The needs of the global sustainable development agenda are both broad and urgent, and innovation models are central to addressing them in a timely, efficient, and scalable manner, from promoting inclusive growth and ensuring the longevity of natural resources to addressing issues across the state of the human condition.
Inclusive businesses—whether they are large multinational corporations (MNCs), social enterprises, or impact investors— recognize that the private sector can play a lead role in solving problems and closing gaps to advance the objectives of global sustainability. Such gaps-closing can cost USD 3-5 trillion annually, according to some earlier estimates, and those costs have gone up significantly in a post-pandemic world. The value that businesses can unlock while closing the gaps is estimated to be in the range of USD 12-15 trillion a year. Ideally, thus, this suggests a macro-level argument for businesses pursuing an agenda of doing good even as they pursue profits and seek to do well.
While the macro-level argument provides a rationale for the private sector’s engagement in addressing sustainable development challenges, it is also essential to consider a bottom-up perspective through an analysis of the business models of individual inclusive businesses. Such a perspective is even more critical as we consider the role that digital technology can play as a key component of the business model and as a force for inclusion. Against such a backdrop, researchers at Digital Planet put a list of private enterprises that leverage digital technology to solve sustainable development challenges under a microscope—building a case study for each of them from a bottom-up perspective.
Through a case study approach, we hope to provide insights into an enterprise’s journey and ask the question: how is a company in a particular part of the world taking on a sustainable development challenge and helping close inclusion gaps? In addition, in each case study, we use a novel “Nine A’s Framework” to analyze the robustness of an enterprise’s business model. In doing so, we hope to provide an outside-in evaluation of the company’s strengths and weaknesses at the time of the drafting of this document and its potential to tackle its business problems along with the sustainable development objectives it was planning to address. Lastly, the compendium also facilitates a comparison of the enterprises’ business models, deriving a few common themes and learnings that other business leaders, entrepreneurs, investors, and policymakers could consider for future actions.
In this first edition of the case compendium, we covered three enterprises in the food system, concerning the welfare of smallholder farmers in three distinct developing economies. Our estimates show that the three enterprises can collectively address a total market worth USD 130 billion in economic value and help make advances towards many of the UN’s SDGs, including but not limited to: SDG 1, no poverty; SDG 2, zero hunger; SDG 5, gender equality; SDG 8, decent work and economic growth; SDG 9, industry, innovation and infrastructure; and SGD 17, building partnerships for the goals.
Below is an overview of the three enterprises in the compendium:
AgroCenta in Ghana and Cultivando Futuro in Colombia are digital platforms that facilitate direct trade among stakeholders in the agricultural value chain. The innovations enable financial, educational, and informational access to previously excluded segments of the market and help disintermediate legacy institutions and other structural elements that act as barriers to change, providing customized interventions to cater to the needs of individual farmers.
Hello Tractor, a self-described “Uber-meets-Salesforce for tractors” company, is a digital farm equipment platform that connects tractor dealers and suppliers with smallholder farmer customers across sub-Saharan Africa. Digitally integrating the agricultural supply chain not only allows farmers to improve their mechanization rates to drive up productivity, but also offers equipment manufacturers opportunities to better manage their fleets and access a previously untapped market
Looking across the three cases, some insights and learnings which emerged are:
Digitally enabled services are critical for scaling innovation and addressing the various development challenges, but it is not enough. Despite steps toward digital transformation, citizens in Ghana, Colombia, and countries across sub-Saharan Africa face significant barriers to realizing widespread digital access with uneven smartphone and mobile broadband usage across the board. Consider the fact that of the 600 million people worldwide living outside of mobile network coverage, 67% are in sub-Saharan Africa, and the percentage of those unconnected is disproportionally higher in rural and out-of-reach areas.
For inclusive technology-enabled business models to succeed, social enterprises need to consider these factors when developing their core businesses, accommodating users, and incorporating alternative means of access to the digital solution besides apps that might be accessible only on smartphones. In addition, there ought to be accommodations for situations where there is intermittent internet access or when the network is down altogether.
For example, Hello Tractor worked with experts specializing in a cellular internet of things (IoT) connectivity design for business and developed a telematics device, which can capture tractor usage and condition data, and store it locally when internet is unavailable. AgroCenta partnered with one of Ghana’s largest mobile network companies, Vodafone, to provide free voice calls between farmers and discounted mobile devices and bundles.
