The Mexican government has increasingly turned to public–private partnerships (PPPs) to build energy industry infrastructure. The photo shows a gas pipeline belonging to Mexico’s state oil company, Pemex. Credit: Courtesy of Pemex

By Emilio Godoy
MEXICO CITY, Sep 28 2015 (IPS)

The Mexican government has increasingly turned to public–private partnerships (PPPs) to build infrastructure in the energy industry and other areas. But critics say this system operates under a cloak of opacity and is plagued by the discretional use of funds.

As the 2013 energy reform, which opened the industry to national and international private capital, is implemented, PPPs have become more and more frequent.

In the case of the state oil company Pemex, “it doesn’t form alliances with just anyone, only with corporate giants. It doesn’t talk much about those deals. They’re very hard to track,” said Omar Escamilla, a researcher on fossil fuels with the non-governmental Project on Organising, Development, Education, and Research (PODER).

The analyst told IPS that “The PPPs are formed with companies registered in tax havens, which makes it difficult for the Mexican justice system to hold them accountable or request reports on how the funds are used.”

“What is worrisome is who the partnerships are formed with, where the capital comes from, and what is the history of those companies,” he said.“The PPPs are formed with companies registered in tax havens, which makes it difficult for the Mexican justice system to hold them accountable or request reports on how the funds are used.”-- Omar Escamilla

The Law on Public–Private Partnerships, in effect since 2012 and amended in 2014, regulates long-term contractual arrangements by the public sector for the provision of services that use infrastructure partially or totally provided by the private sector.

The law requires that the contracts be put out to tender, and gives the state the power to declare the works of public utility and to expropriate land, while setting a minimum timeframe of 40 years for the contracts.

Mexico is in seventh place among developing countries in terms of the number of PPPs. In Latin America, only Brazil uses this scheme more frequently. The largest number of PPPs has involved the construction of roads, although they are also used in the construction of hospitals, prisons, airports, railroads and the energy industry.

According to the World Bank, “PPPs are typically medium to long term arrangements between the public and private sectors whereby some of the service obligations of the public sector are provided by the private sector, with clear agreement on shared objectives for delivery of public infrastructure and/ or public services.”

PPPs are seen as improving the equation between quality and prices for services, transferring risks to the private sector, improving incentives for efficient production, reducing public spending, and transferring debt to the private sector.

But critics say they bind governments to payments under lengthy contracts. They also argue that they can bring down spending on public services, mask the true extent of the public debt, disguise the privatisation of public services, and drive up costs.

At the federal level, Mexico has 29 PPPs, while different states have a combined total of 20.

The energy reform approved in December 2013, the biggest transformation of the industry in the last eight decades, opened up oil exploration, extraction, refining, transportation, distribution and sale of oil and its by-products to local and foreign private investment.

In the last 20 years, Pemex has turned to PPPs to build oil industry infrastructure, as a way to get around the legal and economic limitations of a state monopoly, says the study “Analysis of the business structure in Mexico’s oil industry,” published by PODER in June.

For example, in 1996 Pemex and the U.S.-based Sempra Energy formed a partnership to create Gasoductos de Chihuahua, which became the biggest player in Mexico’s natural gas industry, because it controls nine companies by means of two joint ventures and seven partner companies, all of which form part of Pemex’s organisational chart.

With the aim of developing three mature fields in the southern state of Tabasco, PMI Campos Maduros Sanma, a subsidiary of Pemex, formed a partnership in 2011 with the subsidiaries in Mexico of the private trasnational corporations Petrofac Limited (UK) and Schlumberger Limited (U.S.).

In 2013, Pemex transferred the Planta Clorados III petrochemical complex, one of the national petrochemical industry’s most important assets, to the local firm Mexichem, creating the company Petroquímica Mexicana de Vinilo. In the joint venture, Mexichem controls 55.1 percent of the shares and Pemex holds the rest.

Another case is Gasoductos de Chihuahua, the company that will be responsible for the operation and maintenance of the Los Ramones pipeline, the biggest investment in infrastructure for transporting gas in half a century, with a capacity to transport 3.5 billion cubic feet of natural gas a day over a distance of 900 km.

The pipeline will link central Mexico with the U.S. border in the north.

