WEF_GrowAfrica_AnnualReport2014

Making markets competitive
Overall, the private sector recognises progress, but calls for urgency and leadership from government to make markets more
competitive, particularly in respect of the following constraints:
Constraint
Solutions
Even the most robust business plan will fail if the broader enabling environment is not conducive. Across
Africa, companies report that improvements to infrastructure, policy and market regulation are steadily
reducing the cost of doing business and opening up agricultural economies, but the frustratingly slow pace
of this change is a drag on growth.
Adequate infrastructure is vital. Without affordable access to power and water, manufacturing is unviable.
Without decent roads, transport costs can be greater within a country than shipping a commodity from
Southeast Asia. Storage is vital to reducing postharvest losses and evening out supply against demand.
With limited budgets, better dialogue between government and the private sector is enabling more
targeted infrastructure investments. For example, the Nigerian government honoured its pledge to one
company that the road from Abuja to Lakoja would be improved within the year. Public-private partnerships
are also financing infrastructure. In Kenya, Netafim is bringing drip irrigation to smallholders through an
innovative financing model with USAID and local banks.
Policy improvements often involve general reforms to improve the ease of doing business, as
demonstrated by the World Bank’s ranking of Rwanda as the top global reformer of 2014. Specific
agricultural policy improvements are less numerous, although the enactment of a new Ghanaian seed law
is promoting commercialisation of improved inputs. Tackling land policy remains politically awkward in
many countries, with ambiguous tenure presenting a major challenge to everyone operating in the sector.
Trade policy is also problematic: changes to import rules disrupt the stability and viability of domestic value
chains, currency rules lead to foreign exchange shortages, and non-enforcement of agreed regional policy
on seed homologation makes development of better varieties uneconomic.
1 Infrastructure
Affordable power, water, storage and transport
systems are public goods without which the
private sector cannot function.
2 Open, well-regulated agricultural
economies
Rent-seeking protects vested interests at the cost
of productivity gains.
3 Trade policy
Business struggles to operate when policy is
unclear, weakly enforced, or liable to change due
to short-term political interests.
4 Land policy
Without clear land tenure, the private sector –
whether smallholder or multinational – will not
have the security to invest in production.
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Targeted infrastructure investments to unlock
commercial opportunities.
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Public-private financing.
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Whistle-blowing schemes for bribery.
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Technology to eliminate graft.
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Transparency for public tenders.
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Enforce regional policy on seed homologation and food
trade to create larger regional markets.
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Land-titling.
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Voluntary Guidelines on the Responsible Governance
of Tenure.
Finally, effective market regulation is slowly making the sector more open and competitive. In Africa as
elsewhere, agricultural economies can be constrained through vested interests engaging in rent-seeking –
the manipulation of the social or political context to extract value without actually improving productivity.
Companies and governments both report struggling to overcome this in its various forms, whether legal
– such as political lobbying or informal cartels blocking new market entrants – or illegal – such as graft
or bribery. For example, one country reports that established sugar importers sought to protect their
interests through a campaign to paint a major new sugarcane hub/out-grower scheme as a land grab.
Elsewhere, companies attempting to import machinery have faced requests for bribes. There are positive
stories in which reforms are making the economy more open, transparent and competitive. In Nigeria, the
government dramatically reduced graft within its fertiliser subsidy by distributing directly to farmers through
an e-wallet.
Elevating the pace and quality
of multi-stakeholder collaboration
Dynamic, evolving cross-sector coalitions are propagating targeted investments and value-chain
partnerships, and fuelling efforts to make agricultural markets competitive. When combined at a continental
level, there are the foundations of a movement in which multi-stakeholder collaboration will continue to
drive agricultural transformation, without dependence on any individual organisation or leader to sustain
momentum. In any specific country, while the construct of multi-stakeholder collaboration is more fragile,
partners cite the same components as crucial to building transformative momentum: multi-stakeholder
structures, leadership, coordination and government responsiveness.
Public-private collaboration has usefully shifted from the general to the concrete. Partners are converging
around specific value-chain opportunities, or to address particular policy issues, and thereby becoming
more action-oriented. Such collaboration is enabled within formal or informal structures for strategysetting,
dialogue and connection. In Rwanda, an Agricultural PPP Working Group is now in place. In Côte
d’Ivoire, a steering committee for the national plan for agriculture combines three established consultation
groups for the private sector, civil society (including farmers) and development partners.
Systemic change depends upon leadership to push through reforms and give partners confidence and
direction. For example, some companies reported that they overhauled their African investment strategy
because of the strong and determined leadership within the Nigerian Ministry of Agriculture. Meanwhile in
Malawi, a major transition of political leadership has put many company investment plans on hold.
Companies in every Grow Africa country cited the quality of roads as a constraint.
Partners require support and coordination to facilitate investment and enable collective problem-solving,
alignment and connections. Bodies such as Tanzania’s SAGCOT Centre and the Rwanda Development
Board are serving this function, although they are often under-resourced and stretched to meet the scale of
demand for their role.
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Review of 2013 Review of 2013
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