Overlooking a village in southeastern Senegal.
What do Silicon Valley and Africa’s Sahel have in common?
At first blush, not too much. One is apps, algorithms, and acquisitions, and the other? Well, you might be thinking more of a woman in a field, tilling soil with a hand hoe, a vast horizon behind her.
Over the last month, I’ve been fortunate enough to travel to both places – first to eastern Senegal to meet with Root Capital clients (agricultural businesses organizing hundreds of cashew growers and millet farmers across the remote region), and later to the Global Entrepreneurship Summit at Stanford University in Palo Alto, convened by President Obama. And I can tell you one thing: the very same entrepreneurial and innovative spirit that fuels Silicon Valley is alive and well on the last mile of dirt roads in the Sahel.
The problem is, the world hasn’t supported agricultural entrepreneurs in the same way that Silicon Valley supports tech entrepreneurs. But what if it did? What would it look like if there were more agricultural innovators and disruptors, who had greater access to farm inputs, technology, training, markets, and capital? My hunch is that the stereotype of the impoverished farmer working the land would soon fade away, and the picture of a high-impact business would come into focus. Such businesses would have the scale and efficiency to enable farmers to earn a decent living, feed local populations, and form the economic backbone of entire nations.
My colleagues and I have spent the past 15-plus years pushing in this direction, investing in over 600 agricultural businesses that collectively serve more than 1 million farmers and link them to local and international markets. It’s a bumpy road for sure. Think how difficult, indeed unlikely, it is for homegrown entrepreneurial ventures to succeed in the context of unpaved roads that are impassable for weeks at a time, frequent power outages, and woefully inadequate legal systems.
The role of government in all this doesn’t make it into the social entrepreneurship conversation nearly enough – and when it does, it’s often a radar to fly under, criticized as outdated, politically driven, or too focused on handouts. But the bottom line is that if any of us within the market-based-approach-to-development camp are ever going to make real headway, we need governments to do a lot more of the heavy lifting (think infrastructure investments in things like power and roads) that will make our solutions stick and scale.
Earlier this month at the Global Entrepreneurship Summit, and just last week at the White House Summit on Global Development in Washington, DC, I had the privilege of digging into this perspective with Skoll Foundation CEO Sally Osberg, Kiva President Premal Shah, Alliance for a Green Revolution in Africa (AGRA) President Agnes Kalibata, International Food Policy Research Institute President Shenggen Fan, USAID Administrator Gayle Smith, and US Department of Agriculture Secretary Tom Vilsack. Our conversations highlighted the profoundly important role that the public sector can and must play in creating the right environment for agricultural entrepreneurs to thrive in the hardest-to-serve markets.
It turns out that Agnes Kalibata served as Rwanda’s minister of agriculture before leading AGRA and was one of the architects of a remarkable economic transformation driven in large part by investment in the country’s agricultural sector. In the aftermath of the 1994 genocide in Rwanda, as devastated communities in the country’s coffee-growing regions struggled to rebuild, USAID – the U.S. government agency primarily responsible for administering foreign aid – established a multiyear plan and provided funding to help the country become one of the world’s leading producers of specialty coffee. Farmers were trained, cooperatives established – and all the while, stronger legal and regulatory frameworks were enacted and investments in infrastructure like coffee washing stations, electricity, roads, and water were made to create the environment that would enable businesses to thrive.
Today, thanks in large measure to these efforts, it’s nearly as easy for businesses to access credit in Rwanda as in the United States, and over the past 10 years the country’s per capita income has increased from $250 to $650 per year – with 65 percent of that growth coming from agriculture. Many contributed to this achievement – Root Capital, for one, issued more than $50 million in loans to 30 Rwandan businesses – but the leadership of the Rwandan government, working in partnership with the U.S. government (through USAID) and the private sector, has been paramount.
In the case of Rwanda it was specialty coffee, but the approach is applicable across sectors and geographies – its relevance even applying to the Silicon Valley set. In The Entrepreneurial State, Mariana Mazzucato of Sussex University in England argues that we have Uncle Sam, not just Steve Jobs, to thank for the launch of Silicon Valley icons like Apple and Google. The active role of the state rings true for Root Capital, too: without the support of Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, we would have been able to achieve only a fraction of the work we have to date.
The point is that governments have a fundamental and ongoing role to play in creating the conditions and prerequisites for entrepreneurial ventures to flourish. And for an industry like agriculture, where businesses can be critical engines for transformative impact within rural communities disproportionally affected by risks like natural disasters and underserved by modern infrastructure, we’ve never needed it more.
There’s a motto at Y Combinator, the organization that Fast Company magazine calls the “world’s most powerful start-up incubator,” that says, “Make something people want.” Well, people want food – and food that’s produced in a just and sustainable way. Let’s make sure the right environment exists so that entrepreneurs, from Silicon Valley to East Africa’s Great Rift Valley, can answer the call.
In gratitude,
Willy Foote, Founder & CEO
Subscribe to our newsletter and be the first to receive these bi-monthly letters from Root Capital’s CEO.
What do you think?