Constellr, a German-based satellite data company, is offering land surface temperature (LST) data to African farmers to help them plan for better harvests and face climate change. 

What is LST, and why is it important?

Land surface temperature is a measurement of how hot to the touch the land is, and how safe it is for planting crops over time. An understanding of this data can protect farmers from severe losses and boost food production, Rosa Schmidt, marketing project manager for constellr, told TechCabal in an email.

In farming, temperatures are one of the primary determinants of plant growth and availability of produce. Instability or lack of understanding of the soil’s temperature impacts the outcome for farmers.

As farming depends primarily on rain, LST will become “instrumental in drought monitoring by pinpointing areas experiencing water stress. This early detection empowers farmers to proactively adapt strategies, whether by adjusting planting schedules or opting for drought-resistant crop varieties. Farmers can also promptly detect abnormal temperature patterns indicative of other types of crop stress (e.g., from diseases) and adapt their approaches to ensure healthier and more productive crops,” Schmidt explained.

Africa’s agriculture industry, despite its promise of a bright future, faces challenges such as “unequal access to resources, climate constraints, lacking infrastructure, technologies that are not equipped to handle varying economic and ecological situations, increasingly competitive markets, and low remuneration,” according to consulting firm Morgan Philips.

Constellr is expanding into Africa, starting with Morocco, South Africa, and Zimbabwe.

“With Africa poised for the highest population growth and impact of climate change but also being the continent with the highest potential for a jump in agriculture productivity, this [expansion] holds even greater significance,” Schmidt said. 

Data for everyone

In Africa where a significant percentage of farmers are uneducated, LST data is inaccessible to the average farmer, despite its merits of helping farmers plan their planting and harvest seasons better.

Only 15 out of 54 African countries have launched satellites into space and can gather EO data. Countries like Nigeria and Ghana have used these satellites to aid farming, but the data is usually expensive and hard to obtain. Smallholder farmers who need it the most, can’t access LST data.

As water scarcity concerns continue to stand in the way of achieving $1 trillion in revenue in the African agriculture industry, companies like constellr promise to make the data available and affordable to support a sustainable and more efficient farming ecosystem.

Constellr’s plan to make LST data available to more farmers, according to Schmidt, involves a four-pronged partnership approach with commercial companies, intergovernmental remote sensing institutions, space agencies, and NGOs. By working with the four partners, constellr will share the cost of accessibility across partners so that the end users, farmers, will get it at affordable rates. When asked about their pricing model, Schmidt said the company will provide locally contextualised rates across different countries.

By using local NGOs and intergovernmental institutions, data will be available to farmers in summarised bits over different farming seasons, and may go as far as being read on the radio and in local newspapers to make it more accessible. For a start, Schmidt confirmed that constellr has “a handful of projects and partners in Africa for whom our goal is generating positive environmental and economic impact”. These partners will be their starting point.

“We are concurrently exploring opportunities for our members to get quarterly payout as we recover funds from project partners that are owing us,” Temitope Omotolani, Crowdyvest CEO, told TechCabal in an email.” The company expects to recover around ₦2 billion from some of the businesses it funded within the next two years. Per the same internal document, those monies will be disbursed to investors by a registered asset manager. 

A significant part of debt—around ₦5.7 billion—will be converted to equity in Crowdyvest Management Limited, the company said. Customers who are owed will own 35% of the company. Converting the major part of the debt to company shares is a similar approach to Patricia, the crypto company that lost $2 million in customer assets. 

The company is also launching “Phoenix Fund,” a new investment vehicle to raise funds. 

Key Takeaways

• Crowdyvest owes 3,700 users N7.7 billion since 2021
• The company is proposing converting some of that debt to equity
• The company is also raising a new fund 

How did Crowdyvest get here?

Launched in 2019, Crowdyvest was a member of the EMFATO group alongside two other companies: Farmcrowdy and Treepz. It helped Farmcrowdy, an agritech business, raise money from retail investors who were promised up to 20% returns across several projects. Like many other agritech projects, Farmcrowdy cited the COVID-19 pandemic as a reason many partners could not repay those investments. 

