Promoting Responsible Agricultural Investments in Africa
Increased interest in public and private investments in the African agricultural sector has raised concern over how such investments will benefit smallholder farmers. This discussion will explore how best to develop “responsible investments” that are profitable for international private investors as well as for local farmers, businesses and governments.
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Steve McDonald, Director, Africa Program and Project on Leadership and Building State Capacity, Wilson Center
Michele McNabb, President, Partnership to Cut Hunger & Poverty in Africa
Dan Charles, National Public Radio, Washington, D.C.
Carlos Moamba, USAID AgriFUTURO Project Mozambique
Mima Nedelcovych, Partner, Schaffer Global Group
Katie Campbell, Senior Policy Analyst, ActionAid
Matthew Armah, COO, Millennium Development Authority, Ghana
Njack Kane, CEO, Novel Commodities, Geneva
Paul Weisenfeld, Assistant to the Administrator, Bureau for Food Security, USAID
Steve McDonald, Director of the Africa Program and Project on Leadership and Building State Capacity, recognized that despite budget crises in the U.S. and Europe, investment in Africa has steadily increased. He stressed that “private capital investments groups from the West have been taking a new look at opportunities there, and agriculture presents one of them.” McDonald mentioned that issues of land grabs, displacement of people, and corruption within investment firms and governments require collaboration between the private and public sectors in “Africa and around the world to elaborate permanent solutions for the promotion of responsible investments in Africa.”
Michele McNabb, President of the Partnership to Cut Hunger & Poverty in Africa added that during the last few months, a consensus has emerged around the need to invest in African agriculture, and “everyone has agreed that the private sector has an enormous role to play in mobilizing the funds that are needed to develop the agricultural sector in Africa and that partnership with the private and public sectors is the way forward.” However, in much the same fashion as McDonald, McNabb acknowledged that the controversy around issues of land grabs may undermine the effectiveness of those investments.
Mozamibique: Perspectives on Responsible Investments in Agriculture
As a food and agriculture correspondent for National Public Radio, Dan Charles shared his perspectives on private investment in the agricultural sector of Mozambique. In Mozambique, the land is owned by the state, and the Government can decide to lease it to a corporation for up to fifty years. Additionally, the corporation is required to conduct consultations with local communities using or living on the land to get their buy-in. Even though corporations hold these community consultations, Charles pointed out that there is a “lack of clarity over what [is] promised.” Other important issues that Charles emphasized were corruption in the government and the “integration or [lack thereof] of smallholder farmers” into corporate infrastructure.
In light of these issues, Carlos Moamba, Enabling Environment Director in the Project AgriFUTURO, said that the Government and investors need to partner “to manage all the risks that come up with land acquisition, but also to resolve the issue of infrastructure,” which is a source of uneasiness around land grabs. He acknowledged that the land tenure laws in Mozambique were sound, but that their implementation has been poor. Therefore, he proposed “an institutional and capacity building” at the state level to ensure effective enactment of the laws. Moreover, the lack of coordination from the donor community in Mozambique has been a detriment to the country because donors tend to replicate projects – a trend that does not contribute to the country’s development.
Global Initiatives on Building Partnerships for Inclusive Investments
Mima Nedelcovych, Partner at Schaffer Global Group, framed the discussion of the second panel around three precepts. First, he posited that inclusive investments must be on a “win-win” basis. Next, he underscored the importance of investors including the local community from the project’s inception because “large-scale development that does not incorporate the small farmers and the community will simply fail.” Lastly, he remarked that small scale farming cannot be sustainable in today’s economy if it does not have the “value added” component that only investors can bring. With value additions, smallholder farmers can break the patterns of dependency. As a Senior Policy Analyst at ActionAid, Katie Campbell focused on the centrality of including smallholder farmers in the investment process. She stressed that the principle challenge in building true partnerships is that “investors see smallholder farmers as beneficiaries, and not as investors.” She identified farmers as investors in their own land, and as having human, natural and intellectual capital that foreign investors tend to discount. She concluded by saying that “smallholder farmers want investment, but investment that respect their rights and needs.”
An in-depth look at the agricultural sector in Ghana was provided by Matthew Armah, COO of the country’s Millennium Development Authority (MiDA). He said that MiDA was created “to achieve economic growth through agricultural transformation and reduce poverty.” Thus, MiDA has been putting in place capacity-building initiatives to encourage private investors to come to Ghana and make it easier for smallholder farmers to participate. Some of these investments have been in irrigation, warehousing and food-processing systems and the bolstering of smallholder farmers’ access to finance. He concluded that it is crucial to identify the interests of the parties, and build strong partnerships along those interests.
Njack Kane, CEO of Novel Commodities in Geneva maintained that investing in agriculture can be profitable and is necessary, but the main hurdle is in bringing it to fruition. He recognized that there is a need to develop structures that attract private investment. According to Kane, the best model to build sustainable partnerships is the Public-Private Partnership (PPP) model “whereby the community and large-scale investors can work together and make money together.”
The Assistant to the Administrator in the Bureau for Food Security at USAID, Paul Weisenfeld stated that, aside from reducing poverty and hunger, the Bureau’s focus is on smallholder farmers because raising their income will lead to inclusive growth across the continent. He acknowledged that “the private sector brings not only finances, but also access to new technology, markets, and sustainability that donor resources do not.” Therefore, the USG works with African governments to foster the development of enabling environments that promote private investments.
Alignment of Interests as the Key Component
There are different models of promoting agricultural investments in Africa, and the model adopted by a country ought to depend on the country’s needs and priorities. However, regardless of the model, the panelists agreed that investments that include both the investors and smallholder farmers’ interests were the best avenue to build sustainable partnerships in African agriculture and development.
Dr. Mima Nedelcovych
The Africa Program works to address the most critical issues facing Africa and U.S.-Africa relations, build mutually beneficial U.S.-Africa relations, and enhance knowledge and understanding about Africa in the United States. The Program achieves its mission through in-depth research and analyses, including our Africa Up Close blog, public discussion, working groups, and briefings that bring together policymakers, practitioners, and subject matter experts to analyze and offer practical options for tackling key challenges in Africa and in U.S.-Africa relations. Read more