Pioneering forms of agritech have long been touted as a way to help farmers in Africa tackle efficiency and productivity challenges, improving crop yields, storage and transportation, as well as connecting them to buyers. At the same time, the penetration of agricultural insurance – vital for supporting food security – remains low across the continent. Jenny Messenger looks at how innovative solutions can help farmers meet challenges old and new.


This year, the rain came early in Ethiopia. When that happens, farmers don’t have long to react.

“It speeds up the land preparation, the planting, everything,” says Alazar Michael, co-founder of an Addis Ababa-based agritech startup. It can trigger a rush on machinery, seed and fertiliser, affecting what can and can’t be planted.

Untimely rain during the harvest season also causes a spike in demand for vehicles, because farmers have to gather and store their crops immediately. And sometimes, the rain is late. “Last year, we experienced a longer dry season and a small planting window,” he says. The land was so dry that ploughs struggled to break through the soil.

Michael’s company, Hello Erf, was set up to help smooth the workings of an industry fraught with risk and uncertainty – and becoming even more unpredictable due to climate change – by connecting farmers to service providers who rent out machinery like tractors or combine harvesters.

Previously, smallholder farmers, who typically work on just a few hectares of land, would have had to travel to the nearest city to contact an equipment rental company or broker and arrange a slot. “In the meantime, if that mechanisation service provider gets a better deal, they may decline the request and reschedule,” Michael says.

Farmers access Hello Erf by telephoning a call centre, booking machines via the mobile app or contacting an extension agent – a representative employed by the Ethiopian government to help increase agricultural productivity – who registers their request and passes it on to the company.

The mobile app also helps service providers manage the ebb and flow of requests, enabling them to handle bookings and track the status of their machinery.

Farming equipment like tractors and combine harvesters is retrofitted with tracking devices that communicate with the Hello Erf web platform.

“During peak planting season, tractors are in high demand. Once everything is planted, no one is looking for tractors in that area. Planting will start elsewhere, so we can optimise efficiency by relocating them,” Michael says.

The inherent risks associated with agriculture are particularly severe across the African continent, where farming is crucial for local economies. According to the Food and Agricultural Organization of the UN (FAO), the agriculture sector totals 17% of Sub-Saharan Africa’s GDP.

Yet in 2022, 322 million Africans faced severe food insecurity, the FAO says, and efforts to eradicate hunger are being hindered by poverty, climate change and conflict.

While farmers have developed ways of managing the risks of bad weather, disease, pests and volatile market prices by using strategies like staggered planting or growing a mix of different crops, climate change is putting further stress on the system.

African countries will be disproportionately affected by climate change, with the UN’s Intergovernmental Panel on Climate Change expecting the continent to heat up 1.5 times faster than the global average.

According to the International Water Management Institute, 95% of farmed land in Sub-Saharan Africa is rainfed – making the sector acutely vulnerable to natural disasters such as drought.

Existing poverty means that catastrophes like crop failure can be tough or even impossible for smallholder farmers to recover from.


Eye in the sky

Hello Erf is one of numerous organisations dotted across Africa that are aiming to use agritech to help increase farmers’ resilience.

Agritech, defined by California-based think tank the Milken Institute as “the use of emerging technologies to help farmers become more efficient and profitable”, can be directed at any part of the agricultural value chain, be it increasing crop yield, reducing post-harvest loss, expanding farmers’ connections to buyers or finance, or improving storage and transportation.

Other agritech initiatives on the continent include FarmCommander in South Africa, an app that combines soil temperature and moisture level monitoring with weather forecasts so that it can open irrigation valves when crops need watering. Another is Esoko, a Ghana-based platform that connects farmers via SMS to market information such as current commodity prices, and other data like weather forecasts and best agronomic practices.

Elsewhere, Ugandan firm Karpolax has developed a form of nanotechnology that inhibits the activity of enzymes responsible for ripening in fruit and extends the shelf life of produce by more than a month.

South Africa-based company Aerobotics is a precision farming tool, providing satellite data alongside high-resolution aerial imagery gathered by drones to growers of perennial fruit and nut crops and agri stakeholders. Users can also upload mobile phone photos to help track performance metrics.

Jessica Davies, Aerobotics’ head of marketing, says the company uses computer vision – a type of artificial intelligence that enables computers to draw information from images and make recommendations – “to provide an array of performance metrics to fruit and nut growers, to help them or agri stakeholders make more informed decisions”.

Users can identify crops that have nutrient deficiencies, pests, disease or irrigation issues, check for tree gaps and monitor yields, allowing them to adjust irrigation and fertiliser strategies accordingly.

For example, drone imagery can show the health and vigour of trees and crops, picking up the reflection that bounces back from the leaves and giving an indication of healthy leaf tissue, Davies says.

The platform gives a tree density calculation, which tells farmers how many trees there are in a given plot of land, as well as how many are producing fruit. It also gives an indication of how different blocks of crops are performing relative to one another.

“We can isolate the individual tree canopies to give individual per-tree metrics, so you can see it at a very granular level,” Davies says.


Insuring the uninsurable?

As well as being useful for growers and stakeholders, this type of information is invaluable for the provision of insurance – another vital means of creating resilience, offering farmers a safety net and reducing their vulnerability to climate change as well as bolstering investment in the sector and improving access to credit.

