Case for Collaboration: Public-Private Partnerships in Sub-Saharan Africa

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Over the last two decades, private-public partnerships (PPPs) have become an increasing source of hope and interest in the development of sub-Saharan Africa. According to FAO, the rationale behind PPPs is that the private sector can aid public markets in which the government has failed. In agriculture, this scope is understood to include socio-economic and sustainability objectives in addition to traditional economic goals. What is also important about agri-PPPs is that the private sector has been found to better mitigate concerns with projects that have perceived high risks or low returns. Optimism around the future of agri-PPPs is substantial, with the Africa Business Communities projecting that they will serve to make the agricultural sector modern and market-oriented.

Looking toward a few examples of how PPPs have performed in sub-Saharan Africa, Uganda stands out as a country where diligence in public legislation has led to a massive amount of investment in various projects; as of 2018, Uganda has 28 projects reaching final closure and has seen $1.9 billion in project investment (according to World Bank). Hummedia asserts that this largely stems from a perceived need to increase the use of technology with a view of the private sector being vital.

Hummedia also shared a recent case study done on sorghum production in Uganda which showed that quality and production increased, with some farmers receiving 50-100 more shillings above average market prices; however, drawbacks were that farmers assumed risk in that if their product didn’t meet the standards, they wouldn’t be able to sell it. Other issues existed as well, largely in communication and trust between smallholder farmers and the private partner. The study concluded that communication was largely made possible by public research groups, demonstrating the need for efficient PPP cooperation.

Kenya also stands out as a success. The PPP Act of 2013 in Kenya established a PPP Unit that was designed to monitor and systematically develop projects seen as necessary for sustainable development. They currently have over 70 projects at various stages in the approval and implementation processes and produce regular reports. As far as agriculture goes, water and electricity projects seem to be the furthest along; the only projects specifically related to agriculture and agribusiness are still in the planning and assessment phase. As of 2018, according to the World Bank, Kenya has 23 projects reaching final closure and $2.9 billion worth of investment in PPP projects.

Rwanda has easily accessible and transparent guidelines for PPP development which can be accessed on the official Rwanda Development Board website. A 2014 overview of Rwandan case studies done by IFAD and IDS reported that PPPs had largely helped families acquire assets, access health insurance, improve nutrition, and benefit from infrastructure improvements in roads and electricity. The case study highlights an example of tea-leaf production in which partnerships in cultivation and manufacturing dramatically increased year-round job security and subsequent household improvements. Challenges remain, however, in reaching the poorest smallholders, building long-term local businesses, and facilitating easy communication and trust between farmers and companies, the last of which has been exacerbated by the unbalanced distribution of risk.

Where Rwanda sits at 10 PPP projects reaching closure and $694 million in investment and seems lacking compared to Uganda and Kenya, Ethiopia only has 4 PPP projects moving towards closure and $124 million in investment. A study by the UNDP cites initiatives as being “few and fragmented,” and reiterates throughout the report that the difficulties stem largely from no integration of PPP policy or direction in government. Without existing policy infrastructure, private entities are reluctant to invest in projects.

In summation, it seems as though the most successful PPP initiatives have been in countries where the government is actively involved with facilitating the public component of the partnership. Challenges remain across the board with communication and trust between the companies and the locals. There also has been a large focus on urban PPPs, with agri-PPPs trailing behind only in recent years. The Hummedia report also warns that, while crucial to success, too much attention to building social capital through the partnership function can cause PPPs to overlook technological components, which can affect outputs, and stresses that all agri-PPPs should keep smallholder farmers at “the center of decision making at all levels.”

 

*To learn more about all things PPP, a great resource is pppknowledgelab.org.