Public Private Partnerships (PPPs): The Case of Agribusiness


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Public Private Partnerships (PPPs): The Case of Agribusiness

  1. 1. Public Private Partnerships (PPPs): The Case of Agribusiness Ekiti Economic & Development Summit 15th October, 2011, Ado-Ekiti Ayo Akinola, Technical Advisor GIZ-Sustainable Cocoa BusinessSetting the contextWith increased regional integration, the Dr. Fayemi-led administration seesagriculture as a sector with major revenue generating potential which sadly hasnot been tapped over the years.Agriculture also has the potential to significantly impact on the state ofunemployment among young people in Ekiti State by providing avenues forgainful employment.Against this context, this paper will focus on generic agribusiness public-private partnership (PPP) models with potentials for sustainableimplementation and the attainment of the agricultural transformation policywith particular reference to capacity building in the cocoa value chain whereEkiti State seeks to be a world leader!"Reviving cocoa plantations to make Ekiti again a world leader in cocoaproduction; agriculture to contribute 50% of internally generated revenue;20,000 Ekiti youths trained and employed in mechanized agriculture by 2014."Presentation outline • Enabling landscape for PPPs • What are agribusiness PPPs • The shared value cascade • The capacity building PPP “CBPPP” model • The lesson points of the CBPPP model • Rolling out the Ekiti State CBPPP model   1  
  2. 2. Enabling landscape for agric vision • Mapping out the value chains on areas of comparative strength, market potential, employment, income generation and the envisaged multiplier impacts • Sensitizing and getting the buy-in and ownership of the key actors, service providers (including public agencies) and operators on the selected value chains with particular reference to how their business aspirations and fortunes will be enhanced • Sensitizing and building awareness and community legitimacy across the key growing destinations with a view to getting the buy-in of the target producers, farmer originations and farmgate gatekeepers. • Specific issues such as production targets, potential income generation, access to services, market linkages and most importantly, bottom-up farmgate feedback are key issues that will drive robust vision ownership • The translation of policy statements to specific income and measurement benchmarks are critical not only to rein in community loyalty, project uptake, social capital and collaboration but provides the basis for project monitoring and evaluation. • The policy dialogue and advocacy process must be deployed through a very structured and institutionalized mechanism that brings all the critical stakeholders to a common understanding of the benefits, responsibilities and roles to achieve the agric vision for the specific value chains • This paper thus recommends a one-stop-shop “clearing house” that will be responsible for PPP advocacy, facilitating PPPs and coordination between the project initiating ministries, departments & agencies (MDAs), private sector investors and development partners. It could be tagged Ekiti State PPP Agency!   2  
  3. 3. What is Agribusiness PPPs? • PPPs are collaborative projects that are jointly planned, financed and implemented by public sector, private companies, civil society and development agencies towards a common objective that combines business interests with development policy goals. • Each partner contributes what they do best in a very coherent manner that benefits the interest of all sectors of the society. Public agencies bring to the table the enabling environment, whilst their private counterparts contribute their technology, innovation, capital and expertise in a cost and risk sharing regime. • Development and civil society partners undertake crosscutting pro-poor and socially inclusive activities that ensure a working balance is maintained between social and commercial objectives. • Agribusiness PPPs range from the socially-inclusive outgrower schemes, service contracts, management contracts, public lease contracts to concessions and build-operate-transfer arrangements. Most common in Nigeria are private-sector led outgrower schemes and associated service contracts. • With untapped endowments in cocoa, rice, cassava, cotton and yam, Ekiti State stands well positioned to drive successful agribusiness PPPs that will enjoy strong collaboration from the development community. • A very successful PPP that requires close examination is the Sustainable Tree Crop Program (STCP). It has demonstrated that by bringing together government, the private sector, development agencies & research institutions, towards a common goal, can benefit the value chain, increase famer income, national economies and competitiveness of global partners.Shared value cascade with a common vision to enhance the circumstances ofWest Africa Cocoa farmers, the STCP:- • Spawned off the farmer field school (FFS) extension approach into national consciousness,   3  
  4. 4. • Enhanced cocoa yield and quality • Triggered higher farm gate prices & the strengthening of farmer organizations disenfranchised from the collapse of the cocoa board; • Compelled private sector investment in socially-inclusive and dedicated supply chain arrangements with cocoa producing communities; • Brought some credibility and order into the otherwise unregulated cocoa value chain in Nigeria; • Commanded public sector attention and in particular, was one of the key factors that grew the Cross River cocoa economy; and provided the platform for another PPP, the Cocoa Livelihoods Program (CLP), which is sponsored by Bill & Melinda Gates Foundation, World Cocoa Foundation & German Ministry of Economic Cooperation. • Shared Value Cascade & Partner Roles • Public Sector Role:- • Providing the enabling structures for coherent implementation • Coordination between MDAs & other partners • Co-funding technical assistance, training, skills, mentorship etc • Assist with organizing smallholder farmers into producer groups • Facilitate access to selected services (land clearing, tractor services, seed gardens, government permits) • Facilitate communication between NGO partners, farmer groups • Private Sector Role:- • Adoption of selected producer groups on cleanly defined parameters • Co-funding technical assistance, training & mentorship • Provide seeds, fertilizers, agrochemicals and in-kind credit facilities • Organize farmgate procurement based on specific quality arrangements and social services or projects to deserving communities • Pay attractive prices from elimination of rent-seeking middlemen • Shared Value Framework & Partner Roles • Development Partner/Ngo Role:-   4  