When Crowdyvest left the EMFATO Group in March 2021, it took on the debts of Farmcrowdy. Since 2021, it has repeatedly assured investors it remains committed to repaying all debts; the company said it paid N18 billion between 2020 and 2023. 

“As a business, we’re dealing with the hard truths of what is lost, what is still redeemable and what can be done to completely solve this,” explained Omotolani. “We have come to the realization that our commitment to meeting our obligations to all stakeholders can only be legitimately fulfilled if we remain a viable and continually improving entity,” she added.

According to Wandile Sihlobo, an agriculture economist and author, technology has played a significant role in making South Africa’s agricultural sector the most advanced on the continent.  “South Africa has been able to make great strides in biological and mechanical engineering technologies, which has seen the country’s agriculture sector’s output more than doubled since 1994,” Sihlobo told TechCabal.

The importance of technology in the sector is reiterated by Amanda Chembezi, a member of the board of directors of the Center for Coordination of Agricultural Research and Development for Southern Africa (CARDESA). CARDESA seeks to coordinate and harmonise the implementation of agricultural research and development in the 16 member states, including South Africa.

“When we talk about food security in Southern Africa, technology is at the forefront of enabling us to increase our food sufficiency and our production levels as well the effectiveness by which we produce food,” Chembezi told TechCabal.

Despite the clear importance of technology to the agriculture sector, the sector is struggling to incorporate new technologies along its value chain. Numerous agritech startups in South Africa are building unique solutions  to accelerate the adoption of such technologies to boost the sector. These solutions aim to address the challenges, both in the production and distribution parts of the value chain, facing the country’s breadbasket sector.

Agritech startups boosting agriculture production

One of those startups is Tsehla Holdings, a startup specialising in hydroponic farming. Hydroponic farming refers to growing plants using a water-based nutrient solution rather than soil. Tsehla claims to help farmers use about 90% less water than conventional farming methods, a sell factor statistic in a country where water is classified as a scarce resource.

“Technologies like hydroponics help tackle adverse and unpredictable weather patterns which can lead to droughts. With such technologies, we can control our production, thus ensuring that whatever happens with the weather, at least the production of food continues to go on,” Roseline Mapuranga, founder of Tsehla, told TechCabal.

Mapuranga shared that the main challenge she faced was access to funding, as hydroponics is cash-intensive. She secured an investment from the Africa Trust Group which she used to refine the company’s go-to-market strategy. After that, she landed a supplier contract with one of South Africa’s leading retail chain stores. Tsehla is also an alumnus of the Grindstone X program, one of the country’s leading accelerators.

Another startup using newer technologies to boost production in South Africa’s agriculture sector is AgriLogiq. The startup, founded by Joel van der Schyff, enables farmers to optimise crop yield through a fully automated greenhouse management system. The system includes a cloud-based IP-intensive software platform to allow wireless and intelligent poly greenhouse automation.

“One of our key products is a ventilation system that gets you to 70% of the efficiency of a traditional closed greenhouse at 50% of the capex cost and 20% reduction of running costs. That helps to bring water and chemical usage, leading to a massive impact on a farmer’s bottom line,” van der Schyff told TechCabal.

Founded in 2021, van der Schyff shares that AgriLogiq has deployed its proprietary system in over 25 farms across the country, tripling its turnover within its first year of operations and is on track to do so again in the current financial year. The company also resells its system to other greenhouse manufacturers in the country.

Van der Schyff states that education on deploying technologies in agriculture has been a pressing challenge. To address that, Agrilogiq is creating an open-sourced education space within its infrastructure to teach people about efficient farming.

“I think there is certainly an opportunity [to use technology to drive efficiency] because farmers are also innovative in the sense of trying new things and trying to do more with less. But it does come down to finding those farmers and equipping them with the requisite education,” he concluded.

