Trade

This is what happens when you give small farmers the confidence their food will sell

May 22nd, 2013 10:49 AM UTC
By Roger Thurow

We can make food aid more sustainable not by giving away Western food, but by working with local farmers and creating a market for their crops in the region. ONE Agriculture Fellow Roger Thurow reports. 

Ten years after the Ethiopian famine of 2003, when international food aid rushed in to feed 14 million people, another World Food Program (WFP) tent has been erected on an open field. But this isn’t a scene of food distribution. It is a scene of food purchase.

Leonida and her surplus food, stored in this hut. If farmers have the confidence their food will get sold, they will grow more. Photo: Roger Thurow

The action happens on the grounds of the Sidama Elto Farmers’ Cooperative Union in Awassa, Ethiopia. Sidama Elto is one of 16 cooperative unions in Ethiopia that have signed forward contracts with the World Food Programme for the purchase of more than 28,000 metric tons of maize grown by their smallholder farmer members. The maize, which is part of 112,000 tons of food the World Food Programme purchased in Ethiopia last year, will be used for relief distributions in the country. Ten years ago, many of those farmers and their families were receiving food aid from the World Food Programme.

One of the major lessons in agricultural development over the past decade is this: markets matter. The 2003 famine tragically, and incomprehensibly, followed two years of bumper harvests in Ethiopia. The surplus production overwhelmed the country’s weak and inefficient markets. There were no export channels; the domestic market’s ability to absorb the harvests was crippled by woeful infrastructure. The food piled up on farms and prices collapsed, upwards of 80% in some areas. Farmers lost incentive to plant the next year. Then the drought hit, and feast turned to famine. The markets had failed before the weather did.

That gobsmacking turnaround triggered a reversal of the neglect of agricultural development that had set in since the 1980s, as I noted in my TedxChange talk last month. In the past decade, science and research geared toward improving the work of smallholder farmers (who produce the majority of the food grown in the developing world) have been reinvigorated; so too have trade and business efforts accelerated to provide greater market incentives and opportunities for the farmers. Prior to 2003, boosting agricultural production – growing more food — was the primary focus and developing markets was considered to be a “second-generation problem.” Now, markets share top billing with production, as it should; markets provide incentive to produce more.

In Ethiopia, it started with the creation of the Ethiopia Commodity Exchange in the wake of the famine. Now, the mantra spreads, in radio dramas, government pronouncements, business negotiations: If you grow it, someone will buy it.

The World Food Programme’s partnership with Sidama Elto is part of its Purchase for Progress (P4P) programme, which uses the World Food Programme’s purchasing power to create markets for smallholder farmers. Supported by the Bill & Melinda Gates Foundation, and implemented in collaboration with the government of Ethiopia through the Agricultural Transformation Agency (ATA), P4P works with the farmers to improve the quality of their crops and the post-harvest handling.

Simiret Simeno, deputy manager of Sidama Elto, says that for the first time its 13,000 farmer members see that better quality can bring better prices. And they can also see their contribution to healthier communities, as one of the markets is an expanding network of school feeding programs supplied by locally grown crops rather than food being shipped in from abroad.

The ultimate goal of the World Food Programme purchases is to demonstrate to commercial buyers that smallholder farmers can reliably produce high-quality food worthy of their business. Sustainable success here could also bear witness to the potential impact of President Obama’s proposed food aid reform, which would allow for nearly half of the US food aid budget to be used to buy food nearer to the hunger crises – providing markets for smallholder farmers — rather than shipping it all the way from American farms (as has been the US policy for decades).

These public-private ventures bring both maturity and modernisation to markets that hadn’t changed much for centuries. Working with local banks and donor governments, P4P has introduced forward contracts to participating cooperatives and smallholder farmers. The ATA has also been crafting links between farmers and commercial buyers of several crops, like teff, barley, sesame and chickpeas.

Above all, says Khalid Bomba, the chief executive officer of ATA, “Smallholder farmers need confidence that there will be buyers for what they grow.”

