Connecting Farmers to Markets in Africa Through Super Platforms

Smallholder farmers make up more than 60 percent of Africa’s population and produce approximately 85 percent of Africa’s agricultural output with rural non-farm households, including subsistence farmers.

Rural non-farm households live largely below the poverty line; those below the poverty line are largely in the rural non-farm sector. They produce a wide variety of labor-intensive goods and services, including improved housing, local furniture and a wide range of services.

The products of the rural non-farm sector are non-tradable, meaning that they are sold only within the rural community. Rural poverty must be reduced within this sector. Subsistence farmers obtain about half their income from non-farm sources so they and the rural landless are all counted as rural non-farm.

This is why super platforms have stepped in and are pushing the boundaries of financial inclusion around the world, creating millions of new jobs and stimulating trade, especially in rural markets.

These “platforms of platforms” are typically thought of as connecting customers and merchants, but as new Mercy Corps research in Africa shows, they are also connecting farmers to markets – potentially increasing farmers’ incomes by 50 percent or more.

To better understand super platforms’ transformative potential for digital markets in Africa, Mercy Corps’ AgriFin Accelerate (AFA) program inventoried models from around the world with a focus on agricultural markets and smallholders reviewed 11 digital marketplaces for agriculture, ranging from new and innovative players like Twiga Foods in Kenya to well-known giants like Taobao.

From the research,it emerged that digital platforms link the smallest of agricultural businesses to an expansive and ever-growing market of buyers, often bypassing middlemen and resulting in better prices for goods sold.

When they operate at scale, these platforms also greatly reduce transaction costs related to aggregating and moving goods and making payments. Reliable access to markets and income makes it easier for farmers to invest in productivity enhancements, from purchasing inputs and machinery to hiring additional laborers.

Converting farmers to digital marketplaces will require trust built on strong customer experience. Trust is a key driver for the success of any e-commerce platform that links buyers and sellers, particularly across the distances and risk factors of agriculture. While some platforms provide explicit guidelines to help users benefit from the platforms, others increase user trust by enhancing quality checks and providing safe payment methods.

Farmer-centric research in Kenya showed that, while farmers quickly grasped the potential of expanded digital markets to help them find buyers and sell more at higher prices, they also need market insights and reliability from the platform to make decisions on what to grow and when to sell. At least in the early stages of growth, farmers will require some level of human touch-points and high-quality information to make the jump to the digital marketplace.

So what needs to happen for models to grow and scale in Africa? As Africa’s population doubles by 2050 and the demand for food and rural jobs escalates, the transformative power of super platforms becomes a strategic imperative. Growth has been foreseen from mobile money giants with strong rural coverage and from ubiquitous internet players like WhatsApp, as long as meaningful farmer engagement takes place and relevant products are on offer.

Advances from Africa-native companies in e-logistics and data-smart agribusiness will also be important as we look forward to the transformation of agriculture driven by innovative business models and digital technology.