The gas pipelines that the Mexican government is building to provide gas industry infrastructure are actually the biggest business scheme for the private sector to form ties with Pemex in the natural gas industry, says the Poder report.

The Comisión Federal de Electricidad, a state power company, has followed a similar strategy with the construction and operation of wind power farms in the southern states of Oaxaca and Chiapas.

“Oversight, accountability and transparency are pending tasks, to carry out a comprehensive review of these mechanisms,” Arturo Oropeza, a professor at the National Autonomous University of Mexico’s Economic Research Institute, told IPS.

“There has been a lack of instruments for this, as well as a lack of an integral vision for understanding what happened. What is needed is a sectoral evaluation,” he said.

“Evaluating the environment for public-private partnerships in Latin America and the Caribbean”, published in April, lists Mexico among the countries with the best conditions for PPPs.

The list, which assessed 19 countries in the region based on 19 indicators involving electricity, transportation and water infrastructure, classified Mexico as the best-placed in terms of investment climate and worst in terms of the domestic context.

The report was produced by the Inter-American Development Bank; its private financing arm, the Multilateral Investment Fund; and the Intelligence Unit of the British magazine The Economist.

It states that issues like transparency represent a challenge to the development of more PPPs.

The report mentions the lack of significant independent oversight of compliance with contracts, and says the largest projects have been granted through direct negotiations in cases where there was only one interested party, even though the law requires that they be put out to tender.

Chile headed the list, with nearly 77 points out of a possible 100, followed by Brazil (75); Peru (70.5) and Mexico (nearly 68). Nicaragua, Argentina and Venezuela tailed the list.

Mexico has earmarked some 300 billion dollars for PPPs over the next three years.

In Escamilla’s view, the outlook in Mexico is not promising, given the increased use of PPPs.

“It’s important to generate frameworks for oversight and operability. PPPs should be held accountable with regard to how the partner was chosen, their profile, their history of bribes and fraudulent payments….And if these criteria are not met, the option is to look for other partners,” he said.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

Large-scale energy and logistical infrastructure initiatives in Brazil are notorious for their delays. The majority of railways, ports, highways and power plants are several years behind schedule. Credit: Darío Montero/IPS

By Kanya D'Almeida
NEW YORK, Jun 11 2015 (IPS)

According to new data released by the World Bank Tuesday, investments in infrastructure in 139 emerging economies shot up to 107.5 billion dollars in 2014, with just five countries – Brazil, Colombia, India, Peru and Turkey – accounting for 73 percent of the total.

The update, published by the Bank’s Private Participation in Infrastructure (PPI) database, reveals that projects with private participation in the water, energy and transport sectors totaled 51.2 billion in the first half of 2014, compared to 41.7 billion in the first half of 2013.

"The concept of ‘appropriate scale’ has been deleted from […] policy discourse because now instead of ‘small is beautiful’, the catchphrase is ‘big is better’.” -- Nancy Alexander, director of the Economic Governance Program at the Heinrich Böll Foundation
Based on a review of investments in some 6,000 projects in 139 low- and middle-income countries between 1990 and 2014, the data show that the energy sector accounted for the greatest number of new projects, but the transport sector captured the largest amount of investment, securing 55.3 billion dollars or 51 percent of the total.

Some 33 road construction projects attracted 28.5 billion dollars in investment, with four of the top five road projects in Brazil and one in Turkey. Five airport projects secured 13.2 billion dollars in investment commitments.

Driven largely by massive infrastructure booms in Brazil, Colombia and Peru, Latin and America and the Caribbean accounted for 55 percent of global investments, snagging 69.1 billion dollars last year.

These mega-projects include 11 major ventures, eight of them in the energy sector, in Peru alone, amounting to over eight billion dollars, the largest of which, the Lima Metro Line 2, brought in 5.3 billion dollars in investment.

Not all regions are seeing an increase. Both India and China experienced declines last year, with the latter witnessing its lowest infrastructure investment levels since 2010, at 2.5 billion dollars. India’s commitments dropped down to 6.2 billion dollars.

In sub-Saharan Africa investment plunged from 9.3 billion in 2013 to 2.6 billion in 2014, although increased infrastructure activity in Ghana, Kenya and Senegal suggests that the downward trend might soon be reversed.

