High risks and limited governmental financial resources require partnerships in agricultural development. PPPs are particularly important for enhancing social and environmental sustainability and the commercial viability of food supply chains.
Agriculture’s positive potential for sustainable development and poverty reduction in developing countries is well recognized. Nowhere is this potential greater than in Sub-Saharan Africa (SSA), where the agriculture sector contributes between 20 to 50 percent to the national gross domestic product and employs approximately 65 percent of the population. However, the high risk (actual and perceived) of doing business in agriculture often deters private sector participation.
Simultaneously, the high level of investments required in the region means that the public sector cannot go it alone. An estimated net annual investment of approximately $11 billion is needed if Africa is to address its food security concerns by 2050. Against such a backdrop, public-private partnerships (PPPs) are an important institutional mechanism for gaining access to additional financial resources, risk sharing, and addressing other constraints in pursuit of sustainable agricultural development.
To enable informed formulation of policies and programs to effectively facilitate PPPs, the Food and Agricultural Organization of the United Nations (FAO) undertook an appraisal of PPPs used to improve productivity and drive growth in the agriculture sector in SSA. The appraisal focused on 26 cases in five countries: Ghana, Kenya, Nigeria, Tanzania, and Uganda. Overall, the cases illustrate how the partnerships engaged the complementary strengths of the various actors and bridged gaps that they would otherwise have faced alone.
Partnerships covered many topics and intervention areas but were mainly focused on new technology development and introduction.
Types of partnerships
Some of the PPPs are formal and contractually-based, while others are loose statements of intent and purpose. Most involve a wide range of governmental partners at various levels. These include specialized public sector institutions creating an enabling environment for private sector participation, nongovernmental organizations (NGOs), and private sector participants acting as market facilitators. Other partnerships involve donors and bilateral agencies. Where global food companies are involved, their interest is in product development and improved supply chain coordination. Most partnerships involve many partners; narrow partnerships are the exception.
Other PPP arrangements range from jointly implemented development programs, to grants for private sector services, to co-equity investments. There are also ongoing dialogue and cooperation platforms and broad programmatic initiatives, as well as projects targeted to specific farmers or enterprises. Most of the partnerships focus on primary production and helping small-scale farmers; there is less attention given to post-production enterprises.
Overall, the partnerships covered many topics and intervention areas but were mainly focused on new technology development and introduction. There were several regional and sub-regional initiatives, where similar issues were faced in a specific sub-sector in multiple countries.
To achieve success, all parties need to recognize that their goals complement each other.
When PPPs are well executed, they impact positively on the people involved. Overall, the cases have demonstrated strong performance for delivery of benefits to the intended stakeholders. For example, in a partnership between the private company Olam and Kwara State of Nigeria, rice farmers that benefited from the PPP initiative have recorded an average yield of 3.25 tons per hectare, against the national average of 1.25 tons per hectare. In monetary terms, this translates to an increase in farm earnings from $235 per hectare to $1,000 per hectare. This partnership, which started on just 250 hectares of land in 2007, currently has an area of 5,163 hectares involving 3,500 farmers from five local governments in the Kwara State of Nigeria.
Leveraging investments is another important indicator of PPP performance. For example, in Ghana about $4.6 million was invested in the Cadbury Cocoa Partnership in 2010. This partnership included Cadbury International (private partner), Ghana Cocoa Board (public partner), several NGOs, and the cocoa-growing community.
To achieve success, all parties need to recognize that their goals complement each other. An enabling economic, regulatory, legal, and political environment is the cornerstone of sustainable private sector participation. The public sector must establish an appropriate macro-economic and legal environment to raise the confidence of the private sector. A clear understanding of the roles and obligations of the parties is also critical for optimal PPP operation. In case of failure, these success factors become challenges constraining the expected benefits of PPPs.
Partnerships might address:
Private sector voluntary standards to reduce costs and risks while increasing benefits from capacity to supply in line with market requirements;
Fair and equitable contracting to improve the efficiency and alignment of supply and utilization along food chains while mitigating risks and protecting interests of farmers;
Responsible business practices to mainstream business models and practices that support the public development agenda; and
Food loss reduction to take action on losses along the food chain.
If these objectives are achieved, FAO believes that PPPs can continue to be important for enhancing social and environmental sustainability and the commercial viability of food supply chains. In the process, they can also increase value addition and capture by small-scale producers and processors.
©Food and Agriculture Organization of the United Nations, 2012. The views expressed in this publication are those of the author(s) and do not necessarily reflect the views of FAO.