  5. 5. • Facilitating market and private service provision (seeds, inputs, agrochemicals, financial service providers) linkages • Packaging products & services to give comfort to service providers • Training of public sector frontline extension staff and community based farmers on best practice delivery tools and mechanisms • Training of community based input dealers and seed providers • Facilitating baseline surveys, impact assessment surveys and monitoring and evaluation activities • Selection & capacity building and strengthening of producer groups to deliver services to members and contractual responsibilities under the supply chain arrangements • Facilitates community based ground working and awareness creation activities on behalf of public sector agencies • Builds capacity of selected service providers and public sector agencies to take on role for sustainability and upon exit • Institutionalization of development competences in agribusiness coysBenefits of Agribusiness PPPs Farmers • Increased grassroots income, esteem and livelihoods • Technical improvements and sustained access to pro-poor services • Enhanced farmgate market power and transformationDevelopment Partners • Successful delivery of program mandate • transfer of tools, mechanisms and processes for sustainability • Development of innovative and uptake of socially-inclusive products and servicesPrivate Sector • Improvement of the supply chain arrangements • Guaranteed access to quality commodity at favorable prices and just-in- time delivery • Enhancement of brand equity and government recognition • Accomplishment of in socially responsible projects in a win-win manner   5  
  6. 6. Government • Accomplishment of agric vision & internal generated revenue objectives • Professionalization of public agricultural extension services • Collateral impact on other agric and associated MDAs and strengthened value chains • Enhanced food security, social & political capital • Ppreferred destination to replicate innovative PPP arrangements and donor collaboration • Capacity building PPP model • Capacity building, which encompasses technical transfer, agric extension, training, business skills acquisition and mentoring and is at the heart of successful commodity value chains as evidenced in the previous slides on the shared value cascade • Capacity building can be thus be classified under service contact PPPs arrangements, wherein the partner provides services but with the active involvement of public sector agencies over a fixed but short term period. • Under the framework of the Cocoa Livelihoods Program, GIZ works in partnership with the ADPs to deliver business skills training to cocoa households across Abia, Cross River, Edo, Ondo & Osun states. To date over 4,500 business hungry farmers trained! • To attract superior private sector and development community partners, this paper recommends the CBPPP model to Ekiti State • Lesson points of the CBPPP model • The CLP capacity building regime churns out cocoa farmers that are technical proficient (through the farmer field school (FFS); business minded (through the farmer business school (FBS) and fiercely committed to incubating groups (farmer strengthening component) • Across the 5 states, the cocoa farmers are attracting the attention of the big exporters for dedicated supply chain relationships, agro-input companies and recently, the financial service providers on account of the new agricultural finance products.   6  
  7. 7. • The technical partners GIZ, IITA/STCP & Socodevi (Canadian NGO) work through frontline extension staff of the ADPs and cooperative departments that have begun to adopt and institutionalize the capacity building protocol • The CLP is co-financed by the global cocoa and chocolate brands and this arrangement may well provide an entry point for the local private companies • The frontline extension staff involved in the program has emerged very professional, passionate about their work. • Survey assessment suggests that they are clearly superior to their other colleagues-this is clearly a strong benefit for public service extension delivery, which is plagued by insufficient funding • Given the increasing role of private sector in outgrower schemes the CBPPP model will attract investments and support of discerning agribusinesses • The emergence of properly trained farmers and community based training resource will accelerate the attainment of the agric vision. For too long, agric polices have paid lip service to building farmgate capacity. The unprecedented surge in the Cross River cocoa economy can be attributed to this singular thrust.Rolling Out the Ekiti CBPPP Model • If Ekiti plans to double her cocoa output to say 40,000mt, not less than 8,000 farmgate cocoa entrepreneurs that will work on 40,000 ha of diversified cocoa farming systems will have to be engaged • Ekiti State should clearly define the capacity development spectrum of the targeted producer groups that will drive its cocoa vision. • Ekiti State should then ride on its robust donor pedigree to establish credible international and local service PPP contracts that will professionalize its extension delivery system and grow more a sustainable community based training resource base   7  
  8. 8. • With a coherent business plan, the CBPPP model could attract the attention of private sector investors that could enter buy-back arrangements with specific farmer organizations • Seed money would however be required from development partners to trigger-off the processThanks for your attention!…“to me, poor people are like bonsai trees. When you plant the best seed ofthe tallest flower-pot, you get a replica of the tallest tree, only inches taller.There is nothing wrong with the seed you planted; only the soil base that isgiven to it, is too inadequate…”Prof. Mohammed Yunus.With a right dose of farmgate ownership & PPP arrangements, Ekiti State lookswell positioned to emerge inches taller than.…     8