Towards a Digital One-Stop-Shop for African Producers?

Abstract

The rapid spread of the mobile phone across Africa has stimulated a large number of digital services targeted at small-scale producers. More ecently, such services are increasingly being bundled and offered via integrated digital agricultural platforms. These platforms bring together individuals and organizations to innovate or interact, with the potential for nonlinear increases in utility and value. Most digital agricultural platform companies in Africa were created by tech entrepreneurs, without a strategic partner on board to provide capital, data or clients. Many of them have received technical and financial support from development institutions, non-governmental organisations and impact-investors.

Digital agricultural platform providers are faced with a number of strategic decisions when seeking to scale their operations. The business model needs to be based on a realistic assessment of potential benefits a platform could grant to its users and how the services can be monetized (e.g., via transaction-fees, access-fees, fees for additional services, special fee arrangements for service providers and advertisers). Moreover, there is the need to solve the chicken-and-egg problem, namely the strategic decision which user-group to attract first on the platform. Additionally, the platform companies need to develop a funding strategy in line with projected establishment costs and working capital needs. This policy brief offers insights on how digital agricultural platform companies in Africa are coping with these strategic challenges.