Digital Platforms for Agriculture in SSA & Matchmaking for Transformation

OCTOBER 2020

About Make- IT & Mercy Corps AgriFin

The challenges in agriculture in Africa, particularly for smallholder farmers producing 80% of its food for consumption, are complex, and no single solution exists to reverse age-old issues around markets, infrastructure, poverty and exclusion. Lately, however, the effective application of digital technology has emerged as a catalytic tool in addressing such challenges.

Africa has seen an emergence of technology innovators, especially in fintech and agtech, which are beginning to break down the barriers in agriculture, including the delivery of financial services, inputs, mechanization, logistics, market access, business management and learning tools. These so-called technology innovators include companies across the continent that are building digital solutions to cover the wide range of obstacles farmers and agribusinesses are facing.

Fintechs and agtechs typically face major challenges in driving breakthrough solutions to scale and commercial viability. One pathway for innovators to gain traction in markets is to integrate technology into product and service offerings into digital platforms of mainstream banks, mobile network operators and other companies in order to improve their use and delivery to consumers.

Digital platforms, which facilitate commercial interactions between two or more parties can host multiple service providers, working to offer “end-to-end” services to drive transformation in agricultural markets and impact for SHFs, while decreasing risks and increasing revenue models for fintechs, agtechs and other market actors. Thus, digital platforms are evolving as strong drivers for viability in delivery and bundling of key services for agriculture as well as for scale up of young, breakthrough technology innovators, while cutting costs in marketing and tech development.

 

Source: Mercy Corps AgriFin

 

Make-IT in Africa identified the large potential for transformation through partnerships between digital platforms and Africa’s thriving technology innovators. By facilitating such partnerships, Make-IT aims at supporting, among others, agtech innovators in scaling their business. Within this framework, GIZ and Mercy Corps AgriFin are working together to foster the expansion of services and development of selected product bundles of key platform players in East and West Africa. Over the past five years, Mercy Corps AgriFin programs have worked with more than 130 partners both to build capacity of fintech and agtech innovators to scale and broker partnerships for them onto larger digital platforms.

In this article, we dive into the ongoing learning process on digital platforms for agriculture, with a focus on the core aspect of “matchmaking” to facilitate partnerships between large digital platforms hosted by commercial banks, mobile network operators, agribusiness and government and the innovators that can bring a host of critical services for farmers and food systems.

SUCCESS FACTORS

Early snapshots of this learning process have explored partnership challenges and success factors, also highlighting the role of matchmakers in overcoming challenges and facilitating successful partnerships.

Success factors platform and tech innovator partnerships can include:

  • Recognized mutual benefit to ground the relationship in the partners’ shared interests across the platform activities, including formal documentation of relative value propositions and aligned strategic interests across target markets, geographies and balance of roles and responsibilities.
  • Clear and transparent platform product and technical roadmaps that strategically meet SHF needs allow all parties to communicate their timelines and strategically sequence their partnership building to match their product development. Potential partners can quickly identify key relationships and work together towards a shared vision.
  • Building frameworks for light and rapid prototyping speeds up partnership building whilst sparing resources and getting a good sense of partnership feasibility and needs. At the same time, some larger platforms may require in-depth due diligence of a potential partner before full engagement, meaning sufficient time must be awarded at initial partnership stages to set the foundation for collaboration.
CHALLENGES

There are also significant challenges in these partnerships, which can range from imbalanced revenue sharing arrangements, building up critical dependencies and perceived loss of control of some aspects of the business.

The challenges can be grouped into engagement and process related challenges outlined below:

Challenges related to engagement terms

  • Mismatched revenue models make it difficult to practically bundle complementary products/services whilst creating value for both players. For example, revenue sharing requires joint efforts in closing sales whereas a purchase agreement would require less end-user sales for one counterpart.
  • Limited capacity to manage partnerships. If partners are not included in decision-making, progress on overall platform activities can be decelerated. This includes expanding to new geographies, on-boarding new features, or bundling in additional products. By creating processes and resources to actively engage partners in key decisions, platform owners can ensure their platform evolves in a cohesive and coordinated manner.

Process related challenges

  • Discordant timing can strain a platform’s capacity to onboard partners. Platforms may pursue promising partnerships whilst juggling a large number of immediate priorities, stretching their capacity to fully onboard new partners whilst concurrently hitting larger platform milestones and targets.
  • Need for high levels of trust in counterparts. Particularly in relation to data sharing that may be required between parties, high levels of trust are needed at initial partnership building stages. Protracted brokering processes can create uncertainty. Putting in place clear protocols and agreements can smoothen the path to improved collaboration.
  • Perceived skews of bargaining power can make tech innovators anxious about losing their decision-making power and affect partnership negotiations.
  • Upfront costs incurred by tech innovators when presenting their value propositions to established organizations can be a barrier to entry and risk some organisations are not able to take.

Source: giz

RECOMMENDATIONS

Given the business sensitivities in building platform and tech innovator partnerships, the role of neutral brokers or “matchmakers” can support the development of more successful partnerships through:

  • Aiding both sides to position their value proposition appropriately and develop a shared understanding of roles and responsibilities.
  • Prompting the difficult questions that clarify the terms of partnership. This includes topics such as revenue sharing models and data ownership structures. Matchmakers create open forums to iron out complexities and can help structure conversations around more sensitive topics.
  • Offering neutral judgment to even out bargaining power between platforms and innovators. Matchmakers leverage their impartiality to level out negotiations and promote fair discussions and partnership terms.
  • (re)Aligning interests: a critical role matchmakers can play is advance discussions around the mutual benefit and complementarity in partnership, rather than competition. Building trust and goodwill of all parties involved is a key outcome of matchmaking, building the foundation of partnership success.

This work will continue to bring more insights from platform and tech innovator specific deep dives, whose learnings culminate in a Digital Platform Blueprint Report later this year.

Please don’t hesitate to be in touch with your own experience, questions and recommendations to us!

 

 

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