fund Renew Capital for the next seven years, the timing is right for the firm to make a big push forward,” Renew Capital co-founder and chief executive Matthew Davis said.
“We strongly believe Africa’s private sector is the future of the continent, and we are more committed to our mission to grow companies, build nations and leave a legacy than ever,” managing partner Laura Davis said.
– Don’t miss the upcoming Enhanced Accelerated Women Exec’s Training, to be facilitated in partnership with Renew Capital and AGRA October 17 to October 21.
Renew Capital is an Africa-focused impact investment firm that backs innovative companies with high-growth potential. Renew Capital manages investments made on behalf of the Renew Capital Angels, a global network of angel investors, foundations and family offices who seek financial returns and sustainable social impact. For the latest on investing in Africa, subscribe and follow us at our social links below.
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