Despite uneven investment levels globally, the Bank estimates that spending on infrastructure projects in 2014 represents 91 percent of the five-year average between 2009 and 2013.

In a statement released on Jun. 9, Bank officials claimed, “This is the fourth highest level of investment commitments ever recorded, exceeded only by levels seen from 2010 through 2012.”

What this data reveals is that a global consensus to bolster public-private partnerships in mega-projects is bearing fruit.

Practically every major international organisation from the United Nations to multilateral development banks believe that strengthening road, energy and transport networks are crucial at a time when one billion people lack access to an all-weather road, 783 million people live without clean water supplies and 1.3 billion people are not connected to an electricity grid.

But a closer look at the track records of these gigantic infrastructure projects and new plans for financing them suggests that pouring billions of dollars into highways and dams in the developing world not only enriches some of the wealthiest sectors of the population, they also threaten to further impoverish the poorest, thereby widening global inequality.

‘Appropriate Scale’ – a thing of the past

The world’s most cited scholar on mega-project management and planning, Bent Flyvbjerg of Oxford University, found that on average only one in 1,000 mega-projects is completed on time, within its stated budget and with the ability to deliver what was promised.

Flyvbjerg’s extensive database on the subject reveals that approximately nine out of every 10 large-scale projects incur cost overruns, often over 50 percent of the stated budget – an expense borne primarily by taxpayers.

According to Nancy Alexander, director of the Economic Governance Program at the Heinrich Böll Foundation, these massive projects can cost “potentially billions and trillions of dollars, so when they go over budget and over time, they can devastate the national budget of a country.”

Alexander told IPS that, while there is a very real need for improved infrastructure, particularly in developing countries, there is an equally urgent need to tailor such ventures towards those who would most benefit from the services.

“Whether they are in education, healthcare, water or electricity, projects really need to be appropriate in scale to meet their goals. But the concept of ‘appropriate scale’ has been deleted from […] policy discourse because now instead of ‘small is beautiful’, the catchphrase is ‘big is better’.”

Part of the reason for this change, experts say, is the push to use investment in infrastructure to finance development, particularly by strengthening public-private partnerships and by ‘financialising’ investment.

Research by the Heinrich Böll Foundation reveals that the G20 group of major economies aims to finance the so-called infrastructure gap by tapping into the roughly 80 trillion dollars in long-term private institutional finance – from pension funds to insurance schemes – by creating infrastructure as an “asset class”.

Under this model, governments will undertake a range of public-private partnerships (PPPs) and financial institutions will package and sell financial products “that offer long-term investors a stake in a portfolio of PPPs”.

“When speculators take stakes in physical infrastructure,” the organisation says, “such infrastructure is subject to the whims of herds of investors [and] could trigger instability in the provision of basic services.”

Already, a lack of evidence on the success of PPPs suggests that the current pace of investment in infrastructure with private participation is at best a gamble – and at worst a recipe for disaster.

In a sample of 128 World Bank-financed public-private partnerships, 67 percent of those in the energy distribution sector failed, as did 41 percent of those in the water sector. These are the findings of the World Bank’s own independent evaluation group (IEG).

Other research indicates that mega-projects seldom lead to improvement in access to basic services, since many such ventures are undertaken to serve global, rather than local, demand.

“Energy projects, for instance, are often launched to serve a mine, or you’ll see a dam or power plant built for the same purpose – as is the case with the Inga Dam in the Democratic Republic of the Congo,” Alexander explained.

The very countries highlighted in the Bank’s latest update have a poor track record of successfully managing mega-projects.

Large-scale energy and logistical infrastructure initiatives in Brazil, for instance, are notorious for their delays, while the majority of railways, ports, highways and power plants are several years behind schedule.

Meanwhile, back in April, an expose published by the International Consortium of Investigative Journalists (ICIJ) revealed that in the course of a single decade, some 3.4 million people were evicted from their homes, torn away from their lands or otherwise displaced by projects funded by the World Bank.

Fifty percent of those displaced by large-scale ventures – ostensibly aimed at improving water and electricity supplies or beefing up transport and energy networks in some of the world’s most impoverished nations – reside in Africa, or one of three Asian nations: China, India and Vietnam.

