Tracy Kim Horn: Welcome to The Disruptive Voice. I'm Tracy Kim Horn. Agriculture employs about 30% of the population in Nigeria today, but the industry is ripe for innovation, with many of the technologies that are used across the supply chain dating back many decades. Contact Consulting Nigeria seeks to help organizations gain an in-depth understanding of food-related value chains in markets such as Nigeria, where the data is critical but unavailable or unreliable.

Tracy Kim Horn: Led by Folusho Olaniyan, a 20-year vet of the food industry and a US Department of Agriculture Cochran Fellow, the Contact Consulting team leverages its deep expertise and networks across various food and agriculture-related fields to draw actionable commercial and operational insights that help to drive quality decision making. Today we share with you a conversation between Harvard Business School senior researcher Efosa Ojomo and Mrs. Folusho Olaniyan, founder and CEO of Contact Consulting Nigeria.

Efosa Ojomo: There's been a lot of buzz about agriculture on the continent. In fact, over the last five years, there's been about $5 billion poured into agriculture. Sixty percent of Africa's labor force is in the agriculture space. You can't go to a conference and not hear a lot of dignitaries, investors, politicians, people talk about agriculture, and so we really want to demystify agriculture for our listeners.

Efosa Ojomo: Now, I said $5 billion has been invested over the last five years or so now. What are some constraints in the space that's preventing that from becoming $50 billion, or what do you see as some major constraints in the agriculture space on the continent?

Folusho Olaniyan: The constraints can be broken down into different segments. There are some that are natural hazards. I would refer to things like the soil level, the soil conditions. Those ones are natural. There are abiotic and biotic stresses. The biotic, the pests and the diseases, they are biotic. There's natural problems like drought, heat, soil acidity and salinity. The other problems are inefficient production due to low-level technology in agriculture.

Folusho Olaniyan: The other issues that could hinder the growth of the agric sector is the poor infrastructure in Africa. Another problem which is not highlighted, as should always be, is the post-harvest management of crops. That is a huge aspect of the constraint block.

Efosa Ojomo: Yeah. I mean, seems like there are a lot of issues, but at the same time, billions of dollars are pouring in. If you took one or two value chains for instance, can you help us understand how these issues or some of these issues affect say the production of cassava or rice or tomatoes, or one of these value chains on the continent?

Folusho Olaniyan: Rice, for example, produced in Africa. When the rice is harvested, because of lack of storage facilities, the farmers have to sell off as quickly as they can, before the crop starts to lose its quality. That way, they don't have negotiating power to get best prices. They just take the price that is offered to them, because the longer the harvested party stays, the worse it is for them, so the price deteriorates by the day.

Folusho Olaniyan: For that reason, if they had a storage facility, it would have been easier for them to store up whatever they harvest and wait until when the prices are better to sell, and make more profit. Now, they just produce and they sell. That's one problem.

Folusho Olaniyan: Another problem is, because of this lack of storage facilities, most factories cannot produce to full capacity, because you need a minimum quantity for you to produce at full capacity and be profitable. Because they cannot store the harvests as they come, they never are able to enjoy the economies of scale, because if they have a little quantity, they just process it, rather than processing at optimal quantities.

Efosa Ojomo: That's very interesting, because a lot of the issues I hear about when talking to people about agriculture on the continent deals with say the lack of fertilizer, right? What I'm hearing from you, though, is that you might actually be able to say use fertilizer, increase yields, but if you don't fix some of these post-harvesting issues or storage facilities, transporting from Point A to Point B, that the impact is not going to be as large. Is that fair?

Folusho Olaniyan: Yeah, it's not. What you may end up with is jacking up production and also increasing the loss.

Efosa Ojomo: Oh, wow.

Folusho Olaniyan: Because if you don't store it well, if you don't handle your harvests, you have a lot of losses. It will be like producing and thrown away. It's critical to fix storage and logistics for you to reduce losses at that point in the value chain.

Efosa Ojomo: Okay. We've talked a little bit about rice. Is there another value chain or another crop that comes to mind, that you see as having huge potential if we fix some of the underlying issues?

Folusho Olaniyan: Okay, like tomatoes now. They're highly perishable. At the same time, there is a huge demand for tomatoes.

Efosa Ojomo: Yes. I love my jollof rice.

