There was a necessary and justified renewed focus on private sector involvement in African agriculture. However the complexity of public-private sector cooperation became apparent. Each country and value chain required a tailored approach and therefore no silver bullet existed. -- These were the main findings of participants at an EC workshop on agribusiness in Africa. CSO representatives reminded public and private sectors to keep farmers at the centre of their discussion.
// Organisation and participants
The workshop was organised by the European Commission's Directorate-General for Agriculture and Rural Development in collaboration with the Directorate-General Development and Cooperation – EuropeAid. Both Commissioners as well as the Executive Director of UNIDO attended the event which indicates the level of importance valued to the topic. Other participants included representatives from bi- and multilateral donors, academia, CSOs, private sector and financing institutions as well as practitioners implementing or promoting cooperation projects between public and private sector in African countries. Platform focal point Bernard Rey of the EC chaired a panel at which focal point Albert Engel of giz presented. Thomas Tiedemann of the secretariat attended as well.
// Issues discussed
Insufficient attention to the role of the private sector
In his opening address Commissioner for Agriculture and Rural Development Ciolos admitted that in past decades the EC had not paid sufficient attention to the private sector’s role in African agricultural development. With 25 per cent of the world’s fertile land, stronger investment into African agriculture was a must to satisfy the growing demand for food. As 70 per cent of African farmers were smallholders, approaches had to be designed which allowed smallholders to link to markets and enter value chains.
Public-private cooperation development
On three panels -- complemented by a number of case studies -- panelists and the plenary aimed at opportunities for agribusiness in Africa as well as challenges and approaches to developing public-private cooperation in agricultural development and to designing an agribusiness index. The composition of the panels and the topics of presentation represented the breadth of the issue under discussion: From a Shea butter cooperative in Mali and the funding tools of a financing institution like IFC to strong involvement of the Ethiopian government in organising the export of agricultural crops through a commodity exchange, the presentations illustrated the diversity of stakeholders, variety of approaches, and complexity of potential solutions.
Challenges to increasing investment
Panelists recalled the substantial challenges for increasing investment in African agriculture which included:
- Low productivity
- Post-harvest losses
- Political and social instability Unfavourable investment climates
- Lack of investment in infrastructure
- Inadequate financial services
- Shortage of skilled labor
Climate change, it was agreed, presented an additional formidable challenge for most African producers.
Distribution of risks and benefits
Nevertheless, ample business opportunities existed with the ongoing population growth, increasing urbanisation, an emerging middle class as well as the forecasted continent wide GDP growth of 5 per cent p.a.. Yet – how are risks and benefits shared between African farmers and private sector investors? CSO representatives reminded donors that there should be clarity and honesty about the objectives of investments. Does the demand come from a farmer or from a company? Is the aim to improve rural livelihoods in Africa or to generate value for investors? The trade balance between African countries and EU member states regarding agricultural products quadrupled in recent years in favour of Europe, underlining the importance of assessing the objectives of initiatives.
Private sector does not replace policy
Albert Engel, giz Platform focal point, concluded that the most important point was linking farmers to farmers. He advocated for inclusive business models but also cautioned that public-private partnerships were not suitable at all levels and for all target groups. Private sector investment needed to be flanked by appropriate policies, it did not replace policy. Donor agencies should play a role as honest brokers for cooperation between the private and public sectors.
// What is next?
The European Commission announced continued engagement on the issue. Commissioners Ciolos and Piebalgs would soon visit the African Union Commission to continue the discussion on investment in African agriculture. In his closing remarks, Commissioner Ciolos also declared the Commission’s readiness to achieve greater policy coherence and renounce instruments that have a detrimental effect on African farmers.
The UN Year of Family Farming in 2014 will also ensure continued focus on African smallholders and the question how they can best be linked to markets.
Donors will need to continue developing best practices for supporting public-private cooperation. While different approaches exist, such as the EC’s “blending” approach and the IFC’s GAFSP facility, no state of the art has yet been developed in terms of ODA leveraging private sector investment. Another challenge is how to bridge the gap between microfinance and large scale investments? Finally, donors were challenged to tackle the issue of scale – there was no time anymore to just work on pilot projects if Africa’s agricultural potential was to be fully developed.