University of Johannesburg: African Market Observatory
Updated: Nov 22
By: Simon Robers
Climate change continues to have devastating effects on our planet, and nowhere is this more apparent than in the agricultural industry of Southern and Eastern Africa. Agribusinesses are facing the challenge of meeting the food demand in their regions while also battling the impacts of climate change.
With 90-95% of food production in Africa being rainfed, climate-based disasters such as droughts and floods are wreaking havoc on the continent, accounting for 80% of loss of human life and 70% of economic losses in Sub-Saharan Africa.¹
This is no small loss - agriculture employs 65% of the labor force and attributes 32% of Africa’s entire GDP.1 One of the key opportunities to try and address this growing challenge is better access to market data - something that the University of Johannesburg’s Centre for Competition, Regulation and Economic Development (CCRED) knows quite a bit about.
Our research indicates that smaller agribusinesses struggle to get fair values for their produce due to factors like high transport costs and lack of proper storage. Furthermore, there is no fair access to markets in these regions, even between neighbouring countries.
Access to real-time information is crucial for agribusinesses to work towards better-working markets across Eastern and Southern Africa, where market data is scarce. To address this, CCRED developed the African Market Observatory (AMO) which includes resources like the price tracker. The price tracker summarizes key trends in staple food prices in East and Southern Africa, focusing on soybean and maize prices in the context of factors like trade beginning in harvest season and low precipitation levels.
For data collection, CCRED worked with Poket to crowdsource crucial pricing information across Africa, while sharing it back with agripreneurs in real-time to enable data-driven decision-making.
Poket configured their data collection solution to enable market participants across Africa to enter real-time pricing information about local commodities in their region. Some of these commodities included soybean and maize. Poket’s technology calculated real-time rolling averages for commodities at the local level using these inputs and shared them with all participants on a publicly-facing dashboard (above). This was a completely new approach, and was essential for the AMO project, as it allowed market prices across Southern and Eastern Africa to be self-reported by agribusinesses straight from the market, in real time, and empowered participants to advocate for fairer prices using the power of real-time data.
What made Poket’s technology exciting for this project is that it works on low-cost Android smartphones across Africa, and can be used completely offline while in the field. It is also end-to-end encrypted, with a lock-and-key design that only allows access to those with a specific code for secure access.
As a result of this data, the AMO was able to help uncover that markets in Eastern and Southern Africa are not functioning well in relation to soybean and maize. For instance, as visualized in Figure 2, maize prices were much higher in Eastern African regions like Nairobi, Dar es Salaam, and Rwanda (exceeding US$500/t) compared to Southern African regions such as Zambia (around US$200/t).
The prices were suppressed due to export restrictions, and the data revealed that large buyers took advantage of the huge price differences between neighboring and international regions, offering farmers unfairly low prices for their produce. This, along with export bans, incentivized maize smuggling out of Zambia to sell at higher prices.
Access to an average of the self-reported prices within various regions via Poket’s desktop dashboard was essential for smaller agribusinesses to make informed decisions about selling their produce at fair prices and better understand the market. Moreover, the self-reported prices that were collected using Poket provided current information not only for maize but also soybean in the context of economic and environmental factors as detailed in the price tracker.
El Nino’s arrival will bring extreme weather patterns not only in Southern and Eastern Africa, but globally, posing new challenges for agribusinesses. According to IPCC’s AR6, all aspects of food security including production, processing, storage, distribution and consumption in Africa will be negatively impacted. In tropical regions, maize, rice, wheat and soybean yields are projected to decrease by 5% per degree Celsius of global warming. In Southern Africa, the summer rainfall region is projected to experience a 10-20% decrease in mean annual rainfall and an increase in consecutive dry days during the rainy season. In Eastern Africa, higher mean annual rainfall is projected in the eastern regions. Monitoring the market is crucial for survival in these conditions. Poket’s data collection solution enables the development of better climate adaptation strategies in these regions through crowdsourced real-time data
IPCC’s Sixth Assessment Report (AR6) in 2022 reported that due to climate change:
In Eastern Africa, mean temperatures increased by 0.7°C–1°C from 1973 to 2013. In Southern Africa, there was an increase in mean annual temperatures ranging from 1.04°C–1.44°C from 1961 to 2015.
Total agricultural productivity growth in Africa has reduced by 34% since 1961.
The range and seasonality of pests and diseases is altered, contributing to 10-35% yield losses for wheat, rice, maize, potato and soybean in Sub-Saharan Africa.
Resources
1. Adhikari, U., Nejadhashemi, A. P., & Woznicki, S. A. (2015). Climate change and eastern Africa: A review of impact on major crops. Food and Energy Security, 4(2), 110–132. https://doi.org/10.1002/fes3.61