The Innovation Journey Program was created as a matchmaking opportunity for innovative Israeli digital AgTech startups and players in Ethiopia that are engaged with smallholder farmers. The goal of the program was to build innovative partnerships that will pave the way for Israeli startups to enter the large agricultural market in Ethiopia while contributing to increasing productivity, output quality, and income among smallholder farmers. Now, some of the invaluable insights acquired during the program are available to anyone who wishes to understand the Ethiopian market better.
Throughout 2021, the Pears Program for Global Innovation partnered with the American Jewish Joint Distribution Committee (JDC) to build and steward the second cohort of the Innovation Journey Program (IJ2). After concluding IJ2 and consolidating the acquired materials, the organizations are proud to share a handbook that contains the knowledge that was generated about the market and its opportunities.
When thinking about agriculture markets with high potential in Sub-Saharan Africa, Ethiopia presents an interesting case. With a population of 115 million people, Ethiopia is the second most populous country on the continent and is strategically located between the supply chains of Asia and Europe. Agriculture, in particular, is the country’s main source of employment and exports. Ethiopia is the 5th largest producer of coffee globally and the homeland of the Arabica blend; hosts the largest cattle population in Africa; increasingly supports textile production; and has potential to address some of the global demands for certain crops, improving its farmers productivity and diversifying their produce. During the past few years, the government has promoted policies that are intended to liberalize the market and a historic peace agreement was brokered with Eritrea which gave landlocked Ethiopia the prospect of strategic access to ports.
At the same time, Ethiopia also suffers from a challenging reality that makes doing business there quite complex. Forex is extremely limited, smallholder farmers have virtually no access to finance, and the market suffers from inefficiencies due to the persistence of monopolies in some sectors. There is low penetration of information and communication technologies (ICT) services and almost no digital payments infrastructure. Internal unrest during the past 18 months has created instability and concerns for the future. Some potential investors and entrepreneurs might question whether the opportunity is worth the challenge.
IJ2 was built to expose Israeli AgTech innovative technologies to the opportunities and the specificities of the Ethiopian market, giving them the chance to explore it carefully and intelligently. It was designed to teach selected startups about the realities of smallholder farming in Ethiopia and help them understand how to effectively engage with the market. Moreover, due to COVID-19 related travel restrictions that persisted throughout 2021, the planned trip to Ethiopia was replaced by a matchmaking process that brought together the participating companies and stakeholders from the Ethiopian agriculture market virtually, helping them explore opportunities for collaboration based on structured interactions.
The program concluded in November 2021 and generated several successes. Ten innovative digital agriculture startups from Israel went through a learning and adaptation process and were matched with 19 stakeholders from Ethiopia’s agriculture sector. Around 50 hours of training, mentorship and interaction and some 17 initial partnership discussions show that despite the market’s challenges, both sides are keen to engage and explore working together. One Israeli startup even took the decision to make Ethiopia its primary target market for 2022 and has advanced into a market entry process there. The voices from the field indicate that with recent changes in regulation around digital payments, the opportunity is becoming even bigger.
We at the Pears Program believe that the first necessary step in exploring a new developing market is understanding its reality, which very often varies significantly from what we are used to in more established markets. Knowing better the conditions on the ground and the needs can help us shape more precisely our value proposition and talk to partners in a way that they feel that we have something they truly need.
This is why we are sharing this important source of knowledge, with the hope it reaches more Israeli innovative tech players and stimulates their curiosity and sense of opportunity in the Ethiopian market. Although bringing technology to the Ethiopian market will not be easy, the green field it currently offers may become a huge success in the longer term.