No user image
Monica_55905 Oct 13

Solutions for small-scale farmers in rural Africa

Solutions for small-scale farmers in rural Africa image
The following article is a transcribed extract from the aef2.0 digital broadcast “Women, Energy and Agriculture”
This session featured Habiba Ali (Sosai Renewable Energies Company) as the moderator, with panellists Mbali Nwoko (Green Terrace), Rita Nkuhlu (Siemens), Femi Akinrebiyo (IFC Powering Agriculture) and Amer Barghouth (RTI).

A central discussion point was how to find solutions to some of the challenges farmers like Mbali face every day in Africa. Mbali Nwoko is the CEO of Green Terrace, a primary producing agricultural farm (mainly farming vegetables) based in Johannesburg, South Africa.

Mbali Nwoko: As a farmer who relies primarily on the national power grid that our government supplies, which is really unstable at the moment in South Africa, I’m constantly trying to find ways to continue business without having any interruptions in my production. Solar and the introduction of different forms of energy is very welcome. So I’m curious to find out what innovations and technologies are available for mid-scale and small-scale farmers which, in Africa, are considered to the majority. What are these organizations looking to do and change, from an energy or solar energy perspective on policymaking, on the different pricing model so that small-scale farmers can adopt solar technology to irrigate their farms, and put up cold room facilities to ensure the longevity or shelf life of their vegetable crops? As well as being able to just keep the farm working from a production perspective, how can we find innovative ways to save money in light of all the workers that stay on the farm and who we accommodate. And they use up electricity. So what are the different solutions and interventions?

Habiba: Thank you so much, Mbali. We’ll go onto Mr. Femi Akinrebiyo, who is the global manager for upstream manufacturing, agribusiness, and services for IFC power and agriculture.

Femi Akinrebiyo: The need for agriculture is actually increasing on a daily basis. The world population is growing, and the land we have is not expanding. What we have is finite, and we have to find a way to be efficient with it. And the challenge of COVID-19 actually has increased the burden on the world. In many parts of the world where the bulk of the food that we eat on a daily basis is generated, you don’t even have access to electricity. And how can you be fully productive if you don’t have access to electricity? On the IFC side, we’re looking for solutions that look at technology, energy and innovations that would come packaged together to help farmers.

We’re not only looking at big-time farmers. We’re looking at smallholder farmers too. Because if you look around the world today, especially in Africa, the majority of the food that is coming to the market is produced by smallholder farmers, not even on Mbali’s scale, who owns maybe about 20 hectares. We’re talking about farmers that ownless than one hectare of farmland. We’re thinking about solutions that tackle the traditional financing need everybody is used to, going beyond that and finding solutions that are creative for people who don’t have access to traditional finance.
So we’re thinking about crop receipts. How would a farmer get money for the produce that is yet to come? Because when you plant a crop, it takes time for it to germinate, to mature, so it can go to market. You need money all this while, and you can’t go to a bank to get it. We can have a structure whereby you get money on the expectation that you’re going to plant a crop, and the crop is going to be produced, and then you can sell it in the market. But with that there is a risk. We cannot remove this risk unless we find access to energy and finance, couple them with innovative technology and solutions, and then ensure farmers have access to these in the form of leasing, micro-insurance, micro-credit, and using financial intermediaries to get access to funding.

Habiba: Thank you, Femi. Rita - to give us a response to Mbali, with also some perspective towards empowering women in rural communities, what do you have to say about this?

Rita Nkuhlu: Thank you, Habiba. Mbali’s case is a very interesting one. It’s one that drops right into the Siemens’ portfolio. It’s not a new case for us - we’re very much “in Africa, for Africa,” which means we’re looking at Africa’s needs. In the case of Mbali we have a very similar example in Ethiopia, wherein a small village called Sodo we installed a PV solution for energy for a farmer employing a hundred employees. And Mbali’s plight is theirs: water, electricity, these are all issues she faces.

We have installed a solution for PV - a hybrid micro-grid system. A farmer must be able to use electricity efficiently. To do this efficiently and cost-effectively are two different storylines. And one of the main things that affects a return on investment is that you keep production costs as low as possible, input costs like electricity. We are able to do that with our technology in terms of regulating when electricity is drawn out of which source, hence the hybrid system.

If you consider the main purpose of a micro-system, it’s that it gives you energy. And that energy has to really matter. And what matters is not only the crop, but also the surrounding community. In the Ethiopia case, the school that was in the immediate vicinity who also did not have electricity now has electricity.300 kids going to school can now access resources that were previously not able to. So it goes beyond, and that’s what we look for. We look beyond just the farm, but also at society around it, employment, as well as then energy provision to society itself. And we have made this real.

So we are very interested in being in contact with Mbali to talk about a solution with her.

Habiba: Agreed, Rita, enhancing the access to vital agricultural inputs that require intensive use of energy is key. Another great need Mbali has is a reliable water supply, and all the inputs that she needs to make sure that her farm runs properly, with a major concern being the cost of doing that. Amer, do you think you can add to this from your experience to help Mbali?

Amer Barghouth: Thank you. The good news is that there are commercially available solutions right now for small farm holders, and those solutions are ready to be scaled up. The supply chains are in place for the production of these systems. There are companies both internationally and locally trying to sell these solutions. In fact, one of the projects we support is the Power Africa Off-Grid Project, where over the past six months we’ve been doing research on what the renewable energy off-grid solutions are that are available to farmers in Africa.

We’re talking about dozens of solutions for solar pumping, cooling solutions, agro-processing, food driers, livestock, eco-cultural solutions, and solar sprayers. So we’re spanning a lot of the agriculture activities that farmers are involved in. Unfortunately, there is no matching between the international and local suppliers, and then between the local suppliers and the farmers that need these solutions, which increases the customer acquisition cost and makes it prohibitively expensive for small farmers.
 
A lot of farmers, especially women, do not have access to assets that would allow them to finance these solutions. There are three trends that we’ve seen that address these challenges. The first one is the challenge on customer acquisition matching end users with technology providers. Data in the past five to six years has advanced so much that now, without investing significant sums of money, we are able through these technologies to identify the best areas for the best solutions.

So if we are looking at a solar pump, we are able to look at the communities where they are located, finding the appropriate solution for this area. This helps the matching, making it a lot easier for an international vendor or local supplier to target their marketing and outreach efforts on the communities where their solution is most appropriate.

The other trend we are very excited about is the gender lens investing angle. We’ve seen a lot of impact investors committing to spending a lot more money in loan and equity contributions to companies that empower women. The third kind of trend that we see is the emergence of pay-go technologies of mobile payments. Because, all of a sudden now companies can offer instalment plans, and financing solutions, and have systems in place to collect this money without spending significant sums of money on collection and billing.

So the combination of these three trends - more data, gender lens investment and pay-go technologies will revolutionize over the next five years the marketplace for renewable-energy-powered agricultural solutions.