And confidence that the misery of 2003 – the misery of failed markets — won’t happen again.

This post is part of a series produced by The Huffington Post and The Chicago Council on Global Affairs, marking the occasion of its annual Global Food Security Symposium in Washington, D.C., which will be held on May 21st. For more information on the symposium, click here. Follow @GlobalAgDev and use #globalag on Twitter to join the conversation on May 21.

Want to do more? Tell world leaders to make measurable commitments to reduce chronic child malnutrition for 25 million children. Sign the petition here.

Why our new report has got Kofi Annan, Tony Blair and Bob Geldof talking

Mar 6th, 2013 12:30 PM UTC
By Helen Hector

If you picked up the Observer on Sunday you will have seen that we’ve just launched a new report that looks at the progress made in fighting extreme poverty since the historic pledges made at the Gleneagles G8 Summit in 2005.

If you were part of the incredible Make Poverty History movement that helped secure those promises on aid, trade and debt, this is what it has helped achieve.

Our report has got a lot of people talking – so we’ve pulled all the highlights together here if you want to catch up with the conversation. Get ready to scroll!

ONE publish new report: Summit in Sight – The G8 and Africa from Gleneagles to Lough Erne

Mar 3rd, 2013 10:05 AM UTC
By Helen Hector

Today ONE launches a new report that looks at the progress made in fighting extreme poverty since the historic pledges made by world leaders at Gleneagles in 2005.

Get the headline facts from the graphic below, or if you want to delve deeper, read the full report. 

Revealing Africa’s ‘Hidden Growth’

Nov 9th, 2012 12:39 PM UTC
By Catherine Blampied

Strong economic growth in Africa is no longer a new or unexpected story. Between 2000 and 2010, Africa was home to six of the world’s ten fastest-growing economies.  Last year, growth across sub-Saharan Africa was almost 5% and total GDP was $1.27 trillion. What’s more, these trends are set to continue, with regional growth predicted to average 5.4% per year in 2012 and 2013, outpacing almost everywhere else in the world. With many rich countries struggling to escape recession, this impressive fact is not lost on investors.

Edwina Assan, owner of EdTek Batiks in Accra, Ghana

However, while national growth figures are important, they are not the whole picture. They don’t tell us whether that growth has translated into improved living standards and rising real consumption among ordinary families. However, the data that could tell us is often dubious or missing entirely, especially for Africa. For example, one widely-used estimate of purchasing power parity – the Penn World Tables – does not provide benchmark studies for 24 African countries. Instead, expatriate allowance indices were used to extrapolate price studies to the missing countries (now supplemented using a worldwide study of prices from 2005). When Mozambique conducted its first ever national survey of the informal sector in 2004, this led to a doubling of previous estimates of household consumer spending, revealing just how wide the margins of error can be in such estimates.

An innovative new study—The African Growth Miracle – by Professor Alwyn Young draws on information not normally used in this type of analysis. These findings reveal that growth of real household consumption in sub-Saharan Africa since 1990 could be as much as 3.7% per year – four times previous estimates. What this study does differently is to use direct, simple and obvious measures of real consumption at a household level – ownership of goods such as televisions, refrigerators, cars and bicycles; as well as the quality of housing, education of young people, health and mortality of children, and allocation of women’s time in the family – rather than estimating total nominal consumption and setting it against price indices. It draws on two decades’ worth of data from the international Demographic and Health Survey, focusing on 29 sub-Saharan African countries and 27 other developing countries, covering a total of 1.6 million households. Even accounting for big variations in different countries, the study uncovered a pattern of surprisingly high growth across sub-Saharan Africa.

The overall health and mortality of children is improving, school attendance is rising, and family consumption of a variety of material goods is growing at a rapid rate. According to the study’s author, these achievements should be seen as a hidden growth miracle. Nevertheless, heartening as these trends are, the study also showed that consumption levels in Africa fall far below those in other developing countries. Continuing high levels of poverty and inequality remind us not to be complacent about Africa’s ‘miraculous’ growth.

