How investing in energy can help boost agriculture mechanization in Africa

Africa, despite being a continent rich in agricultural resources, has one of the least mechanized agricultural systems globally. Seth Silverman, Principal at Factor[e] Ventures, sheds light on how investing in energy can help tackle this issue to propel the continent's agricultural productivity to new heights. In a recent interview, Silverman emphasized the critical role energy plays in unlocking the full potential of agriculture across Africa. Silverman explained that energy is a key component that is currently lacking in the agricultural sector, hindering its growth and efficiency. He highlighted five key lessons that need to be addressed to seize the opportunity at the intersection of agriculture and energy, known as the Ag Energy Nexus. The first lesson is recognizing the immense opportunity present at this nexus, emphasizing that agriculture should be at the center with energy acting as a supporting service. The second lesson focuses on the need to invest not only in energy but also in core agriculture and agribusiness services to build capacity and infrastructure across the continent. The third lesson underscores the importance of investing in innovation to drive new technologies and solutions that can scale across markets. Silverman emphasized the need for a robust pipeline of innovative solutions that can revolutionize agriculture and energy services. The fourth lesson calls for a matchmaking function to connect agricultural technology and energy solutions effectively. Lastly, the fifth lesson emphasizes the importance of scale and calls for governments and development banks to play a role in enabling integrated planning and engagement at a regional level to capitalize on the opportunities presented at the Ag Energy Nexus. Silverman also addressed the challenge of limited investment in the sector, stressing the importance of driving capital into market-based opportunities such as dairy processing and grain storage. Additionally, he highlighted the need to foster innovation and create a pipeline of enterprises that can scale across markets to attract more investment. When discussing accessibility and affordability of innovations and investments, Silverman emphasized the need for technologies to be contextualized and right-sized for the African market. Solutions must be affordable and tailored to the needs of agricultural customers to drive adoption. Silverman outlined the main challenges facing the agriculture and energy sectors, including the lack of modular and right-sized technology, behavior change and adoption of new solutions, challenges in business models and finance, and the siloed support for these sectors. To spur private sector involvement in agriculture, Silverman suggested that the government should set a baseline level of productivity in the sector while also acknowledging the increasing flow of capital from the private sector into agriculture. Silverman expressed optimism about the growing investment opportunities in areas such as cold storage, agricultural waste energy, input finance, and processing solutions, signaling a positive trajectory for the African agricultural sector.