How can Agri-Tech embrace digital innovation for improved global growth?
Agri-Tech, or agriculture technology companies, operating in African markets can face a range of challenges which can impact their growth and cause increased costs. Agri-Tech is a booming industry, with a predicted growth rate of 12% per year, according to the International Finance Corporation (IFC). In fact, it’s predicted that there will be 200 million small-scale farmers and pastoralists registered with Digital for Agriculture in Africa by the year 2030, according to the Digitization of African Agriculture report.
In a report by the CIO, Jermia Bayisa Lulu, CEO and co-founder of start-up Debo Engineering Agritech, spoke with regards to his native Ethiopia, ““Our economy is based on agriculture and I believe it should be further supported by technology to increase agricultural productivity… The same is true for most African countries that need to be supported by technological solutions.” But this industry comes with its own set of challenges, and farmers in Africa need digital solutions to support them.
African countries can experience a lack of developed banking infrastructure and gaps when it comes to innovative solutions, resulting in high fees with traditional banks. According to the World Bank, the average cost of sending $200 to Sub-Saharan Africa is about 9%, versus the global average of 7%. Currency fluctuations and businesses trying to get FX rates that suit their financial appetite make it difficult to receive payments from their customers. We’re breaking down what strategies can be implemented to help overcome these hurdles and to help Agri-Tech companies in Africa thrive.
Developing a local partner
A starting point for Agri-Tech businesses is evaluating who they partner with. Do they have an understanding of local markets? Are they equipped with a non-traditional banking partner who’s designed to accommodate their needs? Agri-Tech businesses should develop partnerships with distributors and the right payments provider who understands the markets they operate in, in particular the local banking regulations. Not only will this help smoothen the operations, but it ensures they remain compliant and don’t fall victim to any penalties or fines.
Embracing digital platforms
Another element of their strategy is moving away from traditional banks which often come with high fees, long delays, and poor communication on the status of the payment. Adopting a digital payment platform that’s specifically designed for cross-border payment support for emerging markets can help reduce fees, improve user experience, and strengthen relationships with customers and suppliers. This will help Agri-Tech companies receive payments from customers safely, on time, and better yet, in their local currency. The success of Agri-Tech is strongly tied to the technology the farmers adopt, and that can keep up with this growing industry.
Mitigating currency risks
Agri-Tech companies can help reduce the ongoing struggle of dealing with currency rate fluctuations by using a payments provider that allows FX rates to be set by the businesses themselves. Using a FX marketplace where orders can be executed, prices negotiated and funds arriving swiftly into their account in the chosen currency, allows for more control over a volatile market. Another method would be using multi-currency wallets, where funds can be held in a vast range of currencies and stored in a digital platform to lock in favourable rates until the time is right to payout.
Overall, there are several methods that Agri-Tech companies can use to help tackle cross-border payment challenges, and overall save themselves time and money, while improving their experience.
Get in touch today with us at Verto and we’ll answer your questions and get you on your way to safer, faster, and lower cost cross-border payments. Our deep understanding of local market regulations and commitment to compliance gives you the peace of mind to operate globally and grow your business.
Be part of the revolution of better cross-border payments for Africa and join us at the Africa Tech Summit Nairobi, February 15 - 16, 2023. You’ll find out more about how Agri-Tech companies can improve currency trade and global payments.