Matthew Reynolds, Jeffrey L. Rosichan and Leon Broers Continue reading
By Amy Chambers on behalf of Fintrac’s Feed the Future Enabling Environment for Food Security project.
Working with the private sector is key to fostering vibrant agricultural market systems, and successfully integrating smallholder farmers into these efforts has the potential to pull millions of smallholders out of poverty.
There is an additional key factor in the mix, however. The elusive yet all-encompassing enabling environment — i.e. policies, laws, regulations, and norms that influence behavior in a market system — can derail even the best-laid business plans. By reshaping incentives to the point of hampering initial investment or efforts to scale, enabling environment conditions can create barriers that de-incentivize firms from doing business in a particular market.
To better inform donor support for these actors, we need a stronger understanding of how enabling environment factors influence the decision-making of firms who are either doing or trying to do business in markets inclusive of smallholders. The good news is that the experience and knowledge from the private sector actors either doing or trying to do business in these markets is out there.
What We Heard From the Private Sector
In August 2018, the Feed the Future Enabling Environment for Food Security project interviewed 25 small- and medium-sized agribusiness companies serving smallholder farmers across Bangladesh, Guatemala, Nigeria, Uganda, and Kenya. For each, we endeavored to understand why they invest where they do, the challenges they face in entering and operating in new markets, and what type of support these companies leverage to assist in tackling enabling environment challenges to their investments.
While their stories were unique, the consensus was the same: the enabling environment impacts the structure, speed, and scale of the investment. For one investor, the lack of regulatory protocols for a new technology delayed the investment by more than a year. For another, the complexity of local contract law contributed to shifting focus to other markets. Frequent changes in customs procedures or outright corruption caused others to scale back or reorient their businesses to countries with more stable environments for investment. Typically, the business survives, yet the slower pace of investment or capital flight to safer markets caused by a weak enabling environment limits smallholder farmers’ access to the new technologies and services these businesses provide.
True to the axiom “time is money,” investors expressed little patience for the speed of reforms brought about through industry associations and formal public-private dialogue mechanisms. Though nearly 80 percent of those interviewed participate in these platforms, when faced with a pressing issue, investors favor narrow, action-oriented approaches that quickly bring the issue to relevant policymakers’ attention, such as leveraging informal connections with government officials or independently organizing public seminars or dialogue on specific issues.
What This Means for Donors and Other Development Partners
USAID and other development partners can play a crucial role in building a better enabling environment by identifying key regulatory impediments to investment and facilitating targeted, issue-specific collaboration between the public and private sectors to resolve these issues.
This support includes conducting baseline data studies to provide a starting point for public-private dialogue, assessing gaps in the legal and regulatory framework for new technologies and industries, bringing comparative evidence from other countries to bear on domestic policy discussions, and facilitating productive dialogue by bringing key decision-makers and investors to the table.
For a full discussion of the study’s findings, readers can access the report and summary learning note here.
A version of this post originally appeared on Marketlinks.org. Featured photo credit: Fintrac
In this guest blog post, Sheryl Cown, Vice President of Programs at CNFA highlights the ways the private sector can catalyse sustainable agriculture and tackle global food security issues.
With the world population expected to reach nine billion by 2050, FAO projects that food and feed production will need to increase by 60 percent to meet the world’s food needs. The questions that arise are – Can we meet this growing demand? And can we meet this demand in a sustainable manner without harming our earth’s resources?
The answer is – Yes we can.
But no single organization or sector can address the problem of hunger on its own. However, it is widely agreed that both public and private investment in developing country agricultural productivity is a top priority. Continue reading
At the Hague conference on Agriculture, Food Security and Climate Change, Farming First held a side event ‘Best practices in agricultural value chains’, where spokespeople presented examples of initiatives that aim to increase resilience and productivity at different points in the value chain.