Addressing the distribution bottlenecks

Beyond produce, distribution is another area where there is room to improve efficiency in South Africa. Challenges like the country’s rolling blackouts, known as load shedding, have sometimes led farmers across the country to fail to get their produce to the market. For consumers, the cost of these distribution bottlenecks is passed onto the shelf prices, making food more expensive.

One startup trying to address some of these distribution problems is AgriKool, founded by Zamokhuhle Thwala. The startup claims to “solve the challenges of food affordability” by building an ecosystem that reconnects farmers and buyers so that both parties get fair prices and a reliable marketplace.

AgriKool’s product offering is a two-sided online marketplace where producers list their available produce even before harvest. Buyers use the platform to look for produce they would like to buy. Once the two entities settle on an order, AgriKool engages a third-party logistics supplier to complete the delivery. 

The startup also facilitates payments to farmers from buyers to reduce the time it usually takes for invoices to be settled on the buyer side. According to Thwala, the issue of high food prices in South Africa is more of a logistics than a production problem so reducing friction and fragmentation between producers and sellers, contributes to the reduction of shelf prices of agricultural products.

“We realised that the best way to make food affordable is to make sure that there’s streamlined logistics so that fresh produce travels the shortest route to market,” Thwala told TechCabal. AgriKool’s reports revenues “close to three million rands” from operations based only in  Pietermaritzburg in the Kwazulu-Natal province. A few months ago, the startup also announced a distribution deal with Shoprite, South Africa’s largest retailer. 

According to Thwala, despite the traction, fundraising has been challenging because don’t see the fact that the business is geographically located in one province as compelling enough to write cheques for it.

“[At the moment], it doesn’t make sense for us to scale geographically because if we grow too fast, then not only are we going to need to get farmers, we would also need to get retail partners in those areas,” Thwala said. “The issue with that is B2B sales cycles are very long so we would rather try to get our farmers to output more produce to meet demand which has worked for us so far.”

AgriKool helps farmers become more efficient through a process Thwala refers to as “co-production” whereby they provide a smallholder farmer with the liquidity needed to boost production. This is meant to help the company to ensure that it meets its contractual obligations to suppliers without needing to get produce from further-off farmers, which would increase logistics and transportation costs.

How agritech startups are addressing value addition challenge

Livestock Wealth is a startup seeking to ease access to farming returns by allowing prospective farmers to invest in livestock. Founded by Ntuthuko Shezi in 2015, the startup aims to build a global stock exchange that will allow people who own cows and farmland at a significant return.

“We have pre-selected farms where we have allocated assets that an investor can own in that specific farm. So for example, we can have a farm with cattle and individual investors can own some cattle without the headache of doing the farming itself. Anyone can go into our console web and mobile app and get started on investment from as little as 2000 rands,” Shezi explained to TechCabal.

An investor can invest in individual cattle or in pregnant cows. Individually, a calf is reared over a six months period until it is ready for slaughter. The meat is sold online or through bulk wholesale and to niche export markets, and the investor makes a return of between 10% and 15% per annum from the sale of the meat.

With pregnant cattle, the investor owns the calf for 12 months while it is in the farmer’s care. The calf, once weaned from its mother, is sold to the market to generate a profit. A portion from the sale is given to the investor. Livestock Wealth earns a commission with each transaction.

Livestock Wealth’s solution tries to foster the inclusion of citizens who might not have access to farmland in farming as well as providing significant returns for investors. Livestock Wealth claims that an investor’s average annual return, which takes the monthly fees into account, is about 10%. For context, the Johannesburg Stock Exchange (JSE) All Share Index over the last five years had an average of a 5% annualised return.

With $550,000 raised in October last year, Livestock Wealth is now expanding its model to farmlands, looking to allow investors to secure farmland to pursue various farming activities. Each portion, which investors can hold for up to ten years,  is sold for R50 000 and is projected to earn an annual return of 4% per annum. Livestock Wealth’s asset value stands at R120 million (~$6 million).

