NEWS

Egypt’s agritech entrepreneurs bring the farm to the boardroom

The potential for agritech startups in Egypt is huge

Source: WAMDA

For eight millennia the thin strip of land along the Nile, and the green fan of the Delta, supported Egypt’s growing population with bountiful harvests and herds.

Innovation came in bursts as one interloper after another introduced new ideas, but today the change is coming from within as a handful of entrepreneurs seek to use the booming technology startup scene as a platform for change.

The agricultural industry employs a quarter of the country’s workforce, and in 2012 – the latest statistic available – provided almost 15% of GDP from 3.6% of the country’s landmass.

Yet it is also threatened by a myriad of issues, such as urban expansion, climate change, and soil and water salinity. Egypt tops the ranks for desertification rates and, in November of this year, GIZ Cairo program coordinator Ariane Borgstedt told the Cairo Climate Talks there isn’t enough water for the sector to completely support the 93 million-strong population.

These anxiety-inducing stats are pushing some entrepreneurs to look away from the crowded app-making market and, with half an eye on social impact, towards solving some of these problems.

There are hydro and aquaponics startups Agrimatic Farms, Bustan Aquaponics, and Schaduf which say their technology can make water savings of 90% over traditional agricultural methods, or hardware companies Cubii Systems and Farminal which provide high-tech answers to problems in the dairy sector, and BioGas People and KarmSolar which provide renewable energy technology for agricultural purposes.

The potential for agritech startups, says MC Egypt agricultural officer Benjamin Selle, is huge. “The pipeline is full of great ideas,” he told Wamda. “There’s dozens of amazing ideas, amazing innovations, dozens of super researchers in this country.”

From djellaba to turtleneck

Selle’s colleague Yara Eid says an attitude shift towards agriculture startups has only come about in the last year, as a handful of agritech businesses move from the idea stage to building prototypes, or begin to commercialise their products. The perception of agriculture as a low-tech, family business sector is changing slowly.

“It used to be the idea that agriculture was rejected [by investors] but now that’s not happening,” she says. “People are starting to see the value of having a diverse portfolio. They are moving on to a more long term vision.”

For Flat6Labs CEO Ramez Mohamed, the sector is not adopting technology as much as it should, and so views it as potential for innovative ideas to reinvent Egyptian agriculture. Moreover in a country where agriculture is so important, he feels there should be more emerging agritech startups than there are.

Farminal, with its mastitis (udder infection) detecting prototype, is the only agritech startup Flat6Labs has chosen for the incubator and the experience “was really good, we’d like to see more”.

When it comes to acquiring investment persuading people to look at something other than app makers and software designers is a challenge. Often there is a two or three year lead-in as startups conduct R&D, and this scares off those without a thorough understanding of both technology and the agricultural sector.

“First I need to be sure that everything is ok. I have [a] partner, I have [a] technology team, and then we will see how it goes,” said BioGas People founder Hany Elkhodary.

Farminal founder Waleed Sorour says his software solution, which provides an early warning system for dairy farmers’ biggest herd health problem, is one year into developing the prototype and still has over a year before it will be ready to hit the market. All the cash he has from the Flat6Labs seed investment, and an ITAC (Information Technology Academia Collaboration) grant from the IT industry development agency ITIDA, is going solely into product development.

Hurdles  

If talking investors into a multi-year run-up to commercialisation is difficult, agritech entrepreneurs must also contend with some unique hurdles their city-based colleagues do not.

Mostafa Hassanen, founder of aquaponics startup Agrimatic Farms, says land use and access are two big problems. Egypt’s tangled land registration system meant he’d “never know” if the person he was renting or buying land from was the true owner. Moreover, although his team had established a partnership with a farming family close to Cairo, he had searched throughout the Delta region and beyond for a piece of land on which to test and start his business.

He expects land use to become a problem as Agrimatic expands, because aquaponics combines fish farming with agriculture and the company’s use of land designated for one or the other may bring bureaucratic objections.

Finding interested farmers to test or sell products to in a sector described by agritech entrepreneurs as “disorganised” is difficult, as is locating those who may adopt new technology, or even academics with whom they can share information or scale up a project into a business.

Ashraf el-Sharkawy, co-founder of venture capital firm Innoventures, says a lot also depends on the government. Given Egypt’s low foreign exchange reserves and high food import bill, he says government policy should focus on developing agriculture at home to preserve the former and lower the latter. Unfortunately, “I don’t see a strategy” to do so, he told Wamda.

Research 

Research is at the foundation of agriculture in Egypt. Projects such as the ’,on returning heavily sa line land to agricultural use, or the Agricultural Research Centre’s studies into grain genetics, are just the tip of an iceberg that is a large academic field in Egypt.

Yet accessing this information is hard. 

Much research is “stuck in the dark corridors” of government and academia, Selle says, while Hassanen complains of researchers who aren’t used to publishing their findings and don’t wish to share their ideas.

Sorour, however, has hit on a solution. Part of winning the ITIDA grant in October, a sum he refused to specify but which generally has a project budget of up to $140,000 USD, was a collaboration with Cairo University. His business partner Dr Mohamed Rushdi teaches at the university as well as conducting some research there, and they share information.

Investors and support organisations such as MC Egypt, Ice Cairo, and Nahdet el Mahrousa are watching this sector closely and expect to see some successes emerging in the medium to long term.

“Technology made in Egypt is something that we are looking for and there is an interest,” said el-Sharkawy. “We are looking for innovation in agriculture because we believe it has potential.

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