At its most basic level, venture capital involves investing in companies that create value by solving problems. VC’s often search for companies addressing sectors of the economy that are full of problems — and therefore ripe for disruption. Solutions that effectively alleviate these problems have the potential to spread like wildfire and deliver the rapid, massive scale needed to generate venture-level returns.
From this perspective, Africa’s agriculture industry should be ripe for disruption — and therefore an attractive market for VC investment. Due to a host of problems, Sub-Saharan Africa’s agriculture industry is significantly less productive than the rest of the world.
In addition to the industry’s general dysfunction, several other factors suggest Sub-Saharan African agribusinesses are poised for growth:
a) A young, rapidly growing population [median age of 19 years is the youngest region on earth; 2.5% population growth is the fastest¹]
b) Increased connectivity due to the proliferation of internet and cell coverage [72 cell phone subscriptions per 100 people in 2017 vs. 23 in 2007; 22% of the population using internet in 2017 vs. 3% in 2007¹]
c) The world’s growing need for calories and protein
d) Africa’s 60% share of the world’s remaining uncultivated, arable land²
Taken together, it’s not surprising that several emerging market VC’s have homed in on Africa’s agriculture industry. Indeed, private capital has flocked to the space recently