The future of agritech in South Africa

Despite the challenges that agritech innovators face in South Africa, they are building sustainability and contributing to the country’s agriculture sector. According to Sihlobo, innovators who build products that allow South African farmers compete globally have a chance to build scalable and successful businesses.

Sihlobo is bullish on not only the level of innovation that is yet to come but also its uptake. “I think there will be a lot more innovation and better technologies. I also think there will be more financing that will need to come in and support those new ventures,” Sihlobo concluded.

Lack of financing was a challenge that was reiterated by almost all the entrepreneurs TechCabal talked to and the numbers back their concerns. Although some agritech startups in South Africa like Yebo Fresh and FarmTrace have raised venture capital, the amount of funding that investors put into the agritech sector is dwarfed by VC darling sectors like fintech and ecommerce. According to data by Agfunder since 2017, the agritech startup scene in Africa has received more than $1 billion in funding. Nigeria and Kenya each received $147.8 million, while Egypt received $186.1 million and Kenya $88.5 million. The smallest percentage of the four was claimed by South Africa.

Despite this lack of interest from investors, entrepreneurs like Mapuranga, van der Schyff, Thwala, and Shezi are proof that agritech innovators in the country are capable of building sustainable businesses even in a less-than-optimal funding environment.  Should more funding become available, the sky will be the limit on the quality of innovation that will come out of South Africa’s agritech sector. The ball, or should we say chequebooks, is in the VC industry’s court.

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On Wednesday, Tingo Group released a press statement claiming it had been found innocent after an investigation by an unnamed independent counsel. Tingo Group said, “At the direction of the Company’s independent directors, independent counsel investigated certain Hindenburg allegations and provided the independent directors with an interim report summarizing evidence it had reviewed, along with items requiring further investigation.” 

The company’s press statement says a separate outside counsel carried out an investigation that followed up the report of the unnamed independent counsel. Without explaining what the independent counsel discovered or recommended, Tingo Group said it relied on the second investigation by its outside counsel “and further investigative work of its own” to declare itself innocent of all the Hindenburg allegations. 

The embattled company had previously named prestigious law firm White & Case as its independent counsel after a report by short seller, Hindenburg Research accused Tingo’s operations and SEC filings as an elaborate con. White & Case reportedly ended its relationship with Tingo Group in July. TechCabal reached out to several White & Case partners in New York, London, Hong Kong and the UAE, but we have yet to receive a response.

With Tingo, the more you look…

In Tingo’s Wednesday press release, Tingo explained some of the allegations made by Hindenburg research; the financial statement errors (Hindenburg had accused Tingo of filing financial statements that were unbalanced, missed some figures and missing inventory) that run into hundreds of millions were merely “typographical errors.” A partnership with Stanbic Bank that was exposed to not exist had merely failed due to fallout over a 2021 press release and was subsequently replaced by a partnership agreement with Visa. Tingo now says it is building a “super app” based on that partnership.

A mobile virtual network partnership with Airtel that was exposed by WeeTracker to not exist is now provided by an undisclosed third party and covers all four mobile network operators in Nigeria. In addition, Tingo earns commissions from airtime and internet data sales. The NWASSA platform which is now inaccessible after reports that it did not work is now a USSD platform that is pre-loaded on the Tingo Mobile phones that are then leased to the cooperatives and their farmers. Tingo Group did not disclose the USSD code to access the platform. The earlier USSD code available on the NWASSA website did not work. Here’s the full rebuttal from Tingo.

Tingo’s most recent SEC filings show a drop in the company’s cash balance from around $780 million in March 2023 to just over $53 million in June. This is despite reporting revenues of $1.828 billion in the year’s first six months. According to Tingo SEC filings, $977 of that $1.8 billion was generated between April and June of 2023. Tingo explains the drop in cash balances as due to vendor payments and advances. These payments include

• A $434.2 million payment to a mobile phone supplier to purchase 6 million phones (type not specified) for new members of All Farmers Association of Nigeria (AFAN).
• Advances to AFAN for agricultural produce to be exported by Tingo Foods and a settlement of outstanding balances. It did not disclose when these outstanding invoices were incurred.
• Self-funding food stocks before receiving payments for same. This is essentially, Tingo buying the food it claims to export ahead of receiving customer payments.
• And a $174 million tax payment to the Nigerian government for Tingo Mobile for 2022.

