Tag Archives: LACA

UK-Africa trade and investment: is it good for development?

Just ten days before Brexit is declared, the UK is hosting a major investment summit, attended by the PM, Boris Johnson and an array of royals. There is much hype about the event (check out, #UKAfricaSummit, #InvestinAfrica, for example), with hopeful, win-win-win rhetoric abounding, linked to forging new partnerships for a post-Brexit future. Ghana, it seems, is being given top treatment as a favoured destination, while despite being ‘open for business‘, Zimbabwe seems to have been snubbed.

UK aid policy these days is very much focused on promoting UK trade interests abroad. Whether DFID survives as a separate entity or gets incorporated into the Foreign and Commonwealth Office will soon be known; but whatever happens, the UK government has adopted a global business promotion approach for UK firms, on the assumption that this will help meet the SDGs.

I have no objection to private sector investment and trade, but quite whether all such initiatives meet the criteria we assumed were central to UK aid policy is another matter. Indeed, questions have been raised about the allocation of funds to some quite dubious outfits. The linking of aid and trade of course has a history in Britain. Remember the Pergau dam controversy, when aid was used as a sweetener for a deal (in this case for arms)? This scandal of course led to the commitment to untie aid, a separate development department with a cabinet minister and an Act of Parliament specifying how aid must be spent. This consensus on aid since the mid 1990s however is under threat.

Trade and investment can of course help reduce poverty, promote women’s empowerment and be good for children’s rights, as the gloss from DFID suggests, but the opposite may be true too. There are many different business models – and so labour, environmental and rights regimes – with very different outcomes for ‘development’. We’ve been looking at some of these issues over the last few years across a number of projects (in fact all with DFID funding), and there are some important conclusions, relevant to the new UK government’s focus for aid.

The project, Land, Agriculture and Commercial Agriculture in Africa (led by PLAAS), compared three broad types of commercial agricultural investment. These were estates and plantations, medium-scale commercial farms and outgrower schemes. The team worked in Ghana, Kenya and Zambia and looked at each business model in each country, examining the outcomes for land, labour, livelihoods and so on. The cases included investments with some UK-linked companies, including the much-hyped Blue Skies company in Ghana, which packages and exports fruit produced by smallholder outgrowers. There is also the rather bizarre sugar outgrower scheme in Zambia, operated by Illovo, now largely owned by British Foods, whereby smallholders’ land is incorporated into an estate, and they are paid revenues for the use of land. The full set of publications was produced as a special Forum in the Journal of Peasant Studies, with an overview, and papers on Ghana, Kenya and Zambia.

Our findings showed that the ‘terms of incorporation’ into business arrangements really mattered. Too often estates/plantations operated as ‘enclaves’ separated from the local community, possibly providing employment opportunities, but frequently with poor conditions. Those investments that had substantial linkage effects included those with smallholder-led outgrower arrangements, where leverage over terms was effective. Meanwhile, consolidated medium scale farms potentially had positive spillover effects into neighbouring communities through labour, technology and skill sharing linkages.

A decade ago, at the height of Africa’s land rush, many such investments were deemed to be ‘land grabs’, but our work as part of the Future Agricultures Consortium argued for a more nuanced assessment of what works for who. Not all investments are bad, but not all are good either. Linking investment to the FAO’s ‘Voluntary Guidelines’ is essential, as this allows investors, governments and recipient communities to make balanced appraisals, avoiding investment riding roughshod over local land rights and livelihoods. Our review of the Guidelines for the LEGEND programme, highlights what is needed.

Another project, part of the Agricultural Policy in Africa (APRA) programme, has focused on agricultural investment corridors in Kenya (LAPSSET), Tanzania (SAGCOT) and Mozambique (Beira and Nacala). Alongside Chinese, Brazilian and other investors, UK investments are evident in all sites, notably through support from AgDevCo and UKAID in the Beira corridor (although many initiatives have been affected by Cyclone Idai during 2019).

Again, our findings highlight the design of corridor investments, and the importance of facilitating a ‘networked’ approach, with multiple linkages from the core investments (usually around infrastructure, large estates and mining) to the wider hinterland. Too often extractive ‘tunnel’ designs emerge, with limited impacts on wider development.

Our conclusions are reflected in AGRA’s excellent 2019 report produced by Tom Reardon and colleagues, focusing on the ‘hidden middle’. This argues that private sector investment that has the most impact is usually small, often informal, and deeply linked into local economies. Clusters are usually spontaneous, not planned as part of grand corridor or investment hub schemes. And when you look, the link between the vast number of smallholder producers and consumers is increasingly filled with many entrepreneurial private sector actors working in transport, processing, logistics and so on.