Folusho Olaniyan: The thing is, you see, tomatoes are produced in the Northern part of Nigeria. It could take as much as eight to ten hours for the trucks to bring the produce down to the south and the western part of the country. By the time the lorries arrive, the way the produce is stacked in the truck, the ones at the bottom are rotten. Usually you lose not less than 40% in transportation.

Folusho Olaniyan: Whereas if they had storage facilities where they could part-process these tomatoes into paste or just into tomato liquid and juice, and store them up in drums in cool temperatures, they can actually produce in large quantity and sell when the prices are right.

Efosa Ojomo: Interesting. A little bit of post-processing for the tomato before perhaps heavy transpo, or transport where you're going and long distances. Wow. Interesting. Are there successes on the continent, though, in terms of how countries might have improved their agriculture value chains?

Folusho Olaniyan: Okay. For example, for rice, you need a lot of water to grow rice. Organizations have helped African countries to develop a technology called smart valleys, and with smart valleys you can increase your rice yield by about 30 to 40%, and that translates into more income, more profit for the farmers, so that technology works.

Folusho Olaniyan: Then there's another technology that is actually being put to use here in the US and in South Africa. These are root stimulants that are produced from red and brown seaweeds. What this does is to accelerate root growth such that, when you have more roots, that means more water gets into the plant, and then the plant becomes bigger. The fruits grow bigger, and within seven, eight days, you see the difference when you compare it to your control plant that does not use this technology.

Folusho Olaniyan: This is produced by a South African company, and they actually have a subsidiary here in the US, Afrikelp. They help tomatoes, so their technology works for tomatoes.

Efosa Ojomo: Yeah. I mean, that's fascinating. It's amazing. As I hear you talk about different value chains, different crops, I am left thinking about some of the theories that we study here at the center I work at, at Harvard Business School Forum for Growth and Innovation. It's one that I've talked about on this podcast before. It's called interdependence and modularity. Essentially what I'm hearing, though, is when you have multiple components in a value chain, if you optimize just one of them, then you're really not going to improve the outcome of the whole system.

Efosa Ojomo: That seems to be the approach that many are taking in African agriculture, right? I go in and I improve perhaps the yield for farming, or I go in and I improve maybe this small storage area here, but perhaps the yields aren't quite improved. Is your suggestion that as an investor, I should go in and work on the whole value chain myself, or what are ways that I can go in and actually have the most productive output or outcome in terms of investing?

Folusho Olaniyan: Depending on what point in the value chain you want to intervene. The value chain starts from production to farm to processing. From processing it goes to distribution, marketing. What I would recommend is for any investor, if you choose to go into processing or to production, you should invest in a package that gathers intelligence across the entire value chain.

Folusho Olaniyan: We need agric value chain intelligence. That way, you invest in data from the entire value chain while still focusing on that aspect you want to intervene, because it's difficult for you to make a change happen, to your point, if you don't know what's happening around you. Intelligence is very important, and I'm sure that is one of the things that would move agric forward in Africa and Nigeria.

Efosa Ojomo: Yeah. Now, are there examples of organizations who are looking at this issue holistically? Are there events? What are some things that some of our listeners can do if they wanted to actually go out and invest, or understand more about the agricultural space in different countries on the continent?

Folusho Olaniyan: What I recommend is that whoever's interested in agriculture should try and look for opportunities to network with the players and the actors in that sector. One is attend exhibitions and conferences. One will be happening in Nigeria in November called Agora West Africa, and there'll be value chain actors from over 60 countries.

Efosa Ojomo: Wow.

Folusho Olaniyan: Yeah. This is the third year, and everybody's under one roof. You can talk to the leaders and the key players in the entire value chain, from cocoa to rice to cassava to pepper, everything you want to talk about. When you have all these people working with you, when you can talk to them, then it's easy for you to identify where you want to get in and which of the value chains you think would be more profitable.

Efosa Ojomo: Excellent. It's hard for us to talk about agriculture and perhaps not talk about the government, even though we are at Harvard Business School, not the Kennedy School of Government. I'd like to at least ask the question. Is there a place for governments to play a role here, and what sorts of things can they do? Say a governor or a commissioner is listening to this podcast. What can they do?

Folusho Olaniyan: Government should put in place enabling policies that will stimulate growth, that would attract foreign investment into the country, that would give incentives to innovators. That's extremely important. Currently, incentives are being given by most donor agencies and other partners.

