Agriculture and food production are the bedrock of economic development in emerging economies, employing over 50% of the workforce across Africa. With exponential population growth on the horizon, these sectors will play an increasingly vital role in ensuring continued GDP growth, food security, job creation and expanding global trade partnerships.
Yet over 90% of agricultural and food businesses fail to meet formal compliance across operations, products and more. This severely hampers their growth potential whether in domestic or export markets. Onerous reporting requirements and lengthy inspection processes create barriers even as demand for certified, eco-friendly and biosecure goods accelerates.
As key engines of innovation and job creation, enabling small and medium enterprises (SMEs) to achieve certifications could drive widespread adoption of climate-friendly business practices across supply chains. By democratizing access, Thola liberates SMEs to catalyze climate resilience and food safety – transforming compliance from an obstacle into an opportunity.
Here's a closer look at why we're excited to partner with Thola on their impact journey:
SMEs are the economic engines of South Africa, contributing almost 40% of GDP. Yet onerous sustainability reporting depletes their productivity and dynamism. Thola estimates that most SMEs spend over 500 hours per year navigating fragmented compliance processes across multiple vendors – squandering human capital that could catalyze business growth.
Sustainability certifications present a compelling path to unlock new opportunities, however. Certified SMEs can access premium export markets, partnerships, and growth funding while broadcasting their commitment to equitable and eco-friendly practices. Recent analyses by McKinsey show that sustainability-certified companies generate higher revenue growth compared to their conventional peers.
Although the business case is clear, high costs prohibit participation for resource-constrained SMEs. Thola’s research shows that the average minimum spend exceeds $12,500 annually – pricing out the vast majority of smaller companies still building their capabilities. Assessing agricultural impact specifically, coffee certifications deliver neutral or even negative net results after accounting for control expenses. Consequently, over 95% of South African SMEs languish without sustainability audits.
Thola upends this imbalance by streamlining certification logistics tailored to SMEs’ unique needs and barriers. Their mobile-based system instantly matches companies to accredited local auditors based on audit type, location, and business model – eliminating administrative hassles. Ratings enable SMEs to showcase sustainability improvements to prospective partners and investors over time.
Since launching in January 2023, Thola has already provided compliance support to hundreds of SMEs predominantly operating in the agricultural and food sector. They are projecting $144 million in revenue potential by bringing innovative compliance models to the underserved small business segment. SMEs power local employment and communities in addition to national growth – certifying their operations conduits sustainability deep into the real economy. Thola unlocks this immense potential.
Incumbent sustainability consultants take a one-size-fits-all approach better suited for large corporates than SMEs. Offerings lack localization, automation, and ongoing support – instead prescribing broad standards not tailored to clients' needs. Thola flips the model completely via mobile software matching SMEs to accredited hyperlocal auditors based on audit type, location, and business specifics.
Once matched, auditors efficiently collect relevant data and documentation through Thola's streamlined auditing application. Machine learning models accelerate evaluation while remote monitoring enables continuous improvement over time.
Rather than an impenetrable burden, compliance becomes simplified, scalable, and even strategically advantageous rather than a box ticking exercise. Thola's tech-enabled auditor network provides specialized employment opportunities in rural areas as well.
The innovations make sustainability certifications accessible for farms and SMEs of all sizes for the first time while capturing unmatched data, insights, and relationships to inform a regenerative, inclusive future across supply chains.
Thola launched in South Africa given the immense local market opportunity - with over 2.6 million SMEs nationwide and 800,000 specifically in agriculture and food sectors. By addressing just a tiny fraction of this TAM with their sustainability compliance solutions, Thola is projecting $144 million in attainable annual recurring revenue.
Their local advantage also provides valuable testing to refine products and business model innovation before expanding both across sectors and into new African markets. Thola's founders selected South Africa given their intimate understanding of local challenges and conditions.
Kenya and Nigeria offer similar dynamics and connectivity to propel the next phase, along with burgeoning agritech and climate investor interest across the continent. Thola's recent pre-seed round including backers like Baobab Network demonstrates early validation to support geographic moves.
Our venture building expertise will help Thola optimize its tech and business model, as well as refine expansion plans and sales strategies to maximize sustainable growth. We'll also connect them with strategic partners and investors to accelerate their progress.
Rather than taking a thin, one-size-fits all approach, Thola is leveraging its strategic launching position within South Africa to develop truly tailored sustainability tools that embed within unique regional contexts across Africa over time – unlocking resilience through creativity, technology and understanding.
By investing in Thola, we aim to scale their solution to benefit millions of SMEs in Africa. Compliance should never be a barrier to trade, development, and climate-resilient livelihoods. We're thrilled to back Thola's innovative model and help to accelerate their impact.
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