Technological innovations developed and implemented can drastically change production, supply chains and consumption patterns in the agritech and foodtech sectors of the Middle East and North Africa (Mena).
Also, the rapidly growing interest of venture capital funds and sovereign wealth funds to invest in desert technology innovation is bound to grow with state-led food security initiatives, writes Zada Haj, CEO of Dana, Abu Dhabi-based venture capital and investment platform. .
The regional agricultural market is expected to grow at a compound annual rate of 5.7% through 2026 – not least as the impact of technology promises to deliver new levels of productivity.
Beginning of their growth
Mena’s agritech and foodtech sectors – or, specifically for the region, “desert technology” – are just at the beginning of their growth, expanding particularly rapidly in the UAE, KSA, North Africa and Israeli markets. Unlike other emerging sectors, such as e-commerce or fintech, agritech and foodtech do not yet have a robust ecosystem of regional entrepreneurs and investors.
An important reason for this difference lies in the long history of agriculture. Agriculture and food production form the basis of our region’s oldest trade practices. While the agricultural knowledge built up over millennia has been invaluable, it has also had the side effect of slowing the speed at which technology penetrates this ancient market.
Agriculture and food production make up a large percentage of the GDP of the Mena countries. For example, 14% of Egypt’s and 16% of Morocco’s GDP is completely dependent on the agricultural sector.
Desert technical solutions
To ensure that these large markets maintain their significance and sufficient production levels in the face of water scarcity caused by climate change, there is a great need for desert technology solutions that are widely implemented.
Exports of agricultural products and other foodstuffs also need to adapt to the ever-higher standards of the EU’s premium markets – a task that agritech and foodtech will play a key role in addressing.
Entrepreneurial spirit is greeted with a welcome regulatory initiative on the part of the governments of Mena, making desert technology the new standard in agriculture.
Increase food production
The KSA is implementing the 2018-25 Sustainable Agricultural Rural Development Program, while the UAE has issued the National Food Security Strategy 2051. Both measures are aimed at increasing local food production through technology, regulation and investment.
Qatar’s State Food Security Projects 2019-23 involves establishing an integrated food waste program, and Morocco’s Green Generation 2020-30 initiative aims to create conditions for high-quality agritech innovation.
Sovereignty funds and investment vehicles – key catalysts for growth in the region – have also increased their investment in desert technology. The Abu Dhabi Investment Office has invested $100 million in four agritech companies in 2020, while the SVC has invested in several funds to support agritech companies.
While these initiatives point to greater industry relevance and value, regulatory hurdles still pose a major challenge to the agritech, foodtech and desert technology sectors. Some existing regulations make it difficult to implement new solutions to be approved and technology to be imported.
The private sector is only now starting to follow suit. Between 2014 and 2020, private investment in desert technology startups totaled $250 million — a sum spread across 33 investments.
At the same time, the potential of desert technology is still far from being understood well enough to be accurately priced at this point.
By understanding and acting on these industry trends, Dana is one of the few pioneering platforms in Mena that focuses solely on desert technology solutions for sustainability in arid climates. “We achieve this by emphasizing agri-food innovation by providing in-house pilots and proof-of-concept with our network of beta sites and pilot farms, identifying solutions that specifically address Mena’s needs and technology literacy. farmers, food producers, and supply chains.”
Successful investments in the agri-food sector, and thus the growth of the sector, are directly linked to the availability of technological infrastructure to convert early-stage academic research, prototypes and patents into commercial operations. This is only made possible through capabilities to test and deploy in the field.
Set an example
This process is not just about effective due diligence, but also sets the example for how private sector entities interested in desert technology should build infrastructure to serve the ecosystem and their portfolio.
Another factor contributing to the growth of the desert technology sector is new environmental standards that are increasing worldwide. This trend will be especially noticeable for the region with the upcoming COP27 and COP28 being held in Egypt and Abu Dhabi.
While the GCC’s investment culture has traditionally favored low risk, the maturing regional startup ecosystem and increased private financing have opened up new opportunities for capital and time-intensive ventures – like most desert technology innovations. Often with a longer timeline, this is often accompanied by higher and more stable returns. Mena’s sector growth is in line with global trends showing the rise of agritech and foodtech everywhere.– TradeArabia News Service
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