African economies will have to leverage innovative technologies to ride the crest of agriculture which is standing on the edge of a second green revolution, according to a new report by PwC.
These are some of the highlights of PwC’s latest Africa Agribusinesses Insights Survey 2016 that says that this revolution will entail fundamental shifts in how the agricultural sector implements innovative technology to improve output in a sustainable manner and address the need for greater food security globally.
[quote font=”georgia” font_size=”22″ font_style=”italic” align=”left” arrow=”yes”]“It is predicted that technological innovation will act as a catalyst in lifting agribusiness to the next level in Africa. The winners will be those agribusinesses that seize the opportunity to create new opportunities through technology, they will be able to reach their strategic goals faster and more efficiently”, the PWC reports says.[/quote]Frans Weilbach, Agribusiness Industry Leader for PwC Africa identifies that “there is a second green revolution underway. There is a desperate need for food security and therefore higher agricultural output without compromising resources in the process.”
He says that “innovative technology and advancements in productivity are becoming increasingly important as pressure mounts on food systems. The global population is growing rapidly and the climate is ever-changing”.
For him, “agribusinesses are making changes to go high-tech. From data-gathering drones to artificial intelligence farming, technology is making the agricultural sector more precise and efficient as agribusinesses push for increased profits.”
The survey reveals that the agricultural sector is regarded as one of the most critical industries for the African continent due to economic potential and is projected to become a $1trillion industry in sub-Saharan Africa (SSA) by 2030.
More than half (58.8%) of survey respondents consider investment in Africa as an opportunity for their businesses to expand. The top four countries they are planning to invest in are Zambia, Botswana, Tanzania and South Africa.
PwC says the Agribusinesses Insights Survey 2016 was carried out among a group of African agribusinesses that are mainly focused on delivering agricultural and related services to primary producers.
The survey focuses on the strategic challenges that agribusiness leaders face in their businesses, while on the other hand it highlights areas where technological innovation is already taking place and where it can make a difference in the future. In addition, the survey provides viewpoints on the agricultural sector in Nigeria and Kenya.
Survey respondents, however are less optimistic about revenue growth over the next 12 months compared with their expectations a year ago. The majority of agribusinesses (46.2%) are expecting revenue growth of between 0-5%, and 26.9% of businesses expect it to be between 6-10%.
The survey also reports that the biggest challenges to business growth cited by business leaders were access to technology, the scarcity of natural resources and supply-side uncertainties.
Rasheed Rahji, PwC Partner in Nigeria, says: “Agriculture contributed 24.18% to real GDP in Nigeria in Q4 2015. This is mainly due to mechanized farming and to other activities in the agribusiness value chain.
Rasheed however notes that a number of challenges in the agricultural sector remain to be addressed. These he says include “inadequate infrastructure, access to credit, and the training and education of smallholder farmers in modern farming techniques. Adequate focus on these matters would certainly assist in improving Nigeria’s food security, grow its GDP and increase its foreign earnings.”
Furthermore, the survey suggests that increased pressure on the profitability of farming and agricultural business activities is forcing the agricultural sector to be an early adopter of new technologies in order that it may improve the productivity and profitability of the sector.
According to PwC, survey respondents noted the availability of real-time data as the biggest opportunity for technological innovation. In addition drones are fast becoming a real green-tech tool.
It also says that global research shows that artificial intelligence (AI) farming will be the main enabling factor in increasing the world’s agricultural production capacity to meet the demands of the growing population.
This goes hand in hand with precision farming and other technology trends. The majority of survey respondents (76.5%) agree that AI farming will make a major contribution to increasing capacity in Africa over the next ten years.
Only 47% of businesses had already invested or plan to invest in the development of AI farming capabilities for primary production. This could be due to the cost of implementation, which was noted as the biggest restriction to the use of AI farming capabilities (64.7%), according to PwC.
“It is predicted that technological innovation will act as a catalyst in lifting agribusiness to the next level in Africa. The winners will be those agribusinesses that seize the opportunity to create new opportunities through technology, they will be able to reach their strategic goals faster and more efficiently”, the PWC reports says.