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wealth of available information.

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advisory services being a standard component, but typically not one that is monetised or that is essential to the business model’s viability. There will still be a continued niche for specialised digital advisory enterprises (e.g., for weather data, pest and disease data) who provide B2B information and/or capacity- building services to other D4Ag enterprises, but these will be relatively few in number compared to market linkage solutions.

The second related observation concerning D4Ag business models recognises the value – in terms of both D4Ag impact and economics – of bundling solutions.314 _{Incipient evidence}

suggests that breakthrough impacts on farmers (>50% increases in incomes, >100% growth in yields) are possible with the help of D4Ag solutions. However, results like these typically require a holistic approach to serving the needs of smallholder farmers by providing digitally- enabled market linkages, advisory services and financial services.315

From a business economics perspective, aside from the increased upfront complexity and cost of setting up such solutions, bundled solutions are also uniquely attractive. The key drivers Looking forward, this does not mean that

digital advisory and information solutions will no longer be in favour – rather, the number of solutions with an advisory services component and the reach of such solutions will continue to grow quickly. Large-scale public (e.g., Ethiopia 80-28) and donor-funded (e.g., Digital Green, PAD) digital advisory and information services will grow and remain important as generators of essential public goods. However, we predict that ‘pure play’ advisory solution models among commercially-minded D4Ag enterprises will become far less common over the next few years.

Commercial D4Ag advisory solutions will broaden their mandate by combining the advisory service value proposition with digital market linkages (input, mechanisation and off-take linkage services). They will either do

this directly by incubating market linkage solutions in-house to augment or sit alongside the advisory product (e.g., the path taken by Esoko, Farmerline and Digital Green) or via third-party partners with whom they will share value. In line with this trend, we expect that the majority of D4Ag solutions in 3–5 years will primarily focus on market linkages, with

Africa’s myriad policy regimes, value chains and cross-border trade and logistics challenges, a winner-take-all approach for D4Ag platforms is unlikely for the foreseeable future.

The most likely scenario in the next few years is a complex ecosystem of competing and sometimes collaborating super platforms: commercial providers with

proprietary, custom-built digital platforms that formalise loose value chains via direct agent market integration models (e.g., Tulaa, Twiga, One Acre Farm), micro-entrepreneur platform models (e.g., Kuza), farmer hubs (e.g., Multiservices Agricole in Senegal), bank platforms (e.g., KCB MobiGrow), value chain management solutions designed for agribusiness (e.g., SAP Rural Sourcing Platform, Olam’s in-house digital stack), government-affiliated or -led platforms (e.g., Smart Nkunganire System in Rwanda), solutions from different specialised D4Ag vendors bundled under common super platform commercial brands and farmer interfaces (e.g., Safaricom’s DigiFarm), families of inter-linked digital solutions or enterprises (e.g., Farmerlink, Esoko and – a the very large end of that scale – Alibaba’s Rural Taobao for improved profitability and scalability of

bundled solutions include costs savings due to operational synergies and, more importantly, increasing willingness on the part of farmers to pay for those bundled products that can generate instant economic value – which can take the form of lower input costs or higher, more guaranteed off-take prices alongside the harder to quantify long-term effects of improved farmer productivity and resilience through better practices (which farmers are often unwilling to pay for in the near term).

The most immediate implication over the next few years will be the rise of bundled D4Ag ‘super platform’ solutions as the most common architecture for D4Ag service delivery. The idea of

bundling to enhance D4Ag solution impacts and economics is not new. It has informed, for instance, several phases of Mercy Corps’ AgriFin Accelerate programme for the past seven years, starting with bundles of finance and advisory services in a handful of country pilots and broadening to much broader commercial concepts exemplified by Safaricom’s DigiFarm. What is new today are the improved and still evolving ideas about how to make such models work and, as discussed in depth in Chapter 2, the resulting emergence of D4Ag ‘super platforms’ as a distinct category of D4Ag solutions.

We foresee a proliferation of D4Ag super platform solutions – many at national or value-chain levels – competing with each other, likely with multiple successful players and models emerging in the interim. We predict that the D4Ag super

platform model will become the dominant approach in the sector in just a few years, but this does not necessarily mean that the sector will be dominated by a few big unitary commercial digital agriculture platform providers. That is one possible outcome, but an improbable one given the diversity of sector needs. In the longer term (5–10 years), a progressive winnowing and consolidation of solutions is likely, but with Sub-Saharan

– which we do believe have a role to play and will continue to be important – are unable to match the impact of hybrid models due to the familiar barriers of connectivity in the field, digital literacy, farmer trust in digital content and the difficulty of localising content – all issues where human intermediation can help. For these reasons and others, many sector experts have concluded in recent years that, while direct-to-farmer D4Ag solutions are an important supplemental or ancillary channel for smallholder farmer engagement, for maximal impact and commercial sustainability – in the words of a recent D4Ag business model review by the Syngenta Foundation, a funder of several such models – “field forces [will and must] remain an essential actor in disseminating and embedding digital agriculture solutions” on the ground.317

We believe that D4Ag hybrid ‘digital + human’ business models will become much more common for less formal agriculture value chains in Africa.318

The logic of sector impact and sector economics will push D4Ag super platform players inexorably in this direction given the lack of existing last-mile agent forces needed to support digitally-enabled market linkage and logistics operations.

One well-trodden pathway to greater integration of human and digital tools will system in China) and, finally, looser consortia

models, such as the Digital Green-led digital agriculture consortium and related initiatives in Ethiopia, which embrace a more open digital agriculture ecosystem but link independent players together via a common mission, common distribution channels and common application programming interfaces (APIs) to ensure the delivery of holistic solutions to farmers.

