Seeds of Opportunity: The African Growth Series
December 2022 | Issue 2
In this week's issue, you will learn more about:
- Artificial Intelligence for Agriculture
- The Benefits of the AfCFTA
- SANRAL: Awarding Tenders, Creating Jobs throughout South Africa
- Africa’s Youth: A Force To Depend on
- Africa: Innovation in Cloud Computing
- Horticulture in Tanzania: $2 Billion in Exports by 2030
- Active Pharmaceutical Ingredients for South Africa
Artificial Intelligence for Agriculture
Africa is experiencing a severe food insecurity crisis. The COVID-19 pandemic, the war in Ukraine, and extreme weather conditions have aggravated the food, fuel, and fertiliser shortage in the continent. This crisis must be urgently prioritised to protect Africa’s one billion people and the continent’s development.
Improving agricultural practices across Africa is the most effective way to improve food security. A new development in this industry is the use of Artificial Intelligence (AI). AI in the agricultural sector uses machine learning, which is the capability of a machine to imitate intelligent human behaviour. This assists in predicting the weather, monitoring crops, forecasting and improving yields, improving spraying and irrigation, and tracking supply chains. Consequently, AI has created a great opportunity for start-ups in the agriculture industry. The agricultural sector is expected to grow at a compound annual growth rate (CAGR) of 14%, while the value of AI in the agriculture market is estimated to increase by more than 150% from 2022 to 2026, reaching USD4 billion in 2026.
A Cape Town-based Agri-tech start-up, Aerobotics, has been seizing this opportunity in recent years. Aerobotics provide farming insights to better measure, manage and protect yields. The company collects images from drones, aircraft, satellites, sensors, and its mobile app to provide farmers with data and recommendations for managing their crops. Aerobotics already supports more than 200 farmers and have processed data on more than 180 million plants on 560 thousand hectares around the world.

The Benefits of the AfCFTA
The African Continental Free Trade Area (AfCFTA) Agreement was signed by 44 of Africa’s 55 states in March 2018 and came into force at the end of May 2019. The AfCFTA represents the world’s largest free trade area, covering a population of 1.3 billion and a combined GDP of US$ 3.4 billion. In the meantime, all but one nation have signed the Agreement, with Eritrea being the sole non-signatory and trade under the agreement commenced officially on 1st January 2021. The main objectives of the AfCFTA agreement are to create a single market for the exchange of goods and services and facilitate the free movement of business and investments to significantly increase economic growth and development on the continent through a single integrated market for goods and services. The prospects of the benefits of the AfCFTA Agreement are already showing, starting with the establishment of the Pan-African Payments and Settlements System (PAPSS) in January 2022, which allows transactions among companies operating in Africa to be conducted in any local currency. This year also saw the first shipment of locally made car batteries and tea from Kenya to Ghana under the Agreement’s zero tariff rules. The heads of state of 45 African nations will head to the US capitol for the three-day African Leaders Summit, aimed at holding the US and Biden Administration to its promise to redefine relations with the African continent amid swindling investment after the disastrous engagement under Trump. A world bank report estimates that the effective implementation of the AfCFTA Agreement will see an increase in the volume of intra-Africa trade by 81% by 2035 and an increase in total African exports by 29%. The subsequent rise of GDP by US$450 billion could lift 30 million Africans out of extreme poverty and boost the incomes of nearly 70 million people. While the US has largely limited itself to technical support for the AfCFTA, other developed regions such as the EU have established themselves as significant donors to the initiative, funnelling approximately US$79.9 million from 2014 – 2020 to the initiative, according to the Africa-EU Partnership.

SANRAL: Awarding Tenders, Creating Jobs throughout South Africa
In the last few weeks, SANRAL, the South African National Roads Agency Limited, announced that four of the five tenders it had previously cancelled in June had been awarded at the start of November, following an evaluation process by the Development Bank of Southern Africa (DBSA). These projects totalling ZAR 17.47 billion, included the ZAR 4.05 million Mtentu Bridge project on the N2 Wild Coast road, the ZAR 1.23 billion rehabilitation of the R56 Matatiele rehabilitation project in the Eastern Cape, the ZAR 2.44 billion N3 Ashburton Interchange in KwaZulu-Natal and the N2/N3 EB Cloete interchange improvements project, in KwaZulu-Natal, valued at ZAR 5.02 billion. The re-awarding of these projects was vital for SANRAL due to the economic impact of the road and transportation industries. SANRAL chairperson Themba Mhambi had indicated that when the contracts were cancelled, there was concern about the effect that it would have on the country’s infrastructure development agenda. However, awarding these projects was a priority to reduce the negative impacts on the construction industry and the South African economy. Construction companies such as Raubex have benefited from this increased activity, indicating growth in revenue supported by SANRAL’s increased awarding of tenders, particularly in KwaZulu – Natal. Accordingly, Raubex said its revenue for the six months to August surged 23.2% to ZAR 7.38 billion.
SANRAL has indicated that it would continue prioritising infrastructure development to drive economic recovery in South Africa.