The investigators further alleged that the Bank and its private-sector lending arm, the International Finance Corp, pumped 50 billion dollars into projects that financed governments and companies accused of human rights violations.

Brent Blackwelder, president emeritus of Friends of the Earth International, told IPS that “planning bigger and bigger projects despite the failure rate proves what Einstein said: that the definition of insanity is doing the same thing over and over again and expecting different results.”

Edited by Kitty Stapp

UNIDO Director General LI Yong at the Second ISID Forum, Nov. 4-5, 2014. Credit: Courtesy of UNIDO

By Ramesh Jaura
VIENNA, Nov 6 2014 (IPS)

The United Nations Industrial Development Organisation (UNIDO) has come a long way since 1997, when it faced the risk of closure in the aftermath of the end of the Cold War.

At that time, it was threatened with the withdrawal of Canada, the United States – its largest donor – as well as Australia on the grounds that the private sector was better suited to foster industrial development than an inter-governmental organisation.

Nearly one-and-a-half year after UNIDO’s 53-member Industrial Development Board appointed LI Jong – who had served as China’s Vice-Minister of Finance since 2003 – as Director General, the organisation is set to respond to post-2015 global development priorities by treading the path to inclusive and sustainable industrial development (ISID).

“We have a vision of a just world where resources are optimised for the good of people. Inclusive and sustainable industrial development can drive success" – U.N. Secretary-General Ban Ki-moon
It was not surprising therefore that some 450 participants from 92 countries, including Heads of State and government, ministers, representatives of bilateral and multilateral development partners, agencies of the United Nations system, the private sector, non-governmental organisations and academia, joined hands to interact at UNIDO’s Second ISID Forum on Nov. 4 and 5 at the United Nations headquarters in Vienna.

The first Forum was convened in June 2014, at which government officials and key policy-makers exchanged views on policies and ISID instruments and examined what had worked in one country and could inspire another.

“The promotion of inclusive and sustainable industrial development is a very clear mandate given by our Member States at the General Conference of UNIDO in Lima, Peru, last December,” LI told the Forum on Nov, 4.

“Since then, we have been implementing the new mandate in various ways … Today we send a strong statement: technical assistance cannot remain isolated from the main forces that shape the course of progress in your countries. We have to combine our efforts to enhance the developmental impact of our endeavours. Together we will grow; the partnership will make us stronger.”

The rationale behind the UNIDO Director General’s thinking is obvious. Strategic partnerships are the best response to increasingly complex development challenges because there is no single development strategy and no single actor that can address all the social, environmental and economic challenges the world faces today.

“Integrated and multi-actor responses are required to tackle problems like climate change, economic recovery, rising youth unemployment, conflict, and emerging problems such as global health pandemics,” argues Ll.

U.N. Secretary-General Ban Ki-moon also believes that “the overarching imperative for our planet’s future is sustainable development.” In opening remarks to the Second Forum, Ban said:  “We have a vision of a just world where resources are optimised for the good of people. Inclusive and sustainable industrial development can drive success.”

Amid applause, Ban added that among the main area of action – climate change – presents an opening for inclusive and sustainable industrial development.

“Smart governments and investors are exploring innovative green technologies that can protect the environment and achieve economic growth. For industrial development to be sustainable it must abandon old models that pollute. Instead, we need sustainable approaches that help communities preserve their resources,” he said.

The UNIDO forum closely examined and endorsed new pilot programmes for country partnerships to promote inclusive and sustainable industrial development in Ethiopia and Senegal.

The programmes are based on close analysis and insights gained by UNIDO experts during visits to the two countries in the course of the previous months. They have identified a number of strong partners, both local and international, and accordingly designed the two partnership programmes.

From left to right: Ethiopia’s Prime Minister, U.N. Secretary-General Ban Ki-Moon, UNIDO Director General LI Yong and Senegal’s Prime Minister at UNIDO’s Second ISID Forum, Nov. 4-5, 2014. Credit: Courtesy of UNIDO

UNIDO’s work in the field of inclusive and sustainable industrialisation in Africa was lauded by Ethiopian Prime Minister Hailemariam Desalegn and Senegalese Prime Minister Mahammed Dionne.

Commending the creation of the new partnership approach, Prime Minister Desalegn said that inclusive and sustainable industrialisation would help his country develop. He said Ethiopia was looking forward to enhancing its economic transformation and that such a partnership model will help implement this vision.