These private sector players are not ‘missing’, as is often assumed, but instead ‘hidden’ from view. The focus on ‘investment’ and ‘private sector’ (as in the trade summit) usually emphasises large, formal operations, branded as UK plc. But it is the smaller, local outfits that are driving change in African agricultural value chains, and in need of support and investment. Will the focus of the UK Africa investment summit be on supporting such smaller initiatives with the real potential for transformation, and developmental gains? From what I have seen, I somehow doubt it.

As the UK scrambles to compensate for the errors of committing to Brexit, holding the UK government to account in respect of its aid spend focused on support UK-led investment in Africa will be crucial, lest business imperatives override development goals, and larger UK investors get the upper hand, crowding out (hidden) local alternatives.

Investing is certainly possible in ways where the ‘terms of incorporation’ for local people and the ‘linkage effects’ for local economies are positive, and where land rights are protected in line with internationally-agreed guidelines. But it does require a sophisticated approach that goes beyond the promotional gloss and the hype of international trade fairs.

There’s plenty of good research on the implications of trade and investment on development in Africa, including that commissioned by DFID. Let’s hope the arm of the UK government that is promoting trade and hosting presidents from across Africa in London this week makes use of it.

This post was written by Ian Scoones and first appeared on Zimbabweland

Leave a comment

Filed under Uncategorized

Commercial agriculture in Africa: winners and losers

The findings of the Land and Agricultural Commercialisation in Africa project, funded by DFID and ESRC, have just been published in the Journal of Peasant Studies in a series of four papers – an introduction (open access) and country cases from Ghana, Kenya and Zambia.

In this work we asked what difference did the ‘model’ of commercial farming make, contrasting large-scale plantations/estates, medium-scale farms in commercial farming areas and contract farming arrangements linked to core estates (see background paper here). This is a theme being picked up by a new initiative – the Agricultural Policy Research in Africa project of the Future Agricultures Consortium – which includes new work in Zimbabwe, starting this year.

A blog on The Conversation – The pros and cons of commercial farming models in Africa (Ruth Hall, University of the Western Cape; Dzodzi Tsikata, University of Ghana, and Ian Scoones, University of Sussex) – discusses the findings. In the debate about what approaches to revitalising commercial agriculture, at what scale (including medium-scale farms), with what relationships between smallholders and large-scale agribusiness, this research from across Africa is highly relevant to ongoing debates in Zimbabwe.
The pros and cons of commercial farming models in Africa

File 20170522 25082 38am7t
Workers harvesting from a commercial farm in Ethiopia.
Reuters/Barry Malone

Ruth Hall, University of the Western Cape; Dzodzi Tsikata, University of Ghana, and Ian Scoones, University of Sussex

Colonialism brought large-scale farming to Africa, promising modernisation and jobs – but often dispossessing people and exploiting workers. Now, after several decades of independence, and with investor interest growing, African governments are once again promoting large plantations and estates. But the new corporate interest in African agriculture has been criticised as a “land grab”. The Conversation

Small-scale farmers, on family land, are still the mainstay of African farming, producing 90% of its food. Their future is increasingly uncertain as the large-scale colonial model returns.

To make way for big farms, local people have lost their land. Promises of jobs and other benefits have been slow to materialise, if at all.

The search is on for alternatives to big plantations and estates that can bring in private investment without dispossessing local people – and preferably also support people’s livelihoods by creating jobs and strengthening local economies.

Two possible models stand out.

Contract farming is often touted as an “inclusive business model” that links smallholders into commercial value chains. In these arrangements, smallholder farmers produce cash crops on their own land, as ‘outgrowers’, on contract to agroprocessing companies.

Then there is growth in a new class of “middle farmers”. These are often educated business people and civil servants who are investing money earned elsewhere into medium-scale commercial farms which they own and operate themselves.

So what are the real choices and trade-offs between large plantations or estates; contract farming by outgrowers; or individual medium-scale commercial farmers?

These different models formed the focus of our three-year study in Ghana, Kenya and Zambia. Evidence suggests that each model has different strengths. For policy makers, deciding which kind of farming to promote depends on what they want to achieve.

Plantations are ‘enclaves’

Our cases confirm the characterisation of large plantations as being “enclaves” with few linkages into local economies. They buy farming inputs from far afield, usually from overseas, and in turn send their produce into global markets, bypassing local intermediaries.