Digitally enabled applications, whether through mobile-based platforms, mobile banking, or asset sharing, are critical for a company’s success because they help the enterprise keep a lean organization while reaching a vast number of customers. One common theme we observed among the three cases as the core function of their businesses is that field agents are as important as the digital solution.
However, building trust and bridging the trust gap with customers tends to be sticky and requires flexibility and diverse strategies based on the local context. Many studies have cited farmers’ lack of trust in phone-based transactions as a key barrier to the uptake of their market linkage solutions in developing economies. The CEO of Hello Tractor has said that the booking agents’ business component has proved to be challenging to replicate across countries because of the often-incurred high cost of transportation and human capital needed for trust-building in a particular community. AgroCenta and Cultivando Futuro also had similar challenges interacting with their existing and potential customers.
One solution is to build a lasting relationship with local communities and/or development organizations that work under local capacity to carry out farmer product demonstrations, product tryouts, and awareness activities across various farming communities. For instance, in Kenya and Nigeria, Hello Tractor’s partnership with Technical Centre for Agricultural and Rural Cooperation (CTA), a development institution serving Africa, and the Caribbean and the Pacific, has shown promising usage increase and job creation results.
Time, investment, and consistency are vital in building trust in the long run. While maintaining a steady group of field agents is crucial to expanding visibility amongst hard-to-reach communities, it is difficult to sustain and scale long term and across expansion efforts. Devising strategies to build consistent demand is critical to making the leap from early adopters to the early majority and “cross the chasm” to diffuse widely across the intended market.
A successful business needs resources and capital to be sustainable and scalable. Traditional investors perceive the classic “bottom of the pyramid” market segment to be high risk and low return. Therefore, looking for partnerships that could offer smallholder farmers financial access like microlending, and alternative risk assessment profiles that solve farmers’ low access to formal financial services, is crucial for cost and risk management. Hello Tractor’s partnership with the agricultural machinery giant, John Deere, aids the company in securing tractors and flexible financing opportunities for fleet operators. On one hand, AgroCenta’s collaboration with influential partners like mobile network operators helps farmers save the cost of using mobile services. On the other hand, it helps the company deliver broad messaging campaigns to target customers.
Additionally, participating in events that offer broader exposure to wider audiences is a great way to build a business presence, attract funding, and increase the chance of forming a partnership with impact investors, philanthropies, large corporations, and multilateral organizations. All three companies in this compendium have won prizes on the international stage, increasing their chance of getting picked up by interested partners.
Though mobile phones have become the primary tool to plug into the internet, digital literacy amongst many smallholder farmers remains low. Ensuring that farmers are provided with digital skills training to learn, assess, and implement agricultural best practices is crucial for an impactful agritech venture.
Such guidance and support are crucial to help inform end users and engender trust. Moreover, it is essential to make sure the user interface design is user-friendly and appropriate for the usage contexts. Examples include having the option of the local language, an easy-to-understand interface, and using messaging apps for timely communication.
The three companies in this compendium all rely on online platforms to deliver their core products and services to smallholder farmers and other stakeholders in the agriculture value chain. However, besides the trust gap mentioned above, the cost of using the app can also be a challenge that hinders adoption. While offering free usage of the app might not be a financially viable option for many social enterprises, having an extended period of tryout options could help users experience the products and their benefits while helping the company build advocates and early adopters and leverage the network effect, attracting additional users and building a reputation in the market.
Even though the amount of food provided for the world population has more than doubled over the past five decades, the food system remains vulnerable and prone to external macro phenomena such as climate change, deforestation, and dwindling natural resources. Improper cultivation of the crops can lead to environmental degradation and decreased soil health, further jeopardizing yields.
As more farmers adopt digital technology, businesses need to incorporate environmental sustainability as part of their long-term strategy, besides increasing their reach and usage. Expanding the provision of educational materials and technical assistance to farmers regarding the proper application of chemicals, hybrid seeds, and environmentally sound growing practices will be crucial to preserving soil health and farmland productivity.
Sign up for research and media updates from Digital Planet.