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Aid to Africa: private sector investment becomes new priority

Smallholder Farmers in Ghana

Farmers work in a soja bean field in Bongo village, Bolgatanga country, Ghana. Photograph: Sean Sprague/Alamy


Powered by article titled “Aid to Africa: private sector investment becomes new priority” was written by Mark Tran, Claire Provost, Liz Ford, for on Tuesday 18th February 2014 09.51 UTC

Rich countries are in the midst of a major reshuffle of aid priorities as more turn towards the private sector and look to fund business opportunities in poor countries.

Investors have increasingly targeted African farmland since the 2008 food, fuel and financial crises. Grow Africa, a “partnership platform” which helped to gather companies’ commitments under the New Alliance for Food Security and Nutrition, said there had been a “historic shift” in the level of investment on the continent in 2012.

In January, the Department for International Development (DfID) said it is overhauling how it engages with businesses. It will conduct roundtables and ministerial visits to developing countries with business representatives and create special contact points, “strategic relationship review meetings”, and memoranda of co-operation with priority companies, it said.

In November, the international development secretary, Justine Greening, went to Tanzania with firms including Unilever, Diageo, and SAB Miller, for discussions “at a high level with the government of Tanzania”, and to “accelerate” agriculture projects with private investors.

The EU sees the New Alliance as a way to improve the lives of the “missing middle”, farmers who are able to grow enough to feed their families but have little access to markets to sell their surplus produce.

Jean-Pierre Halkin, head of the rural development, food and nutrition security unit at the development and co-operation directorate-general of the European Commission, said those farmers would consider themselves part of the private sector, adding: “We need to devote our attention to assist commercial smallholder farmers better.”

Commercial smallholders “are going to be part of the solution for the chronic poor”, he said, with their success spurring economic growth and creating jobs in their local areas.

In June, the commission is expected to adopt a new strategy to strengthen the work of the private sector in developing countries.

Meanwhile, last year the US agency for international development (USAid) said it had brought in almost $400m (£240m) of new money through partnerships with the private sector. It aims to increase investments in public-private partnerships to 10% by 2015.

In trumpeting the New Alliance, Jonathan Shrier, US state department special representative for global food security, told a conference in London last week that policy changes in Africa had improved the business climate for companies on the continent. Those changes, he said, had aligned investors behind the priorities of governments, with 70 companies stepping forward with $3bn in investment to support African governments.

Mobilising the private sector for development is not just a donor imperative. Governments want companies to invest as this will provide much-needed jobs. The group of least developed countries (LDCs), the world’s 49 poorest states, at their last conference in Istanbul, Turkey, stressed the importance of foreign investment and the private sector in reducing poverty.

Companies such as Nestlé and Yara, a Norwegian fertiliser company, insist that their involvement in the New Alliance will bring benefits to small-scale farmers. At last week’s Feeding the World conference organised by the Economist, Hans Joehr, corporate head of agriculture at Nestlé , said the company was working with cocoa farmers, not out of charity, but to ensure the necessary quality and quantity of supply on a long-term basis.

As part of its New Alliance projects, Nestlé is investing $40m in cocoa research sites in Ivory Coast. The Swiss giant plans to distribute 1m cocoa plants and 2m coffee plants a year for the next 10 years, to more than 10,000 small farmers, benefiting around 60 000 people when families are taken into account.

Terje Tollefsen, head of strategy at Yara, insisted that it was not in the interest of large companies to exploit small farmers to the maximum.


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