Private Sector Pledges to African Agriculture


WASHINGTON, D.C. — At the conclusion of the first ever U.S.-Africa Leaders Summit on August 6, U.S. and African private sector companies pledged $7 billion in spending to spur the growth of African agriculture developments. By August 7, that number increased to $10 billion in investment pledges, and the Obama administration’s expectations for private sector investment had been greatly surpassed.

The investments come at a time when Africa’s economies outpace those of any other continent. Indeed, the Harvard Business Review noted that roughly a third of Africa’s economies are growing at six percent or more a year, and the continent contains the world’s largest share of uncultivated land.

Africa has the potential to produce greater amounts of food for the world over, and the growth of regional economies mean more resources are available for farmers to do just that. Research by Pricewaterhouse Coopers revealed capital and infrastructure spending would reach $78 trillion by 2025, and farmers stand to benefit from improved access to distribution networks.

Private sector expansion into African economies has risen steadily in recent years, but many NGOs and civil society members fret the investments are part of a greater scheme by big businesses to extract profit from the historically plundered continent.

After the U.S. aid agency USAID announced the New Alliance for Food Security and Nutrition Initiative on August 5, pundits claimed the investments—tied to the new initiative—were simply a refurbished form of colonialism, requiring African states to adopt laws and policies that favor businesses at the expense of greater transparency and accountability measures.

The use of the term “colonialism” may be overwrought, but recent evidence gives some credence to these claims. Research by Health Poverty Action indicates, on aggregate, $192 billion leaves Africa in profits from multinational companies, tax evasions and the cost of climate change. Even accounting for the billions of dollars in investments and aid sent to Africa annually, Africa experiences an overall net loss of $58 billion per year.

Taken at face value, the investments appear to be good news for budding African enterprises, businesses and projects. Investments in agriculture can help rural farmers rise out of poverty, and new technologies and agricultural techniques could increase overall output as well as the number of food secure households. It’s difficult to say whether or not the private investments will harm African farmers in the long run, but under the right circumstances, the investments will help both investors and African farmers, and that would certainly help advance the interest of the poor.

Joseph McAdams

Sources: Harvard Business Review, The Guardian, Washington Post, Health Poverty Action
Photo: Environmental Governance


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