Electrifying agriculture in Africa

Smallholder farmers in sub-Saharan Africa are the backbone of the region’s agriculture, producing 80% of its agricultural output. Yet, many remain unelectrified, limiting their productivity and growth. Innovative distributed renewable energy (DRE) business models are emerging as a solution. These models are increasing the affordability and accessibility of solar water pumps and agro-processing equipment. By prioritising farmers' needs and integrating user-friendly financing options, such as pay-as-you-go (PAYGO), these models aim to boost agricultural productivity and improve livelihoods.

PAYGO and Keymaker models are transforming energy access for smallholder farmers. PAYGO allows farmers to pay for equipment over time via mobile money, while the Keymaker model helps them sell their crops in downstream markets. These models address affordability and market access challenges, making renewable energy technologies more accessible and sustainable for farmers.

Factors influencing success

The success of DRE business models is influenced by each country’s regulatory, financial, and infrastructural environment. Nigeria, for instance, has a robust regulatory framework for mini-grids, facilitating easier operations for DRE companies. However, high-interest rates and stringent collateral requirements pose financing challenges. In Rwanda, clear regulations exist, but the government’s low priority on the off-grid sector limits market growth despite a stable currency and extensive mobile infrastructure. Zambia boasts well-crafted mini-grid legislation, though its draft status stifles growth, and rural road infrastructure is lacking. Mobile money’s widespread adoption aids PAYGO models, yet logistics remain a challenge. Zimbabwe, with its significant potential, needs regulatory improvements to foster market growth. The country’s volatile currency and financing constraints are major hurdles. Nonetheless, community-centered business models and increasing mobile money prevalence offer promising avenues for enhancing energy access and agricultural productivity.

The success of these models relies on addressing macro considerations and leveraging innovative approaches like PAYGO and Keymaker. By understanding and adapting to each country’s unique environment, we can create effective strategies for widespread adoption of renewable energy solutions, ultimately leading to improved agricultural productivity and economic growth for smallholder farmers.

Renewable energy business models can revolutionise smallholder farming in sub-Saharan Africa. By addressing macro factors and leveraging models like PAYGO and the Keymaker model, achieving universal electrification and enhanced agricultural productivity becomes more attainable.

Read more about our work on electrifying agriculture in our Business models for electrification of smallholder agriculture report, available for download here.

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