Another important insight for the future of D4Ag business models is that transformational impact on smallholders requires digitally-enabled human networks, not just purely digital

solutions. Human networks consisting of

last-mile agents or ‘field forces’ of various types (e.g., agriculture extension officers, digital finance agents, market linkage agents, advisory micro-entrepreneurs, ‘lead farmers’) have been a feature of D4Ag solutions for years (roughly 25–35% of solutions in our database feature agents in some way),316 _{but much of the energy}

in the African D4Ag sector in the past decade has been focused on the 65–75% of solutions that are direct-to-farmer via SMS, USSD, IVR channels or, more recently, smartphone applications. This focus has been unsurprising as virtual, i.e., ‘pure digital’ models are cheaper to deploy.

Our interviews with sector experts repeatedly highlighted that purely digital D4Ag solutions

continue to be D4Ag enterprise partnerships with existing third-party agent field force organisations to digitalise how such organisations interact with their smallholder farmers (e.g., One Acre Fund extending digital tools to its agents or Digital Green providing a digital overlay for existing national extension agents). The costs of agents in such models are not born by the D4Ag solution, but by third parties. In most cases, however, such third- party organisations simply do not exist for informal agricultural value chains, and other alternatives are needed.

More novel and promising from an impact standpoint are approaches that involve D4Ag players building their own agent field forces, salaried or

commission-based, alongside their digital platforms (e.g., myAgro, Tulaa, Twiga, DigiFarm) or using a digital platform as a tool for recruiting, training, capacitating and managing agricultural micro-entrepreneurs in the field (e.g., Kuza). Such models have rightly been seen as more costly and operationally complex than purely digital solutions. When considered in light of the impact potential and sustainability of hybrid models, however, the barriers to integrating human agents (often fairly low-wage-earning youth who can be upskilled and managed via digital tools) are likely more easily surmounted than what is commonly believed, leading to a high return on investment.319

In terms of scalability, such models do require more upfront investment and present greater risks, but these are risks that should be quantifiable and manageable for commercial investors as the evidence for hybrid business models accrues over time. Large corporations may be willing to take on such bets for the same long-term, profit-driven reasons that Alibaba in China is investing into Rural Taobao’s last-mile infrastructure of stores and agents (60,000 agents today, with plans to expand to more than 300,000 agents over the next few years).320 _{Donors and governments,}

for their part, should have a strong interest in supporting and de-risking such models, given that they function as direct rural job creation engines.

The final D4Ag business model trend that we believe will be notable in the next few years is an increased focus on agriculture payment digitalisation as an entry point for D4Ag solutions. There

is growing recognition today that expanding digital payments and building responsible digital payments ecosystems are fundamental to creating a more productive and sustainable agricultural sector.321

By enabling farmers to receive compensation, transparently and securely for their crops, digital payments allow them to save money and reinvest it in their agricultural activities. For agribusinesses, digital payments generate

substantial energy on supporting agriculture payment digitisation, with a primary focus on formal agribusiness procurement from highly commercial value chains like cocoa in West Africa.

Our interviews and desk research suggest that agriculture payment digitisation initiatives will continue to increase in scale and ambition in the next few years. Building off existing

pilots with GSMA and others, MNOs have announced an increased number of agriculture payment digitisation projects and partnerships

in 2018–2019. The launch of the new GSMA

Innovation Fund for Digitisation of Agricultural Value Chains as this report

was going to press will likely add further momentum to such initiatives. Development banks like the African Development Bank (AfDB) and the World Bank are embracing the payment digitisation opportunity for priority geographies (e.g., AfDB’s Togo smallholder payment digitisation project).

Even in less formal value chains, payment digitisation is increasingly becoming a standard feature of D4Ag super platform projects, such the benefits of security and speed, as well

serving as an entry point into broader digitalised supply chain relationships with smallholders that can generate marketing upside, improve product quality/traceability or generate other operational efficiencies. The GSMA mAgri team has estimated that the potential market for agricultural payment digitalisation is already substantial and likely to grow quickly. By 2020, the potential value of formal procurement payments to farmers in Africa will be ~€300 million annually, of which only 5–10% is captured via payments digitalisation today322 _{– a major opportunity}

for MNOs on the continent. In addition to the revenue potential, GSMA has assessed that “digitising agricultural payments could generate measurable indirect benefits for mobile operators related to the acquisition of new mobile money users, increasing loyalty, increasing volume of transactions and overall activity on mobile money accounts to support a sustainable agent network.”323

In the past few years, players like GSMA and the Better Than Cash Alliance, as well as corporations like MasterCard, have focused

as MasterCard Farmer Network, DigiFarm and KCB MobiGrow’s work in East Africa, as well as smaller-scale D4Ag platforms like Tulaa and Twiga. Organisations are already seeing results and that will likely add further impetus to the digitisation movement. One Acre Farm, for example, has moved aggressively to digitise loan payments with its 800,000 farmers and, based on early results in a few geographies, has reported reductions in payment losses and collection costs (of 80%), increases in operational efficiency (approximately ~50% less time spent by agents on payments collection) and higher farmer satisfaction relative to cash-based loan payments.324

While we cannot predict what share of farmer payments will be digitised and by when based on the data available, it is clear that payment digitisation is on its way to becoming a standard feature of D4Ag solutions and interventions.

Vastly larger data volumes