Africa continues to recover from economic crisis

Oct 21st, 2011 3:39 PM UTC
By Lauren Pfeifer

This week the International Monetary Fund (IMF) released its Regional Economic Outlook for sub-Saharan Africa, “Sustaining the Expansion,” which found that Africa continues to recover well from the global economic crisis.

The IMF estimates predict robust growth for sub-Saharan Africa in 2011 and 2012: 5.25% in 2011 and 5.75% in 2012. By comparison, the 2011 World Economic Outlook anticipates the United States and European Union will grow by 1.5% and 1.7% in 2011. On average, global growth is estimated at 4% both years, buoyed by dynamic regions such as sub-Saharan Africa and other emerging economies.

Africa’s growth estimates assume that the global economy will regain some of its momentum and meet the 4% estimated growth in 2011 and 2012. If the global economy does not recover the way the IMF predicts, Africa’s growth would likely falter as well. South Africa is especially vulnerable to global trends, as it is most integrated into the global economy. A graph in the report (below) shows how middle income countries in sub-Saharan Africa, like South Africa, were the hardest hit by the global economic crisis. Growth in these countries is expected to reach only 4 to 4.5% in both 2011 and 2012.

Meanwhile, boosted by strong commodity prices, increased demand for exports and domestic good, and diversification of exports into higher-value added and fast-growing emerging markets, oil and natural resource exporting countries in sub-Saharan Africa are expected to grow faster than sub-Saharan Africa as a whole –- 6% in 2011 and 7% in 2012.

What does this mean for the poorest? In an interview about the report, Antoinette Sayeh, director of the African department at the IMF, cites new evidence that sub-Saharan Africa’s growth has been both inclusive and broad. Even though it is hard to draw overarching conclusions about growth in all of sub-Saharan Africa, Ms. Sayeh notes that this recent growth has been fairly inclusive. In the countries with high per-capita growth, the living standards of the poorest 25% have increased substantially. But, while growth is critical to reducing poverty, it is not always sufficient. Growth must be inclusive, reaching the poorest segments of the population.

In reviewing the research on inclusiveness, Ms. Sayeh notes that education levels and where someone lives effect the amount of money they spend on goods and services. The IMF research indicates that targeted investments in education and health services can help the poorest increase their incomes, overall well-being, and make sure that they benefit from economic growth. For the rural poor, increased investments in agricultural productivity — such as infrastructure investment in energy, irrigation, or transportation — produce more inclusive growth.

Agriculture holds the best hope to improve the living standards of the rural poor by providing jobs and increasing incomes. Sound familiar? This is what our new campaign is all about! If you want to learn more about the benefits of investing in agriculture, look here!

Africa looks set to exploit opportunities for economic growth

May 13th, 2011 10:42 AM UTC
By Tom Wallace

Feelings of positivity were practically oozing from the World Economic Forum (WEF) on Africa in Cape Town for all three days of the conference. The opinion was that Africa’s time had come, and the delegates were very happy about that.

With economic growth forecast above the global average at 5.5%, an expanding number of middle class consumers, large quantities of natural resource wealth, an even larger workforce and an increasing number of new investors, Africa appears like a very attractive place for new business.

And African industry leaders know it.

The WEF was full of people talking about the huge potential of Africa. However, while this is good news, it is most certainly not “mission accomplished” for Africa’s economic growth. Key delegates were keen to stress that the situation shouldn’t be taken for granted:

“On one hand we’ve seen encouraging success stories, but there is no doubt that we have a lot to be done and there are many challenges ahead.” said former United Nations Secretary General Kofi Annan.

African infrastructure and financial systems remain underdeveloped. Foreign investors can often be put off by this and the continent needs to spend significant time and resources developing these. Africa’s comparative assets of huge resource natural wealth and a large population are also potential challenges for the continent.