Plantations are large, self-contained agribusinesses that rely on hired labour and are vertically-integrated into processing chains (often with on-farm processing). They’re usually associated with one major crop. In Africa, these started with colonial concessions, especially in major cash crops such as coffee, tea, rubber, cotton and sugarcane. Some of these later became state farms after independence while others were dismantled and land returned to local farmers.

Many plantations do create jobs, especially if they have on-site processing. Plantations may also support local farmers if they process crops that local smallholders are already growing. For example, we found an oil palm plantation in Ghana that buys from local smallholders, giving them access to processing facilities and international value chains they would otherwise not reach.

But, typically, plantations have limited connections into the local economy beyond the wages they pay. Where production is mechanised, they create few jobs, as we found in Zambia: the Zambeef grain estate employs few people, and most of these are migrants whose wages don’t go into the local economy. And the jobs that are created are invariably of poor quality.

The main story is that plantations take up land and yet often don’t give back to the local economy. In the cases we researched, all the plantations led to local people losing their land. For instance, the establishment and later expansion of the 10,000-hectare Zambeef estate led to forced removals of people from their cropping fields and grazing lands.

There are some benefits from plantations and estates. But, given more than a century of bad experience, it may be time to concede they seldom – if ever – live up to their promises.

Contract farming brings benefits for some

Contract farming has a long history in Africa, dating back to colonial times. As with plantations, these arrangements were largely for the major cash crops, including cocoa, cotton, tobacco and sugarcane.

Contract farmers are smallholders who enter into contracts with companies that buy and process their crops. Sometimes members of outgrowers’ households might also get jobs on larger “nucleus” estates run by the companies. Whether or not they benefit, or get mired in debt and dependence, depends entirely on the terms of these contracts. Our study looked at contract farming in Ghana’s tropical fruit export sector, in French bean production in Kenya and in sugarcane farming in Zambia.

Contract farming has been hailed by some as the “win-win” solution, enabling commercial investment for global markets without dispossessing local farmers. Farmers farm on their own land, using their own family labour, while also accessing commercial value chains – rather than being displaced by large farms. But we found that this is not necessarily the case. Crucially, there are different kinds of arrangements that determine who benefits.

In Kenya, contract farmers are poorer than most farmers around them. For them, farming on contract provides a crucial livelihood, especially for poor women, who cultivate French beans for the European market and combine this with seasonal jobs on big farms.

In one Zambian block scheme all outgrowers gave up their land to Illovo, a South African company that grows sugarcane. The company pays them dividends. Here, the landowners, typically the old patriarchs, benefit from cash incomes. Young people lose out: they neither inherit the land nor control the cash incomes.

Contract farming clearly provides one effective avenue for smallholders to commercialise. It means, though, that smallholders take on both the risks and the benefits of connecting to commercial value chains.

Medium-scale farming: a promising option

Between the large plantations and the small contract farmers is another model: medium-scale commercial farms owned by individuals or small companies. We studied areas where medium-scale farms were dominating: mango farmers in Ghana, coffee farmers in Kenya and grains farmers in Zambia. While this kind of medium-scale farming also has colonial origins, the past two decades have seen massive growth in new “middle farmers”. Many of them are male, wealthy, middle-aged or retired, often from professional positions.

The medium -scale commercial farming model has a lot to offer. We found that they create more jobs and stimulate rural economies more than either big plantations or smallholder contract farmers. Yet cumulatively, such farms may threaten to dispossess smallholders, just as the big colonial and more recent plantations and estates have done.

The push behind the explosion of the “middle farmers” in the countries we studied has been investment by the educated and (relatively) wealthy. In Ghana in particular, we found, their expansion has displaced smallholders. Cumulatively, even modest-sized farms have led to substantial dispossession and reduced access to land.

Their informal employment patterns mean poor working conditions and few permanent jobs. But, unlike the plantations, these farms are well connected with the local economy. Building on social networks, these “middle farmers” often buy inputs and services from local businesses. At least some of their produce is sold into local markets.

Winners and losers

While policy choices are of course political, they can and should be informed by research about the implications of these different pathways of agricultural commercialisation. What is clear from our research is that different kinds of commercial farming will have different effects on the economy. It’s not just about efficiency. Ultimately, it’s about who wins and who loses.

Ruth Hall, Associate Professor, Institute for Poverty, Land and Agrarian Studies, University of the Western Cape; Dzodzi Tsikata, Associate Professor, University of Ghana, and Ian Scoones, Professorial Fellow, Institute of Development Studies, University of Sussex

This article was originally published on The Conversation. Read the original article.

 

Leave a comment

Filed under Uncategorized