What if we held a private sector initiative and nobody came?
Lessons from Tanzania for the G8 food security initiativeApril 19th, 2012 | by Guest Blogger
This blog post was written by Porter McConnell, Oxfam America policy and advocacy manager for aid effectiveness.
G8 leaders will meet in Camp David in a month’s time. In 2009 at the L’Aquila summit, they took a bold step forward on food security, committing to resources and a promise to be better partners. Fast forward to 2012, and many of them are cutting their aid to poor countries.
The Obama administration has put food security on the agenda at the Camp David G8. There are proposals circulating for what a Camp David Food Security Initiative should look like. It’s all the rage for donor governments to emphasize the need to entice the private sector to get engaged in promoting growth that fights poverty. One of the models cited often is a public-private partnership in Tanzania called the Southern Agricultural Growth Corridor of Tanzania, or SAGCOT.
In some ways, Tanzania is the perfect “donor darling.” The Tanzanian economy has been growing at 6-8% per year over the past 10-15 years, and budget allocations to agriculture, education, health, roads, and water are on the rise. But at the same time, low growth rates in agriculture, which provides 74% of Tanzania’s jobs, and continuing high population growth, have pushed at least one million more people under the poverty line. Research suggests that investments in agriculture and other productive sectors have failed to benefit small scale agriculture producers or to produce jobs in sufficient numbers, especially in rural areas, so poor people still aren’t feeling Tanzania’s growth.
Yesterday, the German Marshall Fund’s Translatlantic Experts Group released a report on partnerships in food security which digs deeper into the story of the SAGCOT in Tanzania. SAGCOT is intended to be a hub of international partnerships to develop the potential of a formerly marginal region through infrastructure projects like dams and roads, export market zoning, and smallholder access to inputs and agriculture extension through “hub and out grower” relationships with commercial agribusinesses.
While the report is optimistic about SAGCOT, the authors point out some problems with the model. First and probably most damning: the global corporate partners that donors and the Tanzanian government are anxious to recruit have not yet invested in any significant way. SAGCOT’s model is based on private sector investment coming through, in addition to the public resources committed. The lack of investors calls into question the effectiveness of the public money that has been contributed to the partnership. The report also outlines more troubling concerns that agribusiness will dominate at the expense of the region’s small scale agriculture producers, the partnership will encourage land grabbing by investors, and SAGCOT’s governing body leaves little room for small scale producers to participate or influence the partnership’s direction.
These findings mirror Oxfam research in Tanzania in 2011, which also investigated the promise of SAGCOT for poverty reduction through agriculture and found similarly that smallholders seemed to be missing out in the focus on large commercial farms, and the partnership posed a significant risk of land grabs and environmental abuse irrigation, drainage, salination of land, and loss of wildlife habitat and poaching. It was unclear whose role it was to conduct oversight over SAGCOT.
While generally supportive of the partnerships with the private sector, the GMF report acknowledges that donor-private sector partnerships are of limited use for meeting the needs of small scale agricultural producers. And since smallholder farmers, especially women, make up the majority of the world’s poor, it’s tough to argue that these partnerships will be the ticket out of poverty for most.
The private sector can play a supportive role on food security if it invests in ways that strengthen sustainable small-scale production. But there needs to be a high bar: using scarce public resources for private finance may be worth the risk only if it has clear poverty reduction purposes and proven benefits to the neediest. Unfortunately, donors have been taking steps to create an “enabling environment” for private sector investment in agriculture for decades, and there are still a billion hungry people in the world. A recent report by the World Bank’s Independent Evaluation Group pointed out that less than half of IFC’s projects successfully reached the poor. If the private sector is to play a productive role, there needs to be better evidence that these kinds of partnerships can actually deliver for the poor.
All of this begs the question: is Tanzania’s SAGCOT the model for a new G8 food security initiative, or is it more like a cautionary tale?