Thom Achterbosch from the International Food & Agricultural Trade Policy Council spoke about agriculture’s potential for mitigation of GHGs, for which the private sector, and the government, had roles to play. Carbon standards measure the life-cycle impacts of consumer products and particularly their GHG emissions. The data is then run through assessment models, to generate an estimated “carbon footprint”, which is usually expressed in grms of CO2-equivalent per functional unit (kg etc) of the product. By enabling producers to measure and monitor their emissions, carbon standards encourage GHG emissions reductions, and facilitate reducing carbon hotspots in the value chain.
Currently several methodologies exist to calculate GHG effects – national standards, supermarket standards, private voluntary standards and industry standards. There is a need to balance opportunites of carbon footprinting with many challenges: food security, open rade system, shared benefits in value chains.
To read more, see the presentation.
Three years of reporting on AMREF’s development work in Katine, Uganda has come to a close, as the Guardian concludes the findings of its experiment in NGO and media transparency.
In 2007, the Guardian chose the village of Katine as the focus of tracking where donor funds went to in development projects. Every action of AMREF’s, the African health organisation, encompassing health, education, water & sanitation, governance, agriculture and livelihoods, was followed by journalists, who reported back on the Katine site. Funds were donated by Guardian readers, which were then matched by up to £1 million by Barclays.
As an example of a partnership between public and private sectors and civil society and media, the project has been a huge success. At an event concluding the project this week, Director General of AMREF, Dr. Teguest Guerma, said that Katine is “not only about holistic approaches to development, it is also about partnership” and that AMREF have learned that they can do development with the private sector and the media.
For Barclays, this project has spurred them on to scale up their efforts, and they are now involved in 11 other development projects around the world, totaling at £10 million in funds.
For the village, AMREF have helped set up 68 farmer groups, comprising 1842 members, of which 1248 are women. Over 200 acres of drought-resistant high yielding cassava has been introduced to farmers, amongst other successes.
Alison Evans, Director of the Overseas Development Institute, who spoke on the panel, commented that a significant trend was emerging, that of seeing the words ‘Africa’ and ‘success’ in the same sentence.
Yet whilst Katine has offered positive results, Evans noted that this was not a model to be scaled up, rather a model from which lessons could be taken. She noted that not all institutions are developmental. Whilst the focus is on the local, she said there was a danger of replicating other institutions, national ones, needlessly. She pointed out that the national and regional institutions are able to take the general, to the local.
Another key message from the talk was that development is a process with ups and downs, and consequently results are not a single event, but also a process. Governments trying to get quick results to prove success can be dangerous, leading development organisations to seek quick wins in order to meet demands set upon them. Instead, the panelist urged, sustainable development should be prioritised.
Photo Credit: Guardian
Four Farming First spokespeople feature in a Wall Street Journal article published today that looks at private sector investment in African agriculture.
The article, ‘Private Sector Interest Grows in African Farming’ looks at how fears about another global food crisis are leading private companies to tap into the huge potential of the farm sector in Africa. Sub-Saharan Africa is estimated to hold up to 60% of the world’s uncultivated land suitable for farming.
Reflecting on this current wave of investment, Lucy Muchoki, head of PanAAC, said, “People are realizing the potential of agriculture.”
Sindiso Ngwenya, chairperson of COMESA and chairman of FANRPAN, spoke about the failure of previous African agricultural projects initiated by foreign investors, that did not properly address the barriers to the sector’s development, saying,“You end up with an enclave economy, prosperous on cheap labor in the countryside without integrating the locals, and this can lead to future conflicts.”
Hugh Scott, director of the Africa Enterprise Challenge Fund, said that private sector investors have the power to empower local farmers to boost output and ensure sustainable markets. Speaking about AECF’s mission, he said, “We’re looking to create projects others will copy, that will change the way market systems work. By doing this with for-profit companies, hopefully they will be there in 10 years,” he said.
Mima Nedelcovych, board director of the Partnership to Cut Hunger and Poverty in Africa, said if governments want to encourage a sea-change in investment, they need to foster a productive environment themselves.“The agro-industrial side can always be financed because it can handle shorter-term loans. But developing infrastructure and putting in irrigation requires longer term soft money.”