AgricTech

Solving food price inflation in sub-Saharan Africa: How technology solutions can intervene

Solving the challenge of food price inflation in sub-Saharan Africa: How technology can solve some of these challenges - Startup Lagos

Growing food crisis in sub-Saharan Africa

Sub-Saharan Africa is struggling heavily under the burden of food price inflation. Particularly in the wake of the COVID-19 pandemic and its devastation of global food supply chains, distinct parts of sub-Saharan Africa have been plunged into a ravaging food crisis. In countries like Nigeria, Niger, and Mali, the combined factors of insecurity and conflict, and the surge in the oil prices (especially for Nigeria) have contributed to worsening the deepening crises.

The situation globally is equally grim, with countries like Malaysia and Australia recording the highest year-on-year rise in food prices. Consumer price indexes (CPI) of various countries have hit all-time highs during this period, as many countries are still reeling in the wake of the pandemic’s effects. In Nigeria, the Nigeria Bureau of Statistics (NBS) reports that the country’s CPI increased to 431.80 points in March from over 424.40 points in February this year. To put this rise in a greater context, the country’s CPI averages about 124.61 points across a 27-year period, from 1995 until 2022. This marked increase had been spurred by the debilitating effects of the hike in the price of diesel and fuel, as well as the growing challenges that, points of the agricultural supply chain in the country, face in getting food across to the final consumer.

South Africa as well has not been spared the scourge, with the drought that had begun in February, and the weak Rand, have connived to set many consumers at the mercy of the crises. The drought within the country is set to plow down over 29 percent of food production within the country. The country is, however, keen on resorting to imports to buoy up its dwindling food availability to match consumer demand. Droughts in Kenya, Somalia, and Ethiopia as well are worsening the food crisis at the continent’s horn, with more than 15 million people estimated to be gravely affected. In Angola as well, food inflation has peaked at over 30 percent.

Food is an essential commodity. In order to meet the growing necessity of food, many African countries south of the Sahara have had to rely on food imports, with a majority of these as prepared foods, dairy, poultry, and vegetables.

Across the continent, food inflation prices, ended a period of stability during the pandemic, rising from 9 percent to over 11 percent in October last year. Food inflation, according to the International Monetary Fund, is contributing to and outpacing the overall consumer price inflation in sub-Saharan Africa.

Food inflation has consistently risen in the past few months, causing increases in the consumer price index across sub-Saharan African countries. Source: International Monetary Fund, 2021.
Food inflation has consistently risen in the past few months, causing increases in the consumer price index across sub-Saharan African countries. Source: International Monetary Fund, 2021.

Food price inflation: Enhancing collaboration across global value chains

As is seen in the foregoing, food price inflation on the continent has been linked to a number of factors. One significant factor is the disjointed agricultural supply chains in various countries in sub-Saharan Africa. The Food and Agriculture Organization (FAO) of the United Nations, estimated in 2011 that over 37 percent of food produced in sub-Saharan Africa is lost between production and consumption. For cereals, the estimate was the highest at 20.5 percent. In an even more stark perspective, over $4 billion is lost annually in sub-Saharan Africa, during the stages of post-harvest and distribution.

What this implies is that efficient supply chain systems can help address significantly some of the shortage of food, and increase stability. This is because efficient supply chains will help farmers to have ready off-takers for perishable produce, without having them suffer wastage. Also, with better transport infrastructure and logistics, the challenges that we see in getting food across with fewer hassles, and losses along the journey become heavily mitigated.

Against these challenges, the most effective way forward lies in collaboration across value chains. This is the rationale behind the African Continental Free Trade Agreement (AfCFTA) which intends to harness the full potential of the agri-food value chain in sub-Saharan Africa through agro-processing, intra-African trade, and collaboration across countries. However, implementation of the agreement is taking some time to gather steam and effectively broker positive changes.

Technology to drive changes

As the population of sub-Saharan Africa continues to peak past a billion, and real disposable incomes continue to decrease considerably, the ranks of the poor and hungry appear bound to widen. As such, in spite of the increasing progress being made across various sectors of African economies, through the power of technology, there are yet weighty challenges to be addressed bordering on food scarcity and hunger. Fintech particularly had drawn a bulk of investment into the region, dominating the tech space. A McKinsey and Co. research points to the potential of sub-Saharan Africa to increase and possibly triple its agricultural output, and hence, its contribution to economic growth across the countries.

Remarkably, a number of agrictech startups are visibly addressing these challenges from enhancing logistics and supply of agricultural products through technology-enabled platforms, to encouraging more farming involvement through wealth-creation for farmers. Just recently, Farmerline had raised over $12.9 million in pre-Series A funding to accelerate its growth and infrastructure to cater to more farmers and help them with increased access to high-quality production inputs. Other startups like Pricepally are revolutionizing the space through the balance of technology, data, and partnerships to enable easier access for Nigerian customers to food at fair prices. Yet some other startups like Aerobotics, founded in 2014, are leveraging AI solutions to provide intelligent solutions in drones and robotics, for fruit and tree farmers.

Without a doubt, technology can be deployed relevantly to solve many challenges along the food supply chain. Even in cases, where the post-harvest losses are inevitable, there is the opportunity of applying principles of conservation. In very innovative ways, startups can convert agro-waste to pulp that can be put into supplementing the paper industry in countries or even apply techniques in rechannelling this waste to biogas. Other technology solutions can look at points in the food supply chain, and find creative answers to easing the distribution of food across sub-Saharan Africa.

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