The Food and Agriculture Organization of the United Nations (FAO) recently launched an initiative to assess the impediments to scaling innovation and technology in food and agriculture (AgTech). This initiative aims to identify options to improve the enabling environment for AgTech-focused businesses. To carry out the assessment, FAO’s Markets and Trade Division (EST) collaborated with the Yield Lab Institute, developing a methodology applied in three East African countries: Kenya, Rwanda, and Uganda. The report was authored by David Paquette, Eric Ontieri, Brandon Day (The Yield Lab Institute), Josef Schmidhuber, and Mischa Tripoli (Food and Agriculture Organization of the United Nations).
The assessment ranked Kenya as the best-performing AgTech ecosystem among the three countries, with the highest scorecard rating of 68.6. However, the assessment revealed that the AgTech ecosystem in Kenya could be further strengthened by streamlining policies around start-ups and dedicating more resources to the AgTech space. Additionally, the limited market size in Kenya puts a heavy burden on start-ups’ ability to scale out of the marketplace and find business opportunities in neighboring ecosystems.
The assessment also highlighted the Rwandan ecosystem’s strengths, especially when weighted by GDP, with substantial financial resources from donor agencies, government funds, and traditional investors. The country ranked in the fourth quartile for venture capital and development flows to agriculture. Infrastructure was also a strong point, with the country ranking in the fourth quartile for efficiency in the clearance process, indicating the ease of conducting business across borders. However, while some view the lack of clear public policy and government involvement as a positive as they scale, it mostly favors well-resourced start-ups to the detriment of local Ugandan entrepreneurs. The assessment suggests that Uganda’s overall business environment needs further improvements to attract additional capital inflows into agriculture, step up production, and improve food security.
A significant trend across the region is the reliance on donor funding and grants in the early stages of growth by many AgTech start-ups. At the same time, traditional investors do not pay attention until later. Scalability is another significant trend, with many traditional investors and agro-industrials hesitating to invest in technologies in the ecosystems due to a lack of options to scale their businesses. The assessments highlight a range of public policies central to creating enabling environments for AgTech development. Some of these policies include strengthening digital infrastructure, such as broadband and mobile connectivity, including in rural areas; creating legal systems that enforce patents and intellectual property protection; adapting tax laws to provide incentives for the business development of AgTech start-ups; supporting universities to update and strengthen curricula on business, entrepreneurship, and technical skills to adopt and scale AgTech; and fostering private-public partnerships to create the infrastructure needed in rural areas to adopt and scale new agricultural technologies.
Read the complete report here.