Feeding the future: Africa’s agriculture sector is ripe for investment

Using solar-powered irrigation, a Nairobi-based startup with funding from Netflix’s cofounder and Google’s CEO is both increasing crop yields by 300% and reducing water consumption by 80% while earning impressive gains in the African solar irrigation market (expected to hit £2.4 billion at full market potential). With new investments growing, this company is just one example of the incredible investment opportunities opening across the African agriculture value chain.

The continental food market is projected to expand from $280 billion to $1 trillion by 2030, with areas like Africa’s agrifood tech industry receiving $192 million in 2024. This industry’s investment in developing countries increased 63% year-over-year in 2024 (and 600% from 10 years ago). Given these trends, which I explore in my book “Realizing Africa’s Potential: A Journey to Prosperity,” investors in the agricultural sector will find an industry ripe for growth across the entire value chain. 

Key trends and opportunities in the agriculture sector

Demographic scale and preferences: Rising incomes and the doubling of Africa’s population by 2050 makes the agriculture sector one of the most reliable industries for future demand. Growth opportunities abound as global consumer preferences shift toward healthier foods and income growth is opening new industries in luxury foods such as designer chocolates in Ghana or caviar production in Madagascar.

Technology transformation: Africa’s 280 agritech startups raised a collective $1.2 billion in funding in 2023. In the same year, B2B platforms connected 45 million African farmers to market and facilitated $2.8 billion in digital transactions. The results of this technology have been impressive, with tech-assisted firms seeing 32% rise in yields, spending 28% less on inputs, and using 35% less water. Already, AI predicts yields, blockchain can trace exports, financial technology increases digital lending, digital storage facilities manage tonnes of produce, and geospatial mapping identifies locations for processing infrastructure. Investment opportunities abound for both the digital integration of simple technologies and advanced technologies.

Infrastructure revolution: While in Africa, infrastructure can still pose a challenge, it is undergoing expansion and improvement, offering investment opportunities to be a part of the build-out and/or capitalize on its benefits. Agricultural processing is one area receiving considerable investment, such as the $538 million invested by the Nigerian government into its Special Agro-Industrial Processing Zones program. By reducing post-harvest losses, the program is projected to boost agricultural productivity by over 60%. Cold chain infrastructure is also expanding, projected to grow from $10.88 billion in 2024 to $14.85 billion by 2029. As the share of Africans living in urban areas rises to two-thirds by 2050 and AfCFTA accelerates intra-African trade, innovative solutions in logistics and cold chain infrastructure will be a key growth opportunity.

Value chain investment opportunities: As the breadth of the agricultural value chain widens, a few specific high-growth sectors are emerging. Firstly, the production and processing of staple foods will be a key industry as food demand doubles by 2050 alongside population growth. Africa already imports about 40% of its rice and 60% of its wheat, with increased demand already boosting efforts to achieve self-sufficiency. These staple products, alongside cassava, maize, and others offer investors a consistent demand and long value chain for investment in areas such as irrigation, precision farming, fertilizers, seed varieties, and processing. The global market for cassava processing, for example, is valued at over $5 billion. Secondly, Africa’s aquaculture, specifically the farming of tilapia, catfish, and carp, is growing at an accelerated rate, reaching 7% of global output in 2023 and valued at $3.8 billion. Demand is also increasing within this area, with investment opportunities in production, hatchery, cold chain infrastructure, and processing. Third, African livestock and dairy farming reached $43 billion in 2023, including cattle, poultry, and milk production, each of which are showing growth potential and opportunities from feeding to breeding and production. E-commerce transactions for livestock have grown to $1.2 billion in value. 

Leading investment destinations: While opportunities abound across the continent, especially as intra-African trade barriers are reduced, key investment destinations and hotspots are emerging. These include Kenya’s dominance in agritech finance ($95 million raised in 2024), Egypt’s advanced aquaculture sector, and South Africa’s growing partnerships with global markets, among others.

Challenges

Challenges remain for investors to reap the benefits of Africa’s agricultural industry. Only 4% of investment in Africa and only 3% of global development funding goes to the agricultural sector, resulting in an estimated funding gap of $200 billion. This is despite the fact that investments in agriculture are two to four times more effective at raising incomes than those in other sectors, considering that it employs over 60% of Africans. Investors often misrepresent the risks and overlook the opportunities of smallholder farmers, who account for 80% of the farming workforce and are responsible for as much as 90% of food production in some countries. Such misrepresentations underappreciate the innovation and entrepreneurship happening within the industry already, and thereby limit partnership opportunities.

Challenges are also posed by remaining infrastructure deficits and climate change, which, for example, means that the continent’s yields of the main cereal crops only reach 25% of their full potential. In 2024, floods across Nigerian states destroyed approximately 700,000 hectares of farmland and in 2023, blight in the country’s ginger crop led to a loss of ₦12 billion (approximately $7.6 million at the time it was announced). 

Investment strategies

Given the opportunities, challenges, and the successful ventures so far, a few strategies emerge: 

Explore integrated business models: Investor funding to vertically integrated agribusinesses have proven most effective at serving smallholder farmers, surging from $12.1 million in 2019 to $82.4 million in 2022. Approaches that integrate production, processing, and distribution (unlike single-point solutions), provide the comprehensive support ecosystems that smallholder farmers require to transition from subsistence to commercial farming.

Embrace digital-plus-analog solutions: Purely digital approaches often fall short for smallholder farmers with limited digital literacy and trust. Investment flows so far have favored hybrid models that combine technological innovation with physical touchpoints that maintain human connections alongside technological advancement.

Deploy patient capital models: Traditional venture capital timelines and scale expectations are misaligned with the realities of African agriculture. Philanthropic-backed patient capital can be one avenue that can enable companies to meaningfully impact smallholder farmers within realistic timeframes to address the sector’s inherent complexity and longer development cycles.

Prioritize climate-smart innovations: Capital is increasingly flowing toward climate-resilient solutions. Investment in drought-resistant crop varieties, precision irrigation, and regenerative farming practices both addresses immediate productivity challenges and positions portfolios for long-term sustainability.

Leverage blended finance mechanisms: The $200 billion annual funding gap to create a fully sustainable agrifood system requires innovative financing structures. Successful models like OCP’s and IFC’s AgriFinance Platform (which is mobilizing $800 million in blended capital by 2030) demonstrate how blended capital can mobilize private investment by de-risking agricultural ventures and making the sector more attractive to institutional investors.

Focus on regional integration opportunities: The African Continental Free Trade Area (AfCFTA) is projected to increase intra-African agricultural trade by 574% by 2030. Investors should strategically position themselves within these regional value chains and/or cross-border infrastructure to capitalize on reduced trade barriers and expanding market access.

All in all, investors who can integrate these strategies while considering the nuances of the industry could find themselves at the forefront of feeding the world’s fastest-growing population—with demand that can generate both strong returns and transformative impact.