Last year, the company reported a little over $21 million in revenue and $3 million in gross profit in the same period. In the first two quarters of 2023, that $3 million in gross profits has jumped to more than $732 million. Tingo says the more than 8000% growth in revenue was the result of the acquisition of Tingo Mobile and Tingo Foods and the commencement of food exports by a new company Tingo DMCC in May. 

After several postponements, the embattled company held an earnings call for its second quarter results yesterday morning (Eastern Time) where it claimed profits (before tax) of $420 million in the first half of the year. Tingo’s President Chris Cleverly, also announced that the company would begin quarterly dividend payouts—if it was allowed access to forex by the Nigerian government.

On its part, Hindenburg Research released another report saying Tingo did not answer any of the questions it had asked the company in its initial report. The short-seller has accused Tingo Group of contradicting prior SEC filings in its latest press release where it absolved itself from blame. 

Hindenburg says at least one of the vendor payments which Tingo claimed was the cause of the drastic drop in cash balances, was to a company that was only registered in July in Niger Republic, Nigeria’s northern neighbour. Here’s the full rejoinder by Hindenburg.

After a brief spike following the release of Tingo Group’s press release announcing the completion of investigations and the earnings call held yesterday, the company’s shares resumed their downward trend, closing at $1.29 almost 8% down from the previous day’s close.

Venture capital in Africa is being boosted by investments in companies connecting farmers and food producers to retailers (known as “midstream technologies”) according to an investment report that shows African agrifood tech startups raised US$ 1.1 billion in five years.

Last year, investments into agrifood tech – startups seeking to disrupt the global food and agriculture industry – in Africa hit US$ 482.3 million. Of this, 61 percent went to midstream technologies . In 2020 startups in this sector raised US$185 million.

Venture capital firm, AgFunder, in its first Africa Agrifoodtech Investment Report, 2022 shows startups using software to fill in critical infrastructure gaps, including agribusiness marketplaces, raised US$293.7 million last year- highlighting the rising attractiveness of these ventures to investors.

“Many new promising innovations to secure and improve the world’s food supply are starting to gain traction globally, as well as in African markets,” said Dutch lender, FMO ventures, in the report.

The lender said that technology offers more cost-and-resource-efficient ways of addressing Africa’s persistent dependence on food imports and food insecurity.

“We believe emerging agtech solutions have the potential to address challenges in current food production and distribution, and target end users ranging from the smallholder farmer to agri enterprises to the final consumer,” said the firm.

In 2021, some of the largest fundraising by midstream startups included a Series A funding raise of US$ 55 million, by Egyptian e-commerce startup MaxAB and US$ 50 million in Series C funding by Kenya’s Twiga Foods. Twiga is a business-to-business (B2B) platform that helps rural farmers supply fresh produce to small and medium-sized vendors and retailers.

Nigeria’s TradeDepot raised US$ 42million in Series B funding, plus US$ 68 million in a debt round.

This year, the largest funding value in midstream startups more than doubled after Wasoko raised US$ 125 million in series B funding, before relocating from Kenya to Zanzibar.

Wasoko’s fundraise represents about 30 percent of approximately US$ 400 million mobilised by agrifood tech startups in the first half of the year — more than 80 percent of all 2021 sector funding.

Among Africa’s ‘Big Four’ startup markets, Egypt leads with US$ 186.1 million, followed by Nigeria (US$ 147.8 million) and Kenya (US$88.5 million). South Africa had the smallest share of the four, with US$ 22.1 million.

