Although sub-Saharan Africa has the potential to increase its agricultural output and overall contribution to the economy, the sector remains untapped largely due to a lack of access to quality farm inputs, up to par infrastructures like warehousing and market, according to a study by McKinsey and Co.
This is in an economy that derives 23% of its GDP from agriculture, with 60% of its population being involved in small-scale farming. The study stated that while the number of medium-size farms is rising, increased smallholder productivity will be the biggest growth driver.
Several African agritech startups including Farmeline are revolutionising the industry to fill the existing gaps. The Ghana-based startup is delivering technologies that will increase farmers’ access to high-quality production inputs and education on the best farming practices, including how to better deal with the effects of climate change.
After the first close of its pre-Series A in April 2022, Farmeline today announced that it has secured a $1.5 million equity funding from Dutch impact investor Oikocredit in its second close of the round—bringing the total amount raised in the round to $14.4 million.
Farmerline's other equity investors include Acumen Resilient Agriculture Fund (ARAF), FMO, the Dutch entrepreneurial development bank, and Greater Impact Foundation.
This latest investment will enable the company's operations in Ghana, as well as its West African expansion, starting with Cote d'Ivoire. "With the support of Oikocredit alongside our first-round funders, our distribution, logistics and financing services will continue not only in Ghana but also in Ivory Coast where we’ve recently begun the process of expanding our team," Attah said.
Farmerline partner retailers usually leverage the startup's proprietary AI technology platform, Mergdata for supply chain intelligence, digitising the farmers they serve, and generating the data required to predict the demand for farm supplies and prevent stock-outs. It also uses that data to determine the amount of business expansion credit to give to agro-dealers.
The agritech startup intends to reach 300,000 farmers in 2022, a nearly 400% increase in growth compared to last year, when it doubled its direct-reach to 79,000 farmers, up from 36,000 in 2020 and 8,000 in 2019.
Last month, Famerline launched a public crowdfunding campaign to raise $100,000 with the aim of providing 250,000 bags of discounted fertilisers to 25,000 farmers in Ghana. "As fertiliser prices more than quadruple and the conflict in Ukraine compounds global food security challenges, this investment is crucial," the company stated.
According to Oikocredit’s equity officer, Mila Georgieva, "the harmful impact of rocketing fertiliser costs on smallholder farmers in Africa is clear. With our investment in Farmerline, we are supporting those most affected by the price volatility."
"Our investments in the agriculture sector are at the core of Oikocredit’s work as a social impact investor, and we have already identified synergies with other portfolio companies. We are thrilled to support Farmerline Group and smallholder communities across Ghana and Ivory Coast," Mila added.
The Ghana-based startup has claimed to have financed around $18 million worth of inputs and crops through franchise shop alliances with agribusinesses and input dealers.