A market creation story: Rice Afrika Technologies

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Feb 1, 2022

I love rice. Much to the detriment of my waistline, it has always been my favorite food. 

For many Nigerians and West Africans, a particular type of rice, jollof rice, is a popular delicacy. (Even New York Times Cooking now has a jollof rice recipe). 

Considering the size of the Nigerian market and how much Nigerians eat and love rice, conventional wisdom would suggest the country’s rice production process would be efficient. 

But today, Nigeria’s rice farming, harvesting, and processing systems are highly inefficient. Mechanization rate in the sector is very low at 0.3 horsepower per hectare (hp/ha). India’s and China’s are at 2.6 hp/ha and 8 hp/ha respectively. The consequences of this low mechanization rate are dire.

First, Nigeria’s yield per hectare is 2 metric tons while Morocco’s, Brazil, and Vietnam are 9, 8, and 6 metric tons respectively. This means Nigeria needs three times as much land–and the effort that goes with manually cultivating it–to achieve a similar yield to Vietnam.

Second, not only is manual harvesting of rice laborious, time consuming, and fraught with a lot of waste, but it’s also expensive. Harvesting a hectare of a rice field requires around 100 to 150 person-hours. Using a combine harvester is more than 60 times, or 60,000%, more efficient. In Nigeria, manually harvesting one acre of a rice field costs around $100 while using a combine harvester costs between $35 and $40. 

Nigeria is considered the “poverty capital of the world,” where more than 90 million people live below the poverty line and average households spend close to 60% of their income on food. Making a staple food more affordable and accessible would go a long way in helping tens of millions of people feed their families and lead better lives.

It is this problem that entrepreneur Ibrahim Maigari Ahmadu decided to solve when he started Rice Afrika Technologies in 2020.

Rice Afrika Technologies is focused on using technology to improve rice production in Nigeria. But the organization isn’t simply purchasing tractors and providing it to rice farmers for a fee. Instead it is taking an integrated approach to solving this problem.

Rice Afrika’s market creating model

In our book, The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty, we introduced the idea of market-creating innovations. These innovations transform complicated and expensive products and services into simple and affordable ones thereby making them accessible to many more people in society. 

Market-creating innovations are rarely just products or services. They are often new systems designed to serve nonconsumers–people who can’t afford the existing products. In Nigeria for instance, rice is expensive because the farming, harvesting, processing, distribution, marketing, and sales process is complicated and expensive. All this points to a significant market-creating opportunity. Who wouldn’t want to capitalize on an opportunity to farm and harvest food to feed 200 million?

Rice Afrika Technologies is building a system that has the potential to radically revolutionize the existing system thereby making access to rice simple and affordable. The system has four distinct components.

1. Rice Afrika Technologies provides eco-friendly combine harvesters to help more than 5,000 rice farmers mechanize their farming operations. Instantly, this adds significant value to the lives of the farmers and people in their communities because they no longer have to spend hundreds of hours working the farm. It also reduces the cost of production and increases their yield. 

2. To ensure the mechanization programs are sustainable, Rice Afrika Technologies provides training for operating and servicing the combine harvesters. This is difficult but crucial to the organization’s success because it limits downtime and creates jobs for people in the community. 

Unfortunately, many programs that provide resources to solve a problem in growth economies like Nigeria often fail to do the hard work of also providing the necessary infrastructure to make the resources sustainable. And so, schools, hospitals, equipment, and infrastructure go to waste after a short time.

3. Rice Afrika Technologies is creating a mobile agency banking system to facilitate financial transactions for farmers and other stakeholders in the rice value chain. This is important because commerce becomes widespread when methods of payment and goods/service transfer are simplified and frictionless. 

4. Rice Afrika Technologies understands that not all farmers can pay cash upfront for its service. So, the organization allows farmers to pay in rice. As a result, the service isn’t limited to only farmers who have access to cash or credit. Due to the improvement in technology and Rice Afrika’s ability to aggregate demand and understand supply, the organization is able to offer rice farmers a premium for their harvest.

To date, Rice Afrika has processed more than 2,000 metric tons of rice, increased farmer productivity by almost 50%, and is expected to cut down the usage of chemical fertilizers by approximately 40%.

In our paper, Making your own luck in emerging markets, we describe strategies that can help organizations more successfully create new markets in growth economies. Market-creating organizations are more likely to succeed if they reduce barriers to consumption, create new value networks, and integrate their activities.

Rice Afrika Technologies has adopted some of these strategies and is on its path to transforming the way rice is farmed, harvested, processed, and sold in Nigeria. Hopefully, in the near future, as Nigeria’s rice productivity increases, so will the quality of life for millions of people in the country.

Efosa Ojomo is a senior research fellow at the Christensen Institute, and co-author of The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty. Efosa researches, writes, and speaks about ways in which innovation can transform organizations and create inclusive prosperity for many in emerging markets.