At the Energy Access Investment Forum in Dar es Salaam at the end of June 2022, Energy 4 Impact unveiled plans for ‘LEAF’ – the Livelihoods & Energy Access Facility – a new digital e-commerce platform designed to make productive use of (PUE) energy products and services more accessible to SMEs in agriculture value chains in rural Africa.
Products and services such as solar irrigation, transportation and cold storage can address the widespread problems that hinder the efficiency and productivity of African agri-businesses. The FAO estimates that one-third of food produced on the continent is wasted as a result of processing and manufacturing inefficiencies, the absence of cold storage and poor transportation. Low levels of irrigation (only 4% of arable land) undermines productivity and food security as well as resilience against the increasing occurrence of droughts. Without energy services, farmers cannot use the PUE equipment and tools they need to effectively process, package or store their produce. However, small-scale enterprises often struggle to identify suitable suppliers of the products and services that would help them avoid such pitfalls.
The LEAF platform has been designed following a 9-month feasibility study, funded by the Vitol Foundation, that uncovered the challenges impeding the growth of agricultural SMEs in East Africa. It interviewed financers, energy service providers, agri-processors, rural service providers and ecosystem builders, to better understand their requirements and constraints around decreasing post-harvest losses, boosting productivity and resilience, and identifying value addition opportunities.
It emerged that, while there is a myriad of businesses and initiatives providing innovative technological and financing solutions, the market is too crowded and fragmented to be easily navigated by SMEs. Companies struggle to locate adequate data on product fitting and there is dearth of power and appliance matching services curated to the needs of agro-processors. The lack of integrated transport and storage services increase both risks and costs for small-scale producers. Local lenders also have low trust in the business case, rentability and quality of investment in PUE equipment, which keeps transaction costs for SMEs high and lowers the availability of credit. The complex market constraints facing agricultural SMEs consequently inhibit the growth of the leading economic sector in Africa which employs approximately 65% of the labour force.
The next stage for LEAF is a prototyping and piloting phase for which Energy 4 Impact is seeking funding from other philanthropic donors keen to support the demonstration and refinement of the concept. When ready for public launch, it will operate as a fully-fledged B2B e-commerce digital platform which not only serves as a one-stop-shop for all businesses buying or selling PUE appliances and services, but also bundles critical services such as insurance, finance, transport, storage, logistics, market fitting, route-to-market, productivity opportunity mapping and mentoring.