Mineral resource wealth is finite, and it is often exploited by nontransparent businesses in a process which stop the poorest in society from receiving any benefit from these natural resources (see ONE’s extractive transparency campaign work). And while a large, growing, population provides an attractive workforce for investors, this workforce needs to be educated in order to take advantage of any job opportunities. Education that somehow has to be paid for.

One of the biggest challenges facing Africa discussed at the WEF is how to create more jobs in Africa. Current growth hasn’t reached many of the poorest in Africa. Unemployment remains high in many regions and unemployment can foster instability which leads to conflict. Economic growth will be an essential part of job creation, but to ensure stability, these jobs must be accessible to the poorest people in society. African ministers and policy makers must take advantage of Africa’s competitive advantage and help generate investment and jobs in sectors that could employ this large workforce (for example in agriculture or basic infrastructure labor).

Former United Nations Secretary General Kofi Annan went on to say that “The primary responsibility for progress remains with ourselves — with African leaders and their population — who need to translate the continent’s wealth into results and for the benefit of the people.”

Education, technology and strong development strategies will all be needed to achieve this and overseas governments, and organizations must support African nations to provide these things. The WEF on Africa discussed how this can be achieved through innovative funding possibilities, strong policy and other tools.

While this may sound like a challenge, the good news is that governments and industry are aware of the issues. Africa has huge potential, and many businesses and Africans don’t want to see this wasted. You can be assured that leaders are aware of Africa’s opportunity and want to ensure — as many were saying at the WEF — that this is truly Africa’s decade.

Image copyright by World Economic Forum, swiss-image.ch/Photo by Sebastian Derungs

China’s investments in African minerals can be “win-win”

Nov 23rd, 2010 4:44 PM UTC
By Joseph Powell

Chinese demand for African minerals has grown hugely in recent years, and now represents a critical trading relationship both for the continent’s economic development and China’s growth plans. However, natural resources have a mixed history in driving development, too often succumbing to the ‘resource curse’ spiral of corruption, environmental degradation and in the worst cases conflict.

Last week in China Dr Ngozi Okonjo-Iweala – World Bank Managing Director and ONE board member – made an important speech explaining how to consign this ‘resource curse’ to the history books. In her eyes Chinese investments can be made mutually beneficial by following 5 key principles: Align Investments with Countries’ Development Priorities; Practice Transparency; Add Value to the Country and its People; Pay What is Due and Do What is Right; and Engage with Local Communities.

The speech as a whole is well worth reading – and commands attention coming from one of the foremost advocates for transparency and accountability in Africa. While Finance Minister of Nigeria Dr Ngozi published each state’s monthly financial allocation from the federal government in the newspapers. This allowed Nigerian civil society to hold their leaders to account and cut down on wasted funds.

ONE is campaigning for these principles to be applied to the oil, gas and mining industries. In the US this has already paid dividends with the passing of legislation in July that ensures companies have to publish what they pay governments in countries where they operate – once again empowering civil society. We are now seeking to replicate that legislation in other countries, particularly in Europe.

The importance of getting this right should not be understated. In total exports of all natural resources in Africa were worth roughly $393.9 billion in 2008, nearly 9 times the value of international aid to the continent ($44 billion), and over 10 times the value of exports of agricultural produce ($37.9 billion).

Central to success in this area will be the China-Africa relationship, of which the last word should go to Dr Ngozi:

“If China and Africa could work together in a transparent and mutually beneficial way, I am convinced that when history is written, this collaboration will be a strong part of the economic recovery story post financial crises.”

Doing Business in Africa: Where does the continent rank in business regulations?

Nov 12th, 2010 3:55 PM UTC
By ONE Partners

Mikiko Imai Ollison is a former policy manager at ONE. She currently leads a team at the World Bank Group that gathers data for the “trading across border” indicator, one of the nine indicators of the “ease of Doing Business” measure and is one of the authors of the Doing Business 2011 report.

Since I left ONE 10 months ago, I’ve been busy co-writing the Doing Business 2011: Making a Difference for the Entrepreneurs report, which was published by the World Bank and IFC last week.

