New Alliance for Food Security and Nutrition: Part 1

Background

The New Alliance for Food Security and Nutrition (“New Alliance”) was born out of the Camp David Summit of the G-8 in May 2012. It is an initiative that aims to lift 50 million people out of poverty over the next 10 years[1] by using a collective approach of pro-poor policies committed to by African governments, substantial private sector investment in order to increase agriculture productivity and farmer incomes, and donor governments aligning behind country-led plans (i.e. CAADP). Currently, there are over 80 Letters of Intent (LOI) submitted by private companies that represent over $5B of investment. Cooperation Frameworks have been created for six countries: Ghana, Ethiopia, Tanzania, Cote D’Ivoire, Burkina Faso, and Mozambique. The New Alliance has been framed as “additive”[2] and complementary to the L’Aquila commitments, and represents a renewed focus on private sector approaches to achieving food security.

The initiative, however, has not been devoid of skepticism by the NGO community. There are concerns about attendant transparency and accountability measures to ensure companies are prioritizing the needs of targeted beneficiaries (e.g. smallholders, non-farm workers), and a lack of input from local civil society leaders.[3] Given the opaque nature and limited information on the New Alliance, there have been misconceptions about the content of the LOIs, and which firms are driving the investment agenda.

In response, our Agriculture Policy team has done some informal analysis on the LOI summaries, which were outlined in the New Alliance Cooperation Frameworks for each participating country. Since company LOIs are not publicly available yet, limitations on data interpretation are noted.[i]

Key Findings

A few large investments account for a disproportionate share of commitments. For keen observers, this trend is hardly surprising, as Syngenta (Switzerland, $500mm) and Yara (Norway, $1.5bn) both account for a substantial portion of the portfolio (See Figure 1).

Contrary to common perceptions, several large investments come from African firms. It is encouraging to see companies based in Tanzania (Agro EcoEnergy, $425mm) and Cote D’Ivoire (SIFCA, $310mm) show sizeable investments (See Figure 1).

      

Figure 1: Investment based on country origination

Quantity of projects is heavily concentrated in African-based firms. Although a blunt tool, it remains helpful to visualize how many of the projects are being submitted by African-based firms. The graph shows the quantity of projects based on where companies are originated (See Figure 2), however, size of investment is not included.

Figure 2: Quantity of projects based on country origination

Companies are diverse in size – and include many SMEs. The firms were classified as either Multinational (MNC), African-based Multinational (African MNC), Small-to-Medium Enterprise[4] (SME), Public-Private Partnership (PPP), or Business Association (Association). For obvious reasons, information on African SMEs were difficult to find, in cases of a nonexistent website, we assumed the firm was an SME.

Figure 3: Classification based on firm size

European investment is higher than that of the United States, but indeed a few companies have very large investments. Contrary to the criticism that the New Alliance is primarily U.S.-focused, our findings show that European companies are actually committing more dollars than U.S. ones. A few European multinationals, , including Norway-based Yara and France-based Groupe MIMRAN are each single-handedly out-investing all of the US projects combined.[5]

United States investments are not dominated by one firm. Although AGCO constitutes a significant portion, our findings have countered the notion that the New Alliance was a public relations creation of Cargill and other US MNCs. Cargill’s investment ($5.25M) is just one tenth of one percent of the entire volume of investments under the New Alliance ($5.2B).

Figure 4: US Firms

Recommendations

We believe the New Alliance is an encouraging step towards including the private sector in the growth and development of Africa’s agriculture sector. However, much can be done to strengthen existing and future commitments. Our recommendations aim to bolster the credibility and efficacy of the New Alliance by dealing with issues of transparency and accountability for private sector members. These recommendations include ways to ensure that investments are transparent and accountable to targeted beneficiaries (e.g. small scale farmers), in order to progress closer to achieving the goal of lifting 50 million people out of poverty.

Private sector firms need to make public their Letters of Intent. Current members should make their Letters of Intent (LOIs) public and future admission to the New Alliance should be dependent on this requirement.

Investment figures should be complete and regularly updated. Understandably, companies are mindful about proprietary information concerning investments and capital allocation, however, at a minimum there needs to be complete information regarding total investment. According to the Cooperation Frameworks, some companies such as DuPont, Jain Irrigation, and all four Japanese firms have yet to provide concrete investment figures.

Investment projects need consistent indicators. Within a similar vein as the previous recommendation, uniform indicators need to be created to clarify the goals and intentions of private sector investments. Although most projects were projected over a 3-5 year period, there remains a need for indicators (e.g. length of time, key stakeholders, etc.) to provide straightforward analysis on the nature of each project. As an example, only some of the projects have provided a projected number of affected small scale farmers, and there is no consistency on what those numbers include. Some projects include the farmer alone, while others include the farmer and their dependents using an average household of 5-6 members.

Create annual progress reports to demonstrate long-term commitment. Given the G-8 has committed to lifting 50 million people out of poverty over the next 10 years, the New Alliance must demonstrate progress in order to be an important element of this goal. Yearly[6] reports that summarize the impact of each company’s commitment need to be publically available as an accountability mechanism for firms, which will be reviewed by participating governments and civil society. This is equally important for both large MNCs and resource-constrained SMEs – both types of companies to need to evaluate the effectiveness of their investments.

[1] Investment figures are not present for every project (28 projects have no financial information); Available investment figures vary in projected duration, although most projects are considered long-term (greater than one year); There is very limited information on African companies to determine company size classification. We used website information (or lack thereof) as proxy to determine size.


[1] Camp David G-8 Accountability Report, 2012.

[2] Jonathan Shrier, State Department, InterAction Food Security and Agriculture Working Group, 11/8/12.

[3] InterAction, “Delivering on the Promise of a ‘New Alliance for Food Security and Nutrition’”, August 2012.

[4] Defined as less than 250 employees or $1mm in annual revenue.

[5] Yara ($1.5bn), Group MIMRAN ($293mm), United States-based companies($237 mm)

[6] Ideally, this would happen quarterly.


[i] Investment figures are not present for every project (28 projects have no financial information); Available investment figures vary in projected duration, although most projects are considered long-term (greater than one year); There is very limited information on African companies to determine company size classification. We used website information (or lack thereof) as proxy to determine size.

###

About ONE
ONE is a campaigning and advocacy organization of nearly 6 million people taking action to end extreme poverty and preventable disease, particularly in Africa. Not politically partisan, we raise public awareness and press political leaders to combat AIDS and preventable diseases, increase investments in agriculture and nutrition, and demand greater transparency in poverty-fighting programs. ONE is not a grant-making organization and does not solicit funding from the public or receive government funding. ONE is funded almost entirely by foundations, individual philanthropists and corporations. We achieve change through advocacy. Our teams in Washington, D.C., New York, London, Johannesburg, Brussels, Berlin, and Paris educate and lobby governments to shape policy solutions that save and improve millions of lives. To learn more, go to ONE.org.