Over the last five years, Agrifood tech deals have almost tripled from just 51 in 2017 to 150 in 2021.

Agrifood Fintech startups that are facilitating financial inclusion for farmers, agribusinesses, food vendors and retailers are also rising as the next biggest category to watch after midstream tech startups, having raised US$ 23.6 million last year.

More funds are still heading to agrifood tech startups following the launch of a nine-month investment readiness program by Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) earlier in the year.

The program – dubbed Scaling Digital Agriculture Innovations through Startups (SAIS) – targets five startups every year whose solutions enable users of the agricultural or agrifood sector (mainly women and young people) to increase their income.

“The GIZ-SAIS investment Readiness Program is aimed at entrepreneurs who have developed and brought to market a digital product that solves a specific problem in the agricultural and agrifood value chain,” according to their website.

It will consider startups from 25 countries, including the Democratic Republic of Congo, Morocco, Cameroon, Rwanda, Benin and Algeria (and excluding the “big four”), showing that investors are interested in Agritech ecosystems across the continent.

Digital-savvy farmers in Africa are tapping social media platforms to network, learn and find new buyers for their products, outside traditional markets, according to a report.

More farmers in Kenya are sidestepping middlemen and using Meta platforms to take their fresh tomatoes, avocados, kale and other products straight to consumers’ doorsteps.

Research firm Caribou Digital’s latest report found that farmers are also getting information about best farming practices from their peers, through shared online video tutorials.

Dubbed Social Agriculture: young farmers, social media, and the digital transformation of agriculture, further shows there are more people using Facebook for agriculture than all dedicated agricultural platforms in Kenya.

These include Facebook groups like Digital Farmers of Kenya and the Young Farmers Forum, on WhatsApp.

“Based on an industry-standard estimate that 22.5% of 33 million registered users are active, digital agriculture platforms have an estimated active user base of approximately 7.5 million in Kenya; Wefarm, a popular digital agriculture platform, had 1.4 million users in 2018,” reads the Mastercard Foundation-sponsored report, in part. 

“Facebook advertising indicates that the number of users interested in agriculture is estimated to be 9.3 million. In other words, despite any concerted marketing efforts, the number of people using social media platforms for agriculture in Kenya is higher than the total active users of dedicated digital agricultural platforms.” 

Growth in social agriculture in Kenya comes amid rapid smartphone adoption, reliable internet connection and mobile payments services that have made e-commerce vibrant in that market.

In 2020, mobile phone penetration among adults in Kenya was 98 per cent and according to the Communications Authority of Kenya’s (CA) sector statistic report for the quarter ending September 2021, 59 million mobile phone devices were connected to mobile networks in the country.

Of that number, 33 million were feature phones while 26 million were smartphones, putting the penetration levels at  67.9% and 53.4% respectively.

As of 2020, 43% of all adults were using the internet (96% of them on smartphones rather than computers) and 17% of all adults were using social media (98% of them on smartphones).

It is hardly surprising, then, that farmers are turning to social media to find new markets for their produce, which includes supplying to hotels and supermarkets.

Caribou’s report notes that digital platforms are also grooming would-be entrepreneurs who are turning to agriculture to earn a living. “Social agriculture” has lowered the barriers to gaining expertise and helped online communities of farmers develop new avenues of monetization – including through online influence.

“Influencers who promote social agriculture frame agriculture as a livelihood relevant to the digitally connected and introduce agriculture to people who might not otherwise consider an agricultural livelihood,” the report notes.

“The increased visibility of agriculture is important because it makes farming more attractive to people who might not be able to access white collar jobs and brings people with the education and digital literacy required to translate agriculture innovation into practice.”

Caribou says their findings in Kenya point to the growth potential of social agriculture in Africa.

“It has a strong payments infrastructure, which has enabled some of the e-commerce applications common in China. Many Facebook agriculture groups that are now pan-African began in Kenya,” it said.

“Social agriculture” also appears to address some gender imbalances by offering opportunities to women agriculturalists, just as it does for men.