Growing Africa: A Critical Examination of International Agribusiness in Developing African States
Growing Africa: An Agribusiness Venture
(October, 2014. Author: Bryce Young)
Globalization takes place through forces like capitalism. But what enables these businesses to establish themselves in foreign countries is enigmatic for most. The World Bank Group (WBG), the World Trade Organization (WTO) and the International Monetary Fund (IMF), known as the Bretton Woods Institutions (BWIs) are responsible for the facilitation of free market business abroad. They were originally established in 1944 at the Bretton Woods conference post-World War II in order to provide financial aid for countries to repair the economic, political, and infrastructural damages inflicted upon Europe during the war (Peet, R. 2009). The institutions continue today, and have expanded their reach globally to integrate nations into first world markets. The goal of this paper is to present optimistic and pessimistic viewpoints on a World Bank program called Growing Africa: Unlocking the Potential of Agribusiness. We will first look at the objectives and strategies of the program, then examine it from both the perspective of proponents and critics of the program. After presenting each perspective thoroughly, I will analyze and respond, based on my own postmodern perspective, to whether or not the program should be implemented according to its design. The reader should be able to use the information from this paper to examine other BWI programs and the function of globalization from a more globally-informed point of view. The reader is encouraged to critically examine institutions of globalization and their sustainability of their current path.
Overview: Growing Africa Funding and Agenda
The World Bank Group states on the front of their food security web page that “the world needs to produce at least 50% more food to feed 9 billion people by 2050” (Food Security 2014). The page further cites climate change and the depletion of resources as a major threat to food security that calls for a change in how the world grows food and manages natural capital. In 2014, the WBG contributed $4.3 billion toward agriculture and related sectors, and the IFC contributed $4.4 billion, $1.4 billion of which went to agricultural assistance in Sub-Saharan Africa. Growing Africa is a report on the potential for the development of agriculture in Africa, with a focus on the development of agribusiness in order to facilitate the growth of economically competitive agriculture. The report addresses numerous issues: the potential of Africa to expand their agribusiness sector, the benefits that Africa and its people can experience from opening up their agriculture market to agribusiness ventures, lists of constraints to the flourishing of agribusiness, and an agenda for overcoming governmental regulations that restrict the market. Linked to Growing Africa is the WBG Agricultural Action Plan 2013-2015 (AAP), which includes information on what WBG will help their clients do, and how the program will be implemented. In helping their clients enhance the structure, freedom, diversity, and integration of economies into the global market, the AAP has a five-fold goal: to raise agricultural productivity, to link farmers to markets and strengthen value chains, to facilitate rural non-farm income, to reduce risk, vulnerability, and gender inequality, and to enhance environmental services and sustainability.
Allowing for Economic Growth and Individual Prosperity
Proponents of AAP highlight the BWIs’ success in opening markets and allowing for economic growth and increase in the living standards of countries that have been aided by the BWIs. They say it allows for economic growth of both the African economy and the global economy. In order to create sustainable growth in the global socioeconomic realm, the AAP calls for responsible investments, entailing respecting land rights, strengthening rather than jeopardizing food security, upholding the responsibility of all stakeholders, consulting all those materially affected by investments, respecting the laws and best practice standards, generating desirable social impacts, and quantifying environmental impacts (32). Raising agricultural productivity is the dominant focus of the program. Strengthening global food security as well as Africa’s presence in the global economy is pivotal for the WBG since “Africa has more than half of the world’s agriculturally suitable land, and its impressive water resources have scarcely been tapped” (Growing Africa 6). The largest barrier to productivity, according the AAP, is land management. The key action is to increase the availability and use of fertilizers, machinery, and micro-irrigation.
The AAP seeks to “raise incomes, link deficit regions with surplus regions, and reduce…price volatility” (34). Growing Africa asserts that “to realize the opportunities of agriculture and agribusiness, Africa has to overcome a legacy of state intervention in agricultural markets, weak land markets, and the neglect of public investment in agriculture” (9).
