Although support for public-private partnerships is far from universal, advocates say the sheer challenge of meeting development needs at a time when donors like the EU are falling short of their aid promises show that private involvement is essential.
One such emerging partnership, Grow Africa, sees the private sector’s role as crucial in providing supplemental financing and know-how in agriculture, the top employer and economic mainstay of many sub-Saharan nations.
“If we are just going to keep giving aid until infinity, you are not helping anybody,” said Gagan Khurana, head of country operations at Grow Africa, which was launched in 2011 by the African Union and World Economic Forum with the backing of more than 30 African and multinational companies, as well as support from several European governments.
“If there is no business case, we might as well just give and go in for direct food aid … or we take the steps and make agriculture market-based,” Khurana told EurActiv in a telephone interview. “Either we prove the concept that smallholder farmers can be viably integrated into the supply chains, or we don’t try. I think the better thing is to try and keep trying until we prove the case of that happening.”
Nine African countries have signed up as partners in Grow Africa. Currently housed at the World Economic Forum in Geneva, the organisation requires participating governments to commit to develop a national strategy for agricultural investment and provide high-level support for transparent investment. The countries include one of Africa’s poorest – Ethiopia – along with resource-rich Ghana and Nigeria.
Public-private cooperation figures squarely in the European Commission’s ‘Decent life for all’ communication – released in February – as well as the emerging framework for an international successor to the United Nations’ Millennium Development Goals (MDGs), the eight targets agreed in 2000 that expire in 2015.
The Commission’s communication hinges on rallying the 28 EU members to support a post-2015 development plan that promotes partnerships with both civil society and companies. One of the EU’s long-term development goals is supporting efforts to build agricultural self-sufficiency in developing nations.
The EU also supported the ‘New alliance to improve food and nutrition security’. Announced in 2012 by the G8, the initiative aims to promote private-sector financial and technological investment in African farms.
Going beyond donor aid
Grow Africa’s approach is one example. It seeks to supplement traditional aid programmes by providing comprehensive solutions to food challenges, such as helping farmers become more productive but also helping to develop markets, improve the transportation and distribution systems, and provide low-cost financing for small landholders.
“Anything above 100 hectares anywhere in the world will have sufficient capital behind it,” Khurana said from Geneva. “The problem is at the below five-hectare level, and then there is a big swathe between five and 20 hectares. There, the farmers can actually move into the middle class quite quickly, but because of the financing issue they are unable to do so, or because of infrastructure problems or market access issues, they are unable to do so.”
Some advocacy groups and rights campaigners have expressed concern about too much blending of public and private endeavours, saying that no matter how charitable, private companies always expect dividends on their investments.
At a conference held in the European Parliament in March, the European Network on Debt and Development (Eurodad) and seven other aid groups said funnelling money to private companies through blending resources tends to favour multinational corporations and big banks over poverty eradication, and urged policymakers to rethink EU development policies that promote blending funds to help foster private-sector growth.
In a statement, the Eurodad and its partners “expressed their profound concern and questioned whether these new cooperation mechanisms that promote the private sector address the main objective of EU development cooperation,” the eradication of poverty.
Human rights and environmental groups also say private investment has opened Africa to exploitation through land-grabs by foreigners who are exporting crops to meet food and biofuel demands.
In a report, the environmental group Friends of the Earth Europe says land acquisition by foreigners is displacing small farmers – who are the background of African production – and creating competition for often-precious water and resource supplies.
Of the 203 million hectares of foreign land buys between 2000 and 2010, 134 million hectares were in Africa and 29 million hectares in Asia, Friends of the Earth noted in its report - ‘Hidden impacts: How Europe's resource overconsumption promotes global land conflicts’.
Khurana said Grow Africa is dedicated to helping smallholder farmers and provide a forum where solutions to all challenges can be discussed.
“There are fears that this should not turn into a new wave of exploitation or neo-colonialism, but this time driven by quasi-government or private organisations. In that specific regard, the land-grab issue is one big controversial issue,” he said.
Participating African governments have taken steps to “ensure the balance between business requirements and social imperatives is maintained. So the governments are much more attuned and savvy in what their role is in this,” including improving regulation, Khurana said.