Ecosystems and African Agritech
Ecosystems represent in nature one of the most significant examples of comparative advantage. The ecosystem creates a self sustaining environment. In many ways if we look at the Ricardian idea of how comparative advantage works - it reflects how an ecosystem should function. Different parts of the system focus on their expertise and comparative advantage means that the system as a whole will be more productive.
For this post I want to explore the importance of ecosystems and their relevance to my previous post regarding agriculture and technology in Africa.
All the different steps of agricultural production and its final delivery to the end consumer are part of an ecosystem. That includes the financing partners, the logistics providers, growers, and end consumers. All these different actors make up part of a very intricate web of members of one of the most important value chains and ultimately ecosystems in the world. It is something that is built over time by informal and formal relationships across borders and within countries.
Looking at how food systems have developed in Africa over the last decades we can still see that there are areas where traditional colonial trading routes are still relied on, and in others where too much dependency is placed on certain regions. This has been hugely detrimental as we have seen with the ongoing situation in Eastern Europe and its impact on the price of wheat and grains; and the resulting impact it’s had on the local economies and food systems all over the continent.
Designing an ecosystem may seem counterintuitive or rather against the idea of an ecosystem itself which would surely self create in some sense. On the continent in the past these natural ecosystems were not respected by colonial powers, meaning that artificial trade routes in and out of the continent were created even for the most basic food inputs. Equally when food security of an entire country can be jeopardized by geopolitics things need to be re-evaluated so that 70% of major food categories do not come from one region.
By fostering ecosystems that function well and in the interests of the entire continent it is in fact a way to reduce dependency, and further increase productivity. Allowing each actor to focus on their expertise and enhance their input or output to the best of their ability. The creation of special trade zones across regions, could allow this to come into fruition. Whereby a trade zone could become the specialist area for certain production, transformation, distribution, or even clearing (HT to Debisi Araba who made this point in a recent meeting).
Recently in the African startup landscape there have been trends leading to certain parts of the value chain receiving the lion's share of the attention. This seems to create a build up of identical expertise across different geographies and it does make you think that although the competition itself is inherently a good thing, whether when thinking about food supply and agriculture in general if that creates the broader commonwealth and the greatest gains.
Flywheels and network effects are often attributed to startups as positive reinforcing factors of their success. In agriculture these are often overlooked as concepts. Considering that a great deal of the web 2.0 phase of startup development was achieved by startups e.g. “build sustainable agriculture solutions for Africa” as a mission. And as startups have gained scale so they reap the benefits of a flywheel effect which they have created, where it fundamentally owns the underlying assets.
With the advent of the web 3.0 era so the same mission driven goals can be achieved but through collective ownership and groups that means many can own, contribute, and benefit from an ecosystem approach. An interesting example would be the African agriculture and surrounding food ecosystem.
Through the linkages and relationships in an ecosystem a consensus mechanism for each contribution could be recognized as part of a decentralized autonomous organization. The governance and rewards mechanisms are particularly interesting to consider with the goal of food security in mind, and how that might be rewarded.