Folusho Olaniyan: For example, one challenge has just been launched which is live, sponsored by the Rockefeller organization. It's called the cassava YieldWise Initiative, and the challenge is to increase the shelf life of cassava after it's harvested, and there's a cash prize for whoever is the winner. That has been launched in Nigeria, and you should hear who the winners are by August.

Folusho Olaniyan: More of these challenges and incentives should be given out there, put out there for young people. There should be some that should be gender-based, to encourage inclusive participation in agriculture. Governments, by policies to enable the private sector to bring in the foreign investors and then donor agencies and other stake holders incentives for innovation, that's key.

Efosa Ojomo: Yeah. I mean, it sounds like, regardless of what the policies or incentives are, thinking about agriculture, you have to think about the whole value chain. You have to think about the whole system. You can't really just optimize for one component and expect significant returns or a really big outcome. Is that fair?

Folusho Olaniyan: Well, if you know for a fact that agriculture is a science, it's also a business, so you can't cut corners. You must have information and knowledge about what's happening around you, because without that, it's not possible to come out with a solution that would resolve the issues and constraints that are hindering progress. The way to go about it is just invest in data across the value chain, the intelligence. Then you now focus capital expenditure on machinery at the exact point where you think you play best.

Efosa Ojomo: Excellent. I know we were having a conversation earlier about Ethiopia and how they've been able to significantly improve this industry in the country. Can you can you talk a little bit about some of the things Ethiopia has done?

Folusho Olaniyan: Yeah. The case study is on Ethiopia, and they were able to double their wheat production in five years, starting on one acre, and today it's on 1,000 acres and 1,000 metric tons of wheat is produced. They were able to do this by making some movements that tilted things in favor of that product.

Folusho Olaniyan: Government came up with policies that supported that sector. They introduced high-yield varieties. A lot of investment was made in irrigation and technology, and players and innovators were incentivized. These encouraged them. This is a real case study, from one acre to a thousand acres. That tells you that this thing can work if you put incentives in the right place.

Efosa Ojomo: Yeah. Thank you so much. That's just fascinating. In fact, as I think about the demographic explosion that Africa is currently experiencing, and is going to experience for decades to come, I don't know how we're going to be able to feed the continent without innovation in the agriculture space. The UN is projecting that we're going to be about 2.5 billion people by 2050. By 2100, we're going to be about 4 billion people.

Efosa Ojomo: The idea that agriculture is just a nice industry, that's not enough to really explain the importance of this space in agriculture. As you hear those statistics, those population statistics, how do you feel? Are you hopeful? Are you optimistic?

Folusho Olaniyan: Yes, I'm hopeful. One constraint which is also important is lack of finance, access to finance and access to [inaudible 00:17:35]. It's a big issue, and some people are a bit worried. They just don't want to jump into investing in Africa, for some obvious reasons. Some think they've burned their fingers in the past, though we have a lot of success stories. Some look at the corruption in the continent and are like, "Will I get the best yield for my funds?"

Folusho Olaniyan: What I'm going to say is that these things can happen. You can actually help as a partner or a donor by developing capacity, the technical skills and capacity, of people in the agric space. There are donor agencies who focus in capacity development. If that's put in place, the right capacity and caliber of people will not mismanage funds. They'll direct the funds to the appropriate sector, and the interventions will be measurable.

Efosa Ojomo: Yeah. Again, it's one of the theories that we've talked about here. You just touched on it, is the whole idea of capabilities and how an organization's capabilities are broken down into their resources, processes and their priorities. Training people on the kinds of processes that can improve the yields, that can improve post-harvesting issues or resolve post-harvesting issues, focusing on improving capabilities that way, in a holistic manner, seems like one of the sure ways to invest and improve the state of agriculture on the continent.

Efosa Ojomo: Well, thank you so much for your time today here, Folusho Olaniyan. We really appreciate it here, and we hope that some of our listeners out there have gotten some good input on how they can think about agriculture on the continent, some of the successes and ways that they can get involved.

Tracy Kim Horn: The Disruptive Voice is a production of the Forum for Growth and Innovation, a research project at the Harvard Business School guided by Professor Clayton M. Christensen, the Kim B. Clark Professor of Business Administration. Follow us on Medium at HBSFGI.