Doing Business 2011 is the eighth in a series of annual reports that benchmark the regulations that enhance business activity and those that constrain it around the world. A vibrant private sector, with firms making investments, creating jobs and improving productivity, promotes growth and expands opportunities for the poor.

A regulatory environment where new entrants with drive and good ideas — regardless of their gender or ethnic origin — can start their own business and where firms can invest and grow is essential for the private sector to prosper. That’s where the Doing Business report comes in. The report and related data-rich website present quantitative indicators on business regulation and the protection of property rights for 183 economies around the world.

So, where is it easiest and hardest to do business? As you might have guessed, doing business is the easiest in OECD high-income economies. On average these economies rank 30 (out of 183 total). Entrepreneurs in sub-Saharan Africa have it hardest, and the average ranking is 137 for these countries. Sadly, nine out of the 10 lowest ranked economies are in sub-Saharan Africa. These rankings reflect very high levels of red tape — starting a business still costs 18 times more and takes more than three times as much in sub-Saharan Africa as in OECD high-income economies (relative to income per capita). It takes a whopping 216 days to start a business in Guinea-Bissau, compared to one day in New Zealand. Exporting requires 11 documents in the Republic of Congo but only two in France.

But it’s not all bad news for Africa. In fact, the Doing Business database also tells the story of a dynamic continent making strides toward a business friendly regulatory environment. Rwanda, Cape Verde and Zambia were among the 10 economies worldwide that most improved the ease of doing business.

Rwanda moved up 12 places in the global rankings, while Cape Verde and Zambia rose 10 and eight spots respectively. Ghana led the world in making it easier for businesses to obtain credit. Malawi led in improving contract enforcement.

Since 2005, 84 percent of sub-Saharan African economies made it easier to do business by implementing regulatory reforms. Among the top 10 economies globally that made the largest strides in making their regulatory environment more favorable for business, four are from sub-Saharan Africa: Rwanda, Burkina Faso, Mali and Ghana. Overall, a third of the top 30 are in the sub-Saharan Africa (circled below in red).

There is still much to do in Africa to make it easier for local entrepreneurs. The Doing Business report does not measure all aspects of business environment that matter to firms and investors or affect the competitiveness of an economy. But as a co-author of this report, my hope is that this year’s edition will encourage policymakers in Africa to have another look at their business regulations and stimulate debate about what works in business regulations -– and how and why.

-Mikiko Imai Ollison, World Bank Group

Bob Geldof on investing in Africa

May 14th, 2010 6:49 AM UTC
By Chris Scott

As part of the “African Century” edition of The Globe and Mail this week, Bob Geldof sat down with David Berman to discuss Africa’s economic potential, and what the future holds for investors in the continent.

Check out part 1 here, and part 2 here

Another trade meeting, another lost opportunity

Dec 3rd, 2009 11:33 AM UTC
By Mikiko Imai

This week, the World Trade Organization’s (WTO) 153 members gathered in Geneva for a 3-day ministerial conference. While the Doha negotiations—trade talks launched in 2001 to try make trade rules fairer for poor countries—didn’t make it onto the official agenda, they were certainly on everyone’s mind. Prior to the meeting, developing countries had insisted that in order for the Doha Round to conclude by 2010, political statements must start turning into concrete engagements. But the meeting failed to make any real progress, ending with delegates merely reiterating that trade and the Doha Round were important to economic recovery and poverty reduction in poor countries across the globe.

But there were a few small signs of hope. There was wide recognition that to increase trade in developing countries, the focus should be on more than just increased market access. Delegates also stressed the importance of increased aid for trade, capacity-building, and the need for continued monitoring of these commitments to help generate real, sustainable results.

In related news, a group of 20 developing countries ranging from Nigeria, Zimbabwe to South Korea concluded an unprecedented market access agreement that would make over 70 percent of their tariff lines duty-free. Some have called this agreement a “watershed” moment for South-South trade.