A solar revolution in African agribusiness

Every farmer that has ever worked the soils has relied on the power of the Sun.

But farmers around the world are increasingly looking to harness the Sun in another way – through generating electricity from solar photovoltaic panels.

In Africa, farming in large parts of the continent, particularly in more remote rural areas, continues to take place with very little mechanisation. With no means to power machinery, farmers are unable to pump water for irrigation, or use refrigeration to store produce, or carry out activities such as milling, drying and other forms of value-added processing.

This situation leaves rural communities stuck in a low-income trap. “There’s a direct connection between the energy poverty reality and food poverty reality,” says Carlos Sordo, senior product manager for productive uses of renewable energy at GOGLA, an industry group for off-grid solar.

Even where power is available for farms and agribusinesses, it is often supplied by diesel generators that are expensive to operate, as well as highly polluting.

As in other sectors, solar power is often the most realistic way to bring power to agribusinesses in areas that lack grid access. But scaling-up the technology so that Africa’s 250 million farmers can enjoy the benefits of a reliable power supply will be far from easy.

Power struggle

Shortly after graduating from college, Nigerian entrepreneur Onimisi Charles Atere launched a digital market access business aimed at Nigerian farmers. As he engaged with farming communities, he realised the depth of the energy difficulties in the sector.

The reliance on diesel for powering basic mechanical processes struck Atere as illogical, given that Nigeria boasts some of the world’s best conditions for solar energy. “I started thinking, how can we help these farmers tap into this abundant natural resource,” he tells African Business. The result was his decision to launch a new company, Nimsy Agro Solar Concept, to provide solar-powered irrigation pumps and other agricultural equipment for farmers in northern Nigeria.

The company made a “big breakthrough” last year when it received a major order from the NGO Heifer International, which subsequently led to increased interest from other customers.

The most basic challenge facing companies like Nimsy Agro is that farmers struggle to afford the upfront cost of investing in solar-powered equipment.

Atere has attempted to address this problem by partnering with Heifer International to establish a lease-to-own model, in which farmers pay for their equipment in instalments over two years.

Nimsy Agro, which recently won first prize in the Africa Energy Entrepreneurship Awards from the Sustainable Markets Initiative and Octopus Energy, now has plans to expand its offering beyond its current base in Northern Nigeria. “Our long-term plan is to be able to reach at least one million farmers with our solar agricultural products across Nigeria and sub-Saharan Africa within the next five to 10 years,” says Atere.

A key factor in nudging farmers towards using solar energy is the rising costs of diesel. In Nigeria, the removal of diesel subsidies in 2023 led to a sudden tripling of energy costs. Habiba Ali, founder of Sosai Renewable Energies, another Nigerian company that distributes a range of solar products and systems, says this has helped spur demand for solar alternatives.

“People use a lot more money buying fuel,” she says. “And so when they see an option, they actually do go for it.”

Ali adds that solar power can have a range of uses for smallholder farmers, which can potentially enable rural areas to move up the value chain. “We can also have milling and processing within the community so that they don’t have to sell their produce quickly to middlemen, who actually make the most money. They can actually add value to these food crops in their community and sell at a premium.”

Crossing wires

One of the factors holding back progress in extending solar energy is a lack of coherence in policymaking around energy access and energy costs for agribusinesses. “There’s always been a fragmentation between the agricultural sector and the energy sector in Africa,” warns Sordo. “Ministries don’t talk to each other.”

The lack of coherence is also visible among development partners. The World Bank, Sordo says, works with both energy and agriculture ministries, but runs “similar programmes with very different designs,” that he says end up worsening fragmentation.

To illustrate the lack of joined-up thinking, as part of the World Bank-led Mission 300 initiative, which aims to bring electricity access to 300m people in Africa by 2030, 12 African countries have agreed national energy compacts. These compacts contain detailed strategies for achieving electrification. Yet seven of the 12 countries do not even mention agriculture in their compacts, while three other others make only superficial references to the sector. Only Malawi and Zambia pay significant attention to electrifying agriculture in their compacts.

Neglect at the policymaking level translates into a lack of awareness about solar energy among agribusinesses. “The actual body of the problem is the majority of the agri industry in Africa do not have a clue about services provided by energy companies,” says Sordo.  

While he does believe progress is being made, notably with solar-powered irrigation, and expects a further acceleration in the coming years, Sordo emphasises how more “sensitisation and awareness raising” is needed for stakeholders throughout the sector. 

Financial sustainability

One of the key tasks is ensuring companies offering solar energy services can be financially viable. Sordo notes how grants from donors often favour companies that serve smallholders. While this is valuable, he suggests that companies seeking a “healthy portfolio of customers” will also need to look for customers among larger-scale agribusinesses.

“Having anchor customers providing anchor demand is definitely valuable to the financial stability in the long term,” says Humphrey Wireko, managing director at CrossBoundary Access, a blended finance platform for mini-grids. “Some of the best customers on the mini-grids are folks who are running milling machines and things of that nature.”

“In order to make a mini-grid profitable, you need people to be using electricity. You need people to be using machines,” Wireko continues. This, he admits, is far from easy. Financing access to equipment can help, but only up to a point, given demand for agricultural machinery is often highly seasonal.

CrossBoundary Access has just launched a project to invest $20m in mini-grids in Madagascar alongside renewable energy company ANKA, with the aim of connecting 62,000 people to electricity by next year.

“To become a better customer on the grid, you need to earn money, and to earn money, you need to have a reliable, strong and sustainable business,” says ANKA’s CEO Camille André-Bataille. To help address the financial challenge of operating mini-grids in rural areas of Madagascar, the company started developing an ‘AgriGrid’ concept in 2017. This aims to create a “virtuous cycle” where solar power is used to build agribusiness enterprises and stimulate demand for power so mini-grids can operate sustainably.

Ultimately, the potential benefits of solar power for Africa’s farmers are obvious – but how to make access to solar power financially viable remains less certain. In a continent where sunshine is rarely in short supply, scaling-up solutions to this problem will be crucial if Africa is to finally fulfil its promise to become an agricultural powerhouse.