Prime Minister Dionne said economic growth must lead to the eradication of poverty and address the problem of unemployment, adding that inclusive and sustainable industrialisation would help implement Senegal’s development plan by providing the collective action needed to make it happen.

Director General Ll assured the two prime ministers that “UNIDO is fully committed to supporting the governments of Ethiopia and Senegal in implementing the two programmes.”

“These pilot programmes,” he said, “mark the beginning of a larger, more comprehensive and ambitious approach to how UNIDO undertakes technical cooperation with and for Member States to support their industrialisation agenda.”

“If we want to achieve the scale of development needed, we have to explore the full potential of inclusive and sustainable industrial development,” Ll added.

“We have to strengthen productive capacities. We must build enterprises. We must reach out to farmers and entrepreneurs, and promote economic diversification and structural transformation based on adding value to the natural resources of these countries.”

The need for moving away from activities that are low value-added and low-productivity to activities that add more value and boost productivity was explained by the U.N. Secretary-General at the high-level thematic roundtable of the United Nations Conference on Landlocked Developing Countries (LLDCs) on Nov. 3 in Vienna.

There, Ban said: “Think of a coffee bean, just a simple coffee bean. All LLDCs can sell just a coffee bean as it is. But more developed creative countries … grind this coffee bean and sell as a manufactured product at a much higher price.

“The same with unprocessed minerals. Lots of developing countries … sell minerals just as they are. Many foreign companies come and bring all these minerals, and then they sell back with processed manufactures, [at a] much higher [price]. Then with their own mineral resources they have to buy, they have to pay a lot of money.”

ISID takes into account factors such as the structural and knowhow bottlenecks faced by developing countries by “the mobilisation of partners and their resources to synergise with UNIDO’s technical cooperation”, LI told the ISID Forum.

Commenting on the agreed cooperation with Ethiopia and Senegal, he said: “I would say that these two pilot programmes for country partnership mark the beginning of a larger, more comprehensive and more ambitious approach of how UNIDO undertakes technical cooperation with and for Member States to support their industrialisation agendas.”

“Together with our partners, we will finalise the planning of the partnership country programmes, based on the inputs we receive in this Forum.”

Those inputs included recognition that the concerns and development objectives of countries seeking international support must be taken into account and that there is no alternative to public-private partnerships.

These partnerships, participants agreed, must aim at eradication of poverty and not maximisation of the profits of the private corporations involved in such partnerships.

(Edited by Phil Harris)

An irrigated field in Kakamas, South Africa. Due to weak land tenure found in many African countries, large land transfers place local communities at significant risk of dispossession or expropriation. Credit: Patrick Burnett/IPS

By Janah Ncube
NAIROBI, Sep 1 2014 (IPS)

Agriculture in Africa is in urgent need of investment. Nearly 550 million people there are dependent on agriculture for their livelihoods, while half of the total population on the continent live in rural areas.

The adoption of a framework called the Comprehensive African Agriculture Development Program (CAADP) by Africa’s leaders in 2003 confirmed that agriculture is crucial to the continent’s development prospects. African governments recently reiterated this commitment at the Malabo Summit in Guinea during June of this year.The need for private sector investment in Africa is manifest, but the quality of those inflows of capital is vital if it is to enhance the livelihoods of millions of food producers in Africa.

After decades of underinvestment, African governments are now looking for new ways to mobilise funding for the sector and to deliver new technology and skills to farmers. Private sector actors are also looking for opportunities within emerging markets in Africa.

Large-scale public-private partnerships (PPPs) are an emerging trend across the continent. These so called ‘mega’ PPPs are agreements between national governments, aid donors, investors and multinational companies to develop large fertile tracts of land found near to strategic infrastructure such as roads and ports.

Tanzania, Malawi, Mozambique, Ghana and Burkina Faso all host this type of scheme. Several African countries have signed up to global initiatives such as the New Alliance for Food Security and Nutrition, supported by the rich, industrialised economies of the G8; and GROW Africa, a PPP initiative supported by the World Economic Forum.

For governments, these arrangements offer the illusion of increased capital and technology, production and productivity gains, and foreign exchange earnings.

