Africa can become a global player in food value chains with the use of technology

A conversation with Mateja Dermastia on African agriculture

East Africa is one of the most underestimated sources of healthy food and ingredients, says Mateja Dermastia, who works to bring more transparency in African agricultural value chains. Namely, the huge potential of African agriculture remains untapped.

According to the African Development Bank Group, Africa’s agribusiness sector is predicted to reach US$1 trillion by 2030 and will represent one of the foundations of African economies. (Adobe Stock Photo)

Many experts have highlighted the enormous potential of African agriculture, which can feed not only the continent’s population, but the entire world. Mateja Dermastia, who runs Anteja, a sustainability consultancy, and who two years ago founded Anteja Africa in the Kenyan capital Nairobi, agrees that Africa could become a global player in specific food chains. The Kenyan firm operates mainly in East Africa, where it supports the development of sustainable value chains and helps agribusiness companies market their products. To this end, they have developed phy2app, a product transparency web application, through which customers can check the quality and origin of their food. In the interview, she told us that African agriculture is much more transparent than one might expect and that its great advantage is soil, extremely rich in organic ingredients and to a high extent unpolluted. She believes that African companies need to succeed in the regional market first in order to be able to export to global markets, and that a lot of training and innovation will be needed. She points out that Europe has no longer much time to forge closer business links with Africa, given China’s growing influence.

Anteja, your sustainability consultancy,  has been operating for more than 15 years, while Anteja Africa was founded two years ago. Africa is not yet associated with sustainable development, though it is often referred to as the continent of opportunity. Why have you decided to do business in Africa?

Mateja Dermastia leads Anteja since 2005. In the last decade she is active in Africa, where she engages in African agribusiness. (Photo: personal archive)

I have worked in Africa since 2007 together with my professor from Harvard University Calestous Juma, focusing on African agriculture and innovation. In 2011, we published a book called Innovation in agriculture. In 2015, I returned to Africa as a consultant and became involved in the development of agricultural value chains through The World Bank Group. I found that African agricultural value chains are much more sustainable than we think. East African countries (Tanzania, Uganda, Kenya, Rwanda and also Ethiopia) have proved to have the last reservoirs of pure organic soil, never treated with pesticides or fungicides. The crops grow faster than in Europe and they harvest three times a year. African agriculture workers have a sense for social responsibility and environmental sustainability: they give their earnings back to their communities, support their children’s education, and strive to preserve forests.

You are primarily focused on transparency in value chains. Can you explain what value chains are?

Value chains are a useful term, although often confused with supply chains. While supply chains mostly focus on material flows, transport and logistics, value chains refer to all activities from the production of raw materials, flow of information, materials and money, to final product. They include research, development activities, certification etc. Transparency in value chains means knowing what is happening in the value chains and communicating that information to buyers, end consumers or governments (as regulators). The concepts of transparency and traceability can be also confused. The latter means that I know how something is moving in the chain, whereas transparency means that I am aware of the value chain risks and that I am willing to share that information.

Anteja Africa was founded at the beginning of the pandemic. How did it affect the start-up and operations?

When the pandemic broke out, the Europeans started working remotely with Africa. From March to September 2020, Kenyan economy came to a standstill and huge quantities of food rotted. As the air transport stopped, the produce didn’t reach Europe, resulting in disaster for Africa. As we already work remotely, we didn’t feel the effects of the pandemic and were able to develop our phy2app in February 2020.

What are the most common obstacles faced by foreign companies operating in Africa?

Staffing. Although Africa invests a lot into education, finding the right employees is the basic problem. Also, balancing different work approaches and work habits takes more time and flexibility.

Who are the owners of the companies you work with? Are they private, family-owned, village-owned?

Anteja Africa partners with the Rwandan agribusiness Cyato Tea, a producer of organic tea. It was established in 2015 and it employs 3000 people. (Photo courtesy: Denyse Uwera)

We don’t work directly with farmers but with agribusiness companies. These buy produce from farmers or have their own plantations. The African agribusiness is generating a new wave of entrepreneurs. Many Kenyans and Ugandans finished their agriculture and management studies in Europe and started their own agribusiness companies. They work in farming, production, finding markets and building value chains. We work with these companies and with trained entrepreneurs, who understand the markets. The agribusiness companies own their own farms (bought or leased) and pay their employees regular salaries, which is important for the African economies. By selling the surplus on the market, smallholder farmers can cover the education costs for their children and plan their lives. This is an important transformation we’re witnessing. Agribusinesses have made huge efforts to set up this system.

