Private sector-led agribusiness brings with it opportunities but also dangers.
The G8 summit last May ended with a pledge to end hunger in Africa and a plan to inject $3 billion into African agriculture with the aim of "catalysing private sector investment in African agriculture". This record investment, derived entirely from the private sector, appears to stem from a realisation that previous aid commitments have failed, as well as perhaps an assessment of government priorities in an environment of Western austerity.
The G8's position represents a significant leap of faith in market-friendly agriculture four years after the 2008 global food crisis when increasing food prices led to unrest in a number of developing countries. For its alleged ability to promote business opportunities in low income markets, offer inputs and links to markets for small-scale producers, agribusiness was recently elevated by the International Fund for Agriculture and Development as a key driver of hunger reduction. The primary objective of the G8's New Alliance for Food Security and Nutrition is a shared commitment to increase investment into African agriculture, luring investors to Africa's food markets on the premise of favourable returns and low tax rates. It will initially be launched in Ethiopia, Ghana, and Tanzania.
Despite positive forecasts for record level investment, some non-governmental organisations have been critical of the G8's propositions. Lamine Ndiaye at Oxfam International, for instance, claims "the New Alliance is neither new nor a true alliance". "The rhetoric", she says, "invokes small-scale producers, particularly women, but the plan must do more to bring them to the table." She continues: "This new alliance is a nice complement at best, a deflection at worst. The role of the private sector is important, but they will not be able to make up for the G8's broken promises".
Similarly, Henry Malumo, Africa Advocacy Coordinator of Action Aid International, cautioned against investment packages that neglect the needs of smallholder cooperatives, particularly women, noting that private sector partnerships should emphasise women and civil society.
Benefits of private-public partnership in Africa
As part of the alliance, private sector companies will receive access to potentially lucrative agriculture markets. In theory, this should enable producers to benefit from improved technology and rural infrastructure while generating greater income as a result of guaranteed supply lines to large agribusiness companies.
Existing agribusiness success stories such as Kenya's horticulture industry point to the advantages of forming partnerships between government and private enterprise. HomeGrown Kenya Ltd., a leading horticulture export company established in 1986, has invested over $100 million in Kenya and employs over 8,000 people with additional capacity to run its own in-house farmer training and extension services. Another example is Zambia's outgrower scheme, which helps thousands of sugar cane farmers connect to Zambia Sugar, a private company that receives financial assistance from Barclays Bank.
But despite some successes, large-scale investment is often fraught with risks as well as opportunities. For one, investors normally require guarantees that the financial returns promised are secured. In the case of African agriculture, scarce land resources are often used as collateral for private investors - this can undermine the sovereignty of African states and at worst risk widespread displacement.
Against the powerful multi-national agribusiness companies included in the G8 alliance - such as Monsanto, Kraft and Yara International - African governments could find themselves in relatively weak bargaining positions. African states may lack sufficient leverage and may be pressured into giving in to contract demands for favourable investment terms, which could inadvertently undermine the most vulnerable in the longer-term.
In his report on increasing land investment in Africa, the UN's Special Rapporteur on the Right to Food Olivier De Schutter highlighted the importance of African governments to act strategically. Stressing the need for free and full participation and agreement of local communities in contract negotiations, full transparency of national ministries, and adherence to environmental protection, De Schutter insisted that, where possible, investment terms should be backed by specified sanctions and, where necessary, there should be legislation to protect labour and land rights along with the right to food.
Growing activism around the terms of Africa's engagement with international agribusiness also reveals a degree of grassroots discontent toward the kind of large-scale agriculture market expansion backed by the G8 alliance. For example, activist groups such as the União Nacional de Camponeses (UNAC) in Mozambique have formed strategic links to the influential international advocacy group La Via Campesina, highlighting the threat posed by the dissemination of seed technology by giant agribusiness in the name of boosting food production.
Managing risks to political stability
By pushing the initiative firmly back toward international agribusiness, the G8 alliance has also shifted its emphasis to enhanced agriculture growth as the route to reducing hunger. This approach, however, neglects the critical issue of food access.
Several African states are challenged not only by the availability of food but also by how to widen access for the poorest who are unable to purchase it as a result of rising food prices. As witnessed during the 2008 food riots, African governments are accountable to their citizens for ensuring food is affordable. 14 African countries experienced mass disturbances at the time, ranging from organised trade union demonstration to sit-ins by consumers to sporadic store looting.
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Unfortunately for the G8's plans, increased production by no means guarantees increased food access for the poorest. The mediating role of government to regulate the social impact of private investment into agriculture is therefore paramount if repeated political turmoil is to be avoided.
When working towards investment agreements which serve the interests of a hungry urban poor, marginalised smallholder producers, and ambitious private investors, African governments will have to strike the right balance. They must help deliver the right type of investment into Africa's agriculture sector in ways that benefit, not jeopardise, hunger reduction.
Joan Nimarkoh is a freelance writer and journalist working in Accra along with her role as a policy consultant for the UN Food and Agriculture Organisation. Joan graduated from Leeds University in Political Studies, in 2004 and from the School of Oriental and African Studies (University of London) in 2007 with an Msc in Development Studies. Her interests include African politics and economics, agriculture develpoment, democratization, and climate change.