By reducing government interference with the market, the WBG can facilitate business startups for a more stable entry into Africa’s economic system. Key actions include reducing tariffs to mitigate the risk of food price spikes, to provide clients with risk management plans, and to increase the availability of knowledge and the transparency of national and global food markets so clients can objectively assess their risk. Growing Africa highlights seed and fertilizer policies as well as obsolete methods of processing, packing, quality, and branding as barriers to trade with the world economy. Because of the economic nature of the region, most governments have little experience in nurturing a private sector, so reforms and guidance will be needed (Growing Africa 14). Growing Africa asserts that an increase in agribusiness in response to a growing agricultural sector will increase job opportunities for residents in the surrounding physical and socioeconomic area.
In order to enhance environmental services and sustainability, the AAP calls for climate-smart agriculture. The Alliance on Climate-Smart Agriculture (CSA) is involved in the implementation of agricultural and agribusiness projects and is founded on three pillars: being sustainability of agricultural productivity, adapting and building resilience to climate change, and mitigating greenhouse gas emissions (The 3rd Global Conference on Agriculture, Food and Nutrition Security and Climate Change 2013). The Bank recognizes agriculture’s contribution to climate change, as well as its vulnerability to climate change, citing that “since 1980, global wheat and maize production is 3-5 percent lower than if warming trends had not occurred” (AAP 26). The program seeks to increase farmer’s resilience to climate change by improving infrastructure and management techniques, as well as providing farmers with new technologies such as drought- and flood-tolerant crops. The plan asserts that better technologies and management practices can reduce GHG emissions and increase carbon storage in farmland. In addition, it aims to “increase the share of projects that use a landscape approach for more sustainable resource use (e.g. combine agriculture, water, forestry, and biodiversity)” (50). It also aims to reduce environmental externalities associated with agriculture such as reducing methane emissions by implementing better rangeland management practices (52). The AAP places a strong emphasis on climate-smart agriculture in moving forward with sustainable increases in agricultural productivity and cites its ability to reduce the pressure for agricultural land expansion resulting in lesser probability of deforestation.
Dismantling Local Democracies and Depleting Resources
Critics of BWIs underscore the negative effects that BWI policy impositions have on local and national economies and cultures, arguing that structural adjustment policies (SAPs) imposed upon governments turn the governments into de facto plutocracies, confining the government’s role to business enablers.
These critics argue for a model of globalization that allows for the voices of local citizens to be heard. Although the WBG “works directly with government ministries around the world, [it] does not consult with citizens and civil society organizations” (Martin-Préval, A. et al. 12). As such, governments, both local and national, should have the power to implement true agricultural policies in order to appropriate financing in a manner that will serve local socioeconomic structures. Proponents of this viewpoint assert that government should have a role in regulating the market in such a way that protects its citizens from global market forces and externalities rather than creating an environment in which only large, wealthy corporations succeed. Overall, the Oakland Institute says the World Bank’s approach threatens small farms and local economies and therefore “contradicts its stated objectives of fighting poverty and creating shared prosperity” (Martin-Préval, A. et al. 14).
The strongest arguments pertaining specifically the WBG’s AAP are voiced through the document Unfolding the Truth: Dismantling the World Bank’s Myths on Agriculture and Development. This document was published by the Oakland Institute which funds a campaign called Our Land Our Business (OLOB), a multinational campaign involving over 235 organizations that include farmers, consumer organizations, unions, and NGOs. The goal of the campaign is “challenging the World Bank’s one-size-fits-all model, which considers FDI and the private sector key to development” (Oakland Institute, 2014). Rather, OLOB argues that each country and culture has its unique socioeconomic needs that must be addressed on a local scale in order to truly help the people. Concerning agricultural productivity, The Oakland Institute castigates the WBG for their focus on large-scale industrial, export-oriented agriculture. The institute’s report on the WBG’s agribusiness aid asserts that integrating subsistence farmers into commercial activities “exposes [them] to oligopolistic and highly volatile international markets” (Martin-Préval, A. et al. 9), increasing the likelihood that they will be run out of business by more powerful companies aided by the BWI agriculture projects.