Women empowerment is recently highlighted in Africa, since African women still play a subordinate role in most African countries. What is the representation of women in these companies?

The companies we work with strive to support women in being financially independent. They train them and offer entrepreneurship opportunities. Women in Africa are very entrepreneurial. In rural areas, however, still a lot needs to be done.

How do you collaborate with other companies in technology and agriculture sectors? How do you work with authorities?

We have excellent partnerships with many international companies. For example, we collaborate with ProFound, a Dutch consultancy company, who also develops sustainable value chains for natural ingredients for food, cosmetics and health and works closely with African smallholder farmers to ensure food quality and security. Most recently, we have gained new contacts through Startup Africa Roadtrip, an Italian startup programme that develops new African technology companies. We have set up communication channels with regulators and business associations involved in transparency and quality assurance.

Your company has developed phy2app, a digital solution for product transparency in agricultural value chains. How does it work and who is it for? Is it targeting particularly East African market or is East Africa a good initial point for a global expansion?

The web application phy2app is developed for buyers and consumers to learn about products’ transparency. (Photo: Anteja)

In Africa, there are many technology solutions, which are too complex for our target group (agribusiness companies). phy2app is a user-friendly web application that enables product transparency by providing 4 key areas of sustainability information to consumers or buyers: general product information, production information, social and environmental impacts. Providing detailed product information was still revolutionary three years ago, but in the midst of the pandemic, it has become extremely popular. Through phy2app, an African company – either with a few dozen or more than a hundred employees – can present its products to African or European markets. In light of due diligence legislations, companies will be able to show clearly how their value chains are organised and where does the products come from. Due diligence legislation will oblige companies to reveal product sustainability information and value chain risks. phy2app enables African companies to be completely transparent. By scanning phy2app’s QR code, buyers will be able to get all the information about a product, which cost a lot in the past. Current African phy2app users have successfully developed new markets and increased sales because they were able to demonstrate their product’s transparency. Although there is still a lot of capacity building to be done to develop the market, the results are very positive. We are currently looking for investments to develop our phy2app further.

Africa is more associated with corruption than transparency. How transparent are African value chains compared to the West? What strategies should African companies use to penetrate African, European or global markets?

With the use of modern technology approaches, a Kenyan or a Ugandan company can very quickly increase their presence and penetrate Western markets with shortage of natural ingredients. However, Africa needs to develop its regional markets first.

You emphasise the increasing consumer demand for transparency. What does transparency mean in the environment in which you operate? What kind of transparency do African buyers demand?

African buyers do not demand the same level of transparency than the Western buyers, however, there are comparable demands coming from the African middle class, which is rapidly developing. Healthy food and production are increasingly important for Africans, especially in the pandemic.

Anteja Africa is headquartered in Kenya and it operates in other East African countries. You have also worked in other parts of Africa. Why did you choose Kenya and East Africa?

There’s an eternal spring in East Africa. (laughs) Nairobi is a multicultural city with a highly educated population and many international institutions to do business. Europeans are probably chasing the last train to build closer business relations with Africa, since China’s influence is getting stronger.

What are the biggest problems and obstacles for African agriculture compared to Western agriculture? What are some of the advantages of African agriculture on the global market?

It differs per region. In Uganda, the lack of road infrastructure is a big problem, which means that the entire production cycle needs to be set up differently. Generally speaking, the fragmentation of land is problematic and Africa’s regional markets are not developed. There is a lot of unnecessary government involvement and too many certificates. Training and education in agriculture is desperately needed. The Saudi Arabian and the United Arab Emirates’ markets prove to be a big opportunity for East Africa, since they export to Russia. Africa’s great advantage is its land, for which it can become a global food producer.

Pelere Group agribusiness is a producer of organic shea butter. It employs 850 farmers in the North of Uganda. (Photo: Anteja)

When we talk about agriculture in Africa, we cannot ignore land rights, which are very unclear and their regulation is incomparable to Europe. A major problem is inheritance, which is leading to increasing fragmentation of land and to lower productivity. How is politics addressing these pressing issues and what are the solutions?