Africa’s Youth: A Force To Depend on
Africa has a young population with a median age of 19 years old against Europe's median of 42. By 2050, ten of the world's youngest countries will be on the continent and the working-age population in sub-Saharan countries will double over the next 25 years. These factors drive the demand to improve education and support the possibility of Africans working remotely for continents with ageing populations. uLesson Education and Andela are two startups that invest in those opportunities. Founded in 2019, uLesson is a Nigerian Edtech startup that uses mobile phones for students and tutors to access various courses and interactive lessons. Since its launch, the company has raised US$25.6 million in funding. The company serves learners in Nigeria, Ghana, Sierra Leone, Liberia, and Gambia whilst looking to grow into the East and South African regions. Regarding remote working, Andela is another Nigerian startup that helps companies recruit software developers working remotely in regions, such as Latin America and Africa. Since its launch in 2014, the business has raised US$381 million, making it one of Africa's tech unicorns.

Africa: Innovation in Cloud Computing
As a result of the COVID—19 pandemic, 2020 saw companies worldwide planning for flexible working to satisfy government regulations and keep their employees safe. In Africa, this served as a catalyst for the mass adoption of cloud technology solutions (CTSs). In fact, in a recent survey conducted by Twilio, 93% of companies in EMEA moved to cloud software during the pandemic. As of 2022, 42% of employees in Africa continue to work from home. In addition to providing capacity for flexible working, CTSs allow industries to drive greater efficiency and optimise business processes without the capital expenditure of on-premise solutions. In post-pandemic Africa, there is a great demand for more personalised CTSs, especially within business–to–business spending in the manufacturing sector, which has been forecasted to reach USD 1 trillion by 2050. By incorporating CTS into this industry, manufacturers would be able to unlock the benefits of artificial intelligence and robotic process automation to improve predictability and operational efficiency. Moreover, CTS may have a valuable role to play in the rebuilding of the tourism sector in the continent – which contributed over 8% to the GDP in 2019. The opportunity that CTSs presents is further reflected through Google’s announcement in October 2022 that it has selected South Africa to launch a cloud region, the first in the continent. This is one step in a movement to build dedicated cloud interconnect sites based in Namibia and Nigeria, strengthened by the Equiano subsea cable which connects Africa and Europe. This will contribute USD 2.1 billion to SA’s GDP and create more than 40,000 jobs by 2030.
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Horticulture in Tanzania: $2 Billion in Exports by 2030
Africa is undeniably endowed with mineral resources, with the recent crude oil discovery in Nigeria attesting to this. Yet with a waning appetite for financing fossil fuel-driven projects, investments in alternative sectors is critical. The Tanzanian government is one of those pushing ahead with attracting non-oil-related FDI, through planned projects in the agricultural sector. The agricultural sector contributes more > than 25% to GDP in 20 African countries. In a recent announcement at GlobalG.A.P Tour Stop, President SamiaSuluhu Hassan and agriculture deputy minister Anthony Mavundesaid Tanzania announced plans to target $2 billion in horticulture exports by 2030 from the $750 million current status. Collaboration in achieving the goal is expected between Taha and the government. Taha recently achieved great collaboration with the Finnish Agri-agency for Food and Forest Development (FFD), the United Nations Development Programme (UNDP), TradeMark East Africa (TMEA), EU-Agriconnect and TRIAS for the Global GAP tour stop 2022.
To successfully implement this strategy, work is also expected in setting up appropriate infrastructure; people upskilling, establishing of cold chain and attractive policies.

Active Pharmaceutical Ingredients for South Africa
Active pharmaceutical ingredients (APIs) are the active substances in medicines that produce a biological effect on a patient. Plainly, an API is an essential component of medicine. Despite being at the core of the pharmaceutical value chain, most APIs are manufactured in only two countries: India and China. An estimated 80% of APIs used in the manufacturing of medicines in Europe are of Indian or Chinese origin. But the geopolitical landscape has changed in the last few years. Even before the onset of the COVID-19 pandemic, global dependence on a handful of countries – and China in particular – for supplying APIs has raised concerns over health and security risks.
Against this backdrop, and with more than 20 years of experience in the industry (which includes the manufacturing of APIs for animal pharmaceuticals), Pretoria-based Chemical Process Technologies Pharma (CPT Pharma) is blazing the trail for API manufacturing in South Africa. In 2020, the South African Health Products Regulatory Authority granted CPT Pharma a licence to manufacture APIs for crucial medicines such as human immunodeficiency virus (HIV) and tuberculosis (TB). They already have a pipeline of eight APIs, of which three are for TB medicines, one is for epilepsy medicine, another is to treat worms, two are to treat HIV, and one is for COVID-19. CPT Pharma is well-positioned to realise its goal of establishing a dynamic API manufacturing industry in South Africa, where imports of APIs amount to ZAR 20 billion every year. As they work to commercialise their APIs, CPT Pharma is looking to scale up its manufacturing to edge its way into the highly competitive API market which is, according to some estimates, set to reach a value of over USD 200 billion by 2030.
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To find out more about opportunities in Africa, please contact Lynne Martin.
Lynne Martin
Rebecca Mabika