Having started out selling data to insurance companies, Aerobotics is now able to offer precision crop insurance, Davies explains, but adds that this is mainly for the US, where the industry is heavily subsidised and far more developed than in African markets.

Swiss Re valued the global agricultural insurance market at US$46bn in 2020 – with Africa representing less than 0.7% of that figure – and expects it to reach US$80bn by 2030.

Insurance penetration among smallholder farmers on the African continent remains extremely low. A 2021 paper published in the journal Environment and Development Economics estimated that just 3.5% of smallholder farmers in Africa were insured in 2020.

A gap persists between big commercial producers and small-scale growers, explains Ebbe Rabie, head of specialty at broker Price Forbes, based in South Africa’s Western Cape.

Barriers to take-up include a lack of awareness about the benefits of insurance among farmers and a dearth of affordable and sufficiently flexible products.

David Laborde, director of the agrifood economics division at the FAO, notes that crop insurance has historically been challenging because “there are very few countries in the world where farmers want to buy insurance, if it isn’t subsidised or blended with other services”.

Private insurers also tend to avoid covering perils that could involve moral hazard – the risk that an insured might provide misleading information about, for example, the number of trees that have been planted.

“What they don’t want is the grower claiming for all 100 acres, but actually they only had 80 planted,” Davies says. “For example, the claims adjuster could go through an orchard and say, there’s quite a few missing trees and it doesn’t look like it’s as planted as you said it is, so we’re not going to pay out 100% of the claim, we’re going to pay out 90%.”

According to Rabie, access to more precise information sidesteps the problem: “If you have real-time data, and satellite data, then you’ve taken away moral hazard.”

Use of this data can also be a way for financial institutions to manage credit risk.

“In South Africa, one of our early financial services clients was Nedbank. They have a couple of export credit facilities, and part of their credit risk processes is having a collateral manager go out and view the crops and double check that the farms have the trees to support the amount of nuts they have agreed to sell,” Davies says.

Ways of increasing uptake of insurance include public-private partnerships, government subsidies, making crop insurance compulsory and collaborations between input suppliers and insurers.

But one crucial innovation in recent years has been the use of better quality weather and crop data to offer parametric insurance, also known as index-based insurance, which combines scientific and financial innovation with technology to offer a solution for businesses like agriculture that are hard to insure.

“It goes back to the Pareto principle where 20% of the producers are producing 80% of the crops. The vast majority of people who are producing crops around the country are small scale and virtually uninsurable. To get to those clients, you either have to do it in bulk format, or in parametrics,” Rabie says.

The most common agricultural insurance products like named-peril and multi-peril crop insurance pay out the value of an actual loss suffered – such as the cost of a crop being destroyed by drought.

By contrast, a parametric policy automatically pays out if a trigger event happens – such as a heatwave over a certain period of time.

Though the concept of parametric insurance in developed economies worldwide is not new, its use across Africa has been less common – but this is changing.

In a report from August this year, the World Economic Forum (WEF) says the product has the potential to be a “game-changer” in mitigating disaster risk.

Madagascar and Malawi received payouts after experiencing severe droughts in 2020 and 2021/22 respectively, paying out almost US$25mn in claims, WEF notes.

“When you look at some of the most vulnerable countries and those that are most affected by climate change, despite not causing it, the base of their economic pyramid is smallholder farmers. This is a sector that will never be penetrated by indemnity insurance,” says Raveem Ismail, head of parametric underwriting at Africa Specialty Risks.

“The claims infrastructure required to assess and pay claims cannot be supported by the premium volume, or the premium quantum, which means that this is a problem almost made for parametric,” he adds.

And according to a May 2023 report from the African Insurance Organisation, an index-based scheme supported by the Kenya government has paid out more than US$10mn in claims since it began in 2015.

The Kenya Livestock Insurance Programme, which is also backed by the World Bank, Swiss Re and local insurers, has seen the number of policyholders jump from 5,000 in 2015/16 to more than 18,000 in 2019/20.

The programme uses satellite imagery and other data “to assess vegetation cover and predict the likelihood of drought-related livestock losses in specific areas”, paying out when a drought event significantly reduces vegetation.

In South Africa, Rabie says Price Forbes has been looking into more parametric-based options, adding that the current El Niño cycle has meant “the chance of getting capacity from the reinsurers for multiperil drought cover is becoming more and more restricted, so we have to start thinking outside the box and looking at other types of products”.

“We’ve been working with a company called Agnovate, where we’re looking more at soil moisture index insurance. This is new to the market and is taking off quite a bit,” Rabie says. “Farmers can put their geolocation in and see what the correlation is between their soil moisture and the crop yields.”

Producers can see what the deviation is for soil moisture historically in a given area over a specified time period, and what the insured losses were. “The farmer can sit on his computer and put his own parameters in. He can request the binding quote, and within seconds, he’s got something he can work with,” Rabie says.

As Ismail points out, parametric cover “does not make the uninsurable insurable”, but it has the potential to be used on a much larger scale in the future.

Hello Erf’s Michael is also confident that better data will lead to greater insurance take-up.

“If we use machine learning or big data analytics and raise awareness to convince farmers to pay for insurance premiums, I am optimistic that there is huge potential for both the insurance companies and farmers,” Michael says.