African agriculture and processing industries need to rely on innovation, which can connect the fragmented estates. Marketing campaigns can link them to a regional market. In terms of increasing productivity, the West should understand how valuable is innovation in this part of the world. For example, genetically modified food was used by Europeans and Americans, but when it came to Africa, it was suddenly a problem because of Monsanto (the American producer of seeds and herbicides). Instead of processing ten times more maize at the equator, they stopped it all, not because the Africans wanted it that way, but because we told them to.

Africa has the most fertile land in the world, but its population in many areas is still undernourished and it imports a lot of food. How can Africa become more self-sufficient in terms of food? How can progressive solutions address the chronic food shortages in Africa?

We need to help them develop new markets and food value chains. By setting up marketing-oriented systems, they can increase income and buy healthy food. We need to move from humanitarian initiatives to marketing actions. People need to start producing food and sell their surpluses on the market. Entrepreneurship and new technologies can help advance agricultural and food production. Local businesses have started using natural ingredients for high added value products. This is a big step forward.

By 2030, Africa’s population is expected to grow by 500 million from around 1.2 billion today to 1.7 billion. What challenges do these demographic trends pose for African agriculture? How should we address the dilemma between food production for local populations and food production for export?

The biggest problem with population growth is urbanisation. Cities are growing extremely fast and urban systems are not made to support such influxes. However, there are systems in place to keep people in rural areas, including opportunities in agriculture. Agriculture needs to be presented as a lucrative, innovative business. Many projects aim to ensure food security in the cities. If they fail to make this shift, the situation will become unmanageable.

Rural areas are mostly inhabited by elderly people, while youth searches for “non existent” jobs in the cities, because agriculture is not attractive enough. Are agrifood technologies attractive enough for youth to stay in rural areas?

Technology is a good argument, but without a real promotion of the innovative aspect of agriculture and food production, the situation will remain the same. Companies we work with are trying to retain young people in rural areas by educating them, engaging them in value chains, and by promoting higher value-added food production. They also teach them management and leadership skills. In many rural areas there is no electricity or internet connection, unless you live nearby a bigger village.

One of your surveys in Rwanda showed that one of the farmers’ biggest challenges is the lack of adequate marketing platforms to drive sales. How are farmers and their products most often promoted in Africa?

Although advertising is mostly done by foreign multinationals, domestic brands are starting to emerge. We are encouraging them to develop their own brands and to make them recognised on the regional market first. Mostly specialty coffee and tea producers have started developing their own brands.

Africa’s agricultural exports are currently based on cocoa, coffee, tea and cotton. What are the trends and which African products would still be of interest to the global market?

These agricultural products are dominated by multinationals, together with floriculture. Fruits, vegetables and nuts, such as macadamia, avocado, mango, moringa, hazelnut, shea nut, can be reused for creating fertilisers, animal feed or other by-products, which means there is zero production loss. The circularity in the food sector is gaining importance. Sustainable and short value chains aren’t measured in kilometers, but in the number of value chain actors. A short value chain with few actors can be managed efficiently and the producer is able to earn a better living. A producer can share the income with its community, gets trained and produces better food. If we implement short value chains in Europe, we will not be able to get a great diversity of food ingredients. We can promote our regional markets, but there will always be ingredients that Europe will import from other continents.

Only with the use of modern technologies and methods will Africa be able to progress in agriculture. (Adobe Stock Photo)

There is only a fraction of food imports between African countries (a third comes from South Africa). How can trade between African countries be increased? Can the African Continental Free Trade Area (AfCFTA) solve this problem? What do you expect from the establishment of a common African market?

Undoubtedly, it is a giant step forward. South Africa exports to many countries, where it significantly contributes to increasing food security. Once the African certification system will be in order and goods will be transported without customs, the market will start to take off. That will require a growing standard of living and confidence in their own products. Although I believe that regional integration will precede continental integration. If they succeed, Africa faces a positive future: eradicating hunger and becoming a global player in specific food value chains.

The original article was published on 29th of November 2021 on the RTVSLO online portal.