But as Oxfam reveals, mega-PPPs present a moral hazard with serious downsides, especially for those living in areas pegged for investment.

In particular, the land rights of local communities are at risk. Within just five countries hosting mega-PPPs, the combined amount of land in target area for investment is larger than France or Ukraine.

While not all of this land will go to investors, governments have earmarked over 1.25 million hectares for transfer. This is equal to the entire amount of land in agricultural production in Zambia or Senegal.

Due to weak land tenure found in many African countries, this land transfer places local communities at significant risk of dispossession or expropriation.

These arrangements also threaten to worsen inequality, which is already severe in African countries, according to international measurements. Mega-PPP investments are likely be delivered by – and focus on – richer, well connected companies or wealthier farmers, bypassing those who need support the most. More land will also be placed into the hands of larger players further reducing the amount available for small-scale producers.

The ability of small and medium sized enterprises to benefit from these arrangements is also in doubt. The size of just four multinational seed and agro-chemical companies partnering with a mega-PPP in Tanzania have an annual turnover of 100 billion dollars – that’s triple the size of Tanzania’s economy.

These asymmetries of power could lead to anti-competitive behaviour and squeeze out smaller local and national companies from emerging domestic markets. Larger companies may also gain influence over government policies that perpetuate their control.

These types of partnership also carry serious environmental risks. An example of this is the development of large irrigation schemes for new plantations. They can reduce water availability for other users, such as local communities, smaller farmers and important other rural groups like pastoralists.

The need for private sector investment in Africa is manifest, but the quality of those inflows of capital is vital if it is to enhance the livelihoods of millions of food producers in Africa. The current mega-PPP model is unproven and risky, especially for smallholder farmers and the poor.

At the very heart of the agenda to enhance rural livelihoods and eradicate deep-seated poverty in rural areas should be a clear commitment towards approaches that are pro-smallholder, pro-women and can develop local and regional markets. The protection of land rights for local communities is also – and equally – paramount.

Oxfam’s experience of working with smallholder farmers shows that private sector investment in staple food crops, and the development of rural infrastructure such as storage facilities, combined with public sector investment in support services such as agricultural research and development, extension services and subsidies for seeds and credit, can kick-start the rural economy.

Robust regulation is also vital, to ensure that private sector investment can ‘do no harm’ and also ‘do more good’ by targeting the areas of the rural economy that can have the most impact on poverty reduction. African governments should put themselves at the forefront of this vision for agriculture.

These represent tried and tested policies towards rural development in other contexts. This approach, rather than one that subsidises the entrance of large players into African agriculture, would truly represent a new alliance to benefit all.

Edited by Kitty Stapp

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS-Inter Press Service.

Excerpt:

Sweetpotato breeder Jose Ricardo in Maputo Mozambique. Africa currently imports almost 40 billion dollars worth of food, and experts say that the continent needs to become more self-reliant. Credit: Busani Bafana/IPS

By Busani Bafana
MAPUTO, Sep 8 2013 (IPS)

Africa currently imports almost 40 billion dollars worth of food a year, but it should implement measures to attract private sector investment in agriculture in order to reduce its food import bill and increase its self-reliance, experts in the sector tell IPS.
“In the next 10 years, African countries should not rely on food aid, but should produce their own food and buy from within Africa when they run out of food,” agriculture researcher and director of the Barefoot Education for Africa Trust, Professor Mandivamba Rukuni, told IPS."The biggest trick is the private sector putting more money into agriculture. There is nowhere in the world today where you can get the government or industry moving if government and the private sector are not working together." -- agriculture researcher, Professor Mandivamba Rukuni

“Food self-reliance means wealth creation and farmers should be directly linked to markets. More people will have more money in their pockets if more smallholder farmers are farming profitably, and this can be done,” Rukuni said.

African countries, according to an Alliance for a Green Revolution in Africa (AGRA) African Agriculture Stats Report launched in Maputo, Mozambique’s capital, on Sep. 4, produced 157 million tonnes of cereals and imported 66 million tonnes in 2010. In August, the Forum for Africa Research in Africa put the continent’s current food import bill at more than 40 billion dollars, money it said would be better spent enabling African farmers to become self-sufficient.