The Bretton Woods Project is another strong source of voices against the contemporary model of globalization. It is a self-proclaimed information provider, watchdog, networker and advocate for alternative approaches that challenge the power of the World Bank and the IMF. It envisions a global economic system constituted by institutions that are democratic, transparent, and accountable to countries’ most vulnerable citizens, and operate on the basis of human rights and environmental sustainability (Bretton Woods Project 2010). It asserts that, as a result of corporate-centered globalization, “smallholders’ capacity to have secure access and invest in their land has largely been hampered by large-scale land deals, which globally amounted to 203 million hectares (500 million acres) between 2000 and 2010” (Martin-Préval, A. 4). The WBG upholds that governance of the utmost importance in their agriculture-for-development agenda, but the structural policies that the WBG imposes on national governments “confine their role to ‘business enablers’ and place pressure on them to withdraw public policies and intervention in the economy and the agricultural sectors” (Martin-Préval, A. et al. 11). According to critics of the contemporary model of globalization, this empowers businesses that not only threaten local economies, but threaten the integrity of the natural environment that supports them (Peters, R.T.).
To explore the extent to which Growing Africa enhances environmental services and sustainability, one must examine specific case studies and the results of the externalities of industrial agriculture and agribusiness on the locales surrounding these projects. Schilling and Chiang (2010) propose this concept of externalities as an approach to measuring range of costs and benefits resulting from resource depletion. The main critique against the World Bank is its ‘fetish’ with economic growth, to the point where growth takes precedence over all else. Matrin-Préval, writing for The Bretton Woods Project, asserts that WBG’s Doing Business rankings “advocate for lower economic, social and environmental standards for the sake of corporate profit” (Martin-Préval, A. 1). This is a result of the deregulation of the market and the decreased power of the government. “World Bank also encouraged reforms that tend to make land a marketable commodity, easily accessible to wealthy corporations” (Martin-Préval, A. 1). Schilling and Chiang (994) state that governmental regulations can serve the natural environment by implementing regulations such as ecotaxes and emission certificates that can reduce the externalities resulting from industrial agribusiness and agriculture practices. Proponents of the contemporary model of globalization argue that we will reach a point in time at which renewable resources will be cheaper than non-renewable resources. However, Schilling and Chiang argue this theory overlooks the increases in depletion rates that result from the development and employment of new technologies, “new discoveries of natural resources, changes in consumer behavior, and changes of the structural framework of the global economy.” The study concludes that “governmental intervention is necessary where the market system itself does not take sustainability sufficiently into account” (997).
As a more tangible example, AAP cites water availability as a major barrier to increasing agricultural productivity and advocates “expanding new irrigated areas” (AAP 29) with a focus on increased availability of irrigation technology and improved water harvesting techniques. Dr. Jonathan Foley, professor and McKnight Presidential Chair in the University of Minnesota Department of Ecology, has researched the environmental effects of agriculture (Foley, J. 2010). He indicates that 40% of the earth’s land is devoted to agriculture, and much of this is cropland that requires irrigation. He calls attention to areas in Arizona that irrigate crops in their desert climate using water from the Colorado River. As a result, the Colorado River does not flow to the Gulf of Mexico any longer. Critics of AAP argue that this should serve as an important lesson for development-oriented agriculture projects. By increasing the amount of irrigation-dependent land in Africa, especially in areas that are highly vulnerable to the effects of climate change, countries run the risk of depleting or destroying their aquatic ecosystems – another important component of local economies.
Response: Encouraging Democracy
The Doing Business report is an excellent resource for those wanting to do business in Africa, and it has great potential to integrate Africa’s economy into the global market, enhancing the continent’s economic income and, resultantly, the living standards of the citizens on average. The AAP acknowledges the need for climate-smart agriculture and agribusiness growth that focuses on the use of environmental standards for land care. It also integrates the importance of smallholder agriculture and agribusiness into its development model. By facilitating rural non-farm income, AAP asserts that it will strengthen the agricultural economy, a sign of recognition of the reliance of different sectors of a national economy on one another – the ‘econosystem.’ These concerns for the environment and local economies show that the World Bank is implementing its model in a way that it deems sustainable. However, the measures of social and environmental sustainability are valued by their allowance for growth, and the criteria by which the program enhances economies may not be the most important criteria for constituents of those economies. Furthermore, while it is important to remove a certain amount of power from the government in order to assure equitable representation of society’s needs, transferring this power to the forces of the international market can greatly undermine the voices of citizens locally and nationally. What is needed are more concrete policies to democratize the voices of