African heads of state and government committed themselves to improving agricultural and rural development in Africa in the Maputo Declaration of 2003. It includes the ambitious goal of governments allocating at least 10 percent of national budgets to agriculture and rural development.

But in the last 10 years, only a few of the 54 African Union (AU) member states have made this investment. These include Burkina Faso, Ghana, Guinea, Mali, Niger and Senegal. A further 27 have developed formal national agriculture and food security investment plans under compacts. Compacts are a result of country roundtables that bring together key players in agriculture to agree on investment priorities.

Currently one of the few countries prioritising investment in agriculture is Nigeria. In that West African nation, the government developed the Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL), which seeks to reduce the risk in the agricultural finance value chain by building long-term capacity and institutionalising incentives for agricultural lending. The goal of NIRSAL is to expand bank lending in the agricultural value chain.

Nigeria’s minister of agriculture and rural development Akinwumi Adesina told IPS that Nigeria was leveraging 3.5 billion dollars for agriculture from local banks. The government is shouldering the risk in a bid to attract the participation of the private sector.

“We are developing an approach for the private sector to have access to finance because without finance you cannot do much,” Adesina told IPS. “We are working on new financing instruments that will allow our capital markets to work for agriculture. Agriculture accounts for 44 percent of our GDP and 70 percent of all employment but it has only two percent of all bank lending in Nigeria.”

Meanwhile, Rukuni told IPS that while most African countries have not been able to commit 10 percent, they have seen the wisdom of doing so.

“Although 10 percent is a nice figure to talk about, it is not a magic figure. What is more important moving forward is catalytic public financing, where government, its experts, farmers and private sector work together and really understand here it is important for government to invest to trigger private sector investment,” Rukuni said.

Citing China, India and Brazil as examples of public-private partnerships at work, Rukuni said it was time for Africans to understand that there is no competiveness in agriculture without governments and the private sector setting joint targets in infrastructural development, for instance.

“The biggest trick is the private sector putting more money into agriculture,” he said. “There is nowhere in the world today where you can get the government or industry moving if government and the private sector are not working together.”

The AGRA report notes that despite having over 70 percent of prime uncultivated land, land holdings in Africa continue to shrink. This shrinkage has impacted on the productivity of the 33 million smallholder farmers responsible for up to 90 percent of the continent’s agricultural output.

The alliance estimates that a one percent growth in agriculture will increase the income of the poor by more than 2.5 percent, yet only 0.25 percent of bank lending in the Common Market for the Eastern and Southern Africa region goes to smallholder farmers.

AU Commissioner responsible for agriculture and rural development, Rhoda Peace Tumusiime, told IPS that investment in African agriculture has become more urgent than before and this was reflected in the political movement towards the development of national agriculture plans as proposed under the Comprehensive Africa Agriculture Development Programme (CAADP) framework of eliminating hunger and reducing poverty.

“The 70 percent of the population who depend on agriculture is a big figure, so if we focus on improving the situation of this 70 percent, poverty will be eradicated. We do not want a situation where the economies are growing but agriculture is not,” she said.

In a March 2013 report, “Growing Africa: Unlocking the Potential of Agribusiness”, the World Bank projected African agriculture would top a trillion dollars in 2030 on the back of increased domestic and international demand for food. The bank also urged African governments to improve their agriculture policies and promote agribusiness as a driver of growth.

Abraham Sarfo, agriculture, technical and vocational education advisor at the New Partnership for Africa’s Development, told IPS that agriculture used to be part of dual development planning but was now on the continental agenda through the Africa-driven CAADP agenda of eliminating hunger and reducing poverty through agriculture.

“A sector that contributes over 30 percent of the economy of a country and is still at subsistence level shows how it is underdeveloped compared to mining or ICT that attract the private sector,” Sarfo told IPS. He called for the increase of innovative financing models that will remove risk in agriculture investment to attract the private sector.

Phillip Kiriro, president of the East Africa Farmers Federation, which represents about 200 farmer bodies told IPS that access to critical inputs and better technologies has slightly improved in the last 10 years but governments still need to help farmers live off their land.

The conflicting role of big businesses did not go unnoticed by activists at Jeju. Credit: Amantha Perera/IPS

By Amantha Perera
JEJU, South Korea, Sep 18 2012 (IPS)

At the close of the ten-day World Conservation Congress that ran from Sept. 6-15 on the South Korean island of Jeju, members of the convening International Union for Conservation of Nature (IUCN) agreed on an ambitious four-year action plan for protecting global natural resources.

Taking the form of a 24-page document, the four-year programme focuses on the two main themes that dominated discussions among 10,000 participants at Jeju last week – that natural resources are stretched dangerously thin and that nature itself could hold the solutions to the crisis.

“The new IUCN Programme aims to mobilise and unite communities working for biodiversity conservation, sustainable development and poverty reduction in common efforts to halt biodiversity loss and apply nature-based solutions,” the IUCN stated on Saturday.

The challenge now, according to IUCN Director General Julia Marton-Lefèvre, is ensuring that the programme actually gets implemented.

Promoting nature-based solutions for industries as well as communities was the main thrust at the congress, from getting multinational companies to adopt sustainable solutions, to pressing governments to safeguard protected areas, or announcing a partnership with IT giant Microsoft to track extinction threats worldwide.

Experts agreed that the mega congress has the potential to set the agenda not only for the conservation community but for the entire global community to face up to threats brought on by changing climates.

Achim Steiner, executive director of the United Nations Environment Programme (UNEP), told IPS that the congress was the best forum to assess whether there was hope beyond “the political stalemate paralysing the current capacity of nation states to move on issues like climate change”.

Steiner added that this June’s U.N. summit on sustainable development (Rio+20) reiterated the unfortunate fact that the politically divided world still lacks the capacity to act in unison on saving the environment.

“None of us want to wait, but we are forced to wait,” Steiner said.

IUCN can step into this bubble of inaction and make its membership of 89 states, 124 government agencies and 1018 non-governmental organisations count.

The Union believes its primary strength is that it reflects the cutting edge of the conservation community and has the power to set a radical agenda.

An assessment titled ‘A Review of the Impact of IUCN Resolutions on International Conservation Efforts’ recalls that it was the IUCN meeting in Ashkhabad, held in the former Soviet Union in 1978, that gave birth to the term ‘sustainable development’,  which has now permeated the vocabulary of every leading international institution concerned with the impact of development on the natural world.

“This phrase has now entered the mainstream of development thinking and has had a profound influence on the design and operation of conservation and development practice throughout the world,” according to the report.

Braulio F. de Souza Dias, executive secretary of the U.N. Convention on Biological Diversity (CBD), has much more recent examples of the IUCN’s influence on the world stage.

“All the progress we have made on the CBD agenda has been very much influenced by the results of discussions at IUCN congresses,” Dias told IPS, adding that the programme of protected areas, which the CDB set up in 2007, was a direct result of a proposal that came out of the previous IUCN congress.

Public-private partnerships

At the congress last week the emphasis fell unambiguously on getting businesses big and small to adopt sustainable solutions.

“It is great that they have come,” Marton-Lefèvre told IPS, referring to the overwhelming presence of businesses like Holcim and Nestle’s Nespresso who were showcasing their programmes at the congress.

Experts like Steiner and Dias were much more cautious in their praise of the multinationals, but acknowledged that the business community showing an inclination to be “green friendly” was welcome, given the paralysis of national governments.

Dias told IPS that environmental groups and activists were increasingly coming to the realisation that it was better to at least enter into dialogue with big businesses rather than keep up an endless stream of criticism.

“More and more organisations are seeing that they can be much more effective if they establish partnerships to discuss actual results,” he said.

Interactions between business groups and the conservation community is likely to lead to a better understanding of each other, according to Naoko Ishii, chairperson of the Global Environment Facility (GEF), a Washington-based public fund that supports projects related to environment and sustainable development.

“I am confident that the discussions will influence action on a broader level,” Ishii, who has previously served as Japan’s deputy finance minister and country head of the World Bank in Sri Lanka, added.

However, Steiner cautioned against the expectation of results immediately after the congress.

“Let us be clear, to ask the private sector to lead change in the absence of corresponding public policy is not going to work,” he told IPS.

Dias, his colleague from the CBD, struck a much more positive tone, but he too admitted that once the talking stops, the real challenge will be to get all parties – governments, businesses and activists – onto one platform.

“Overall we are still losing biodiversity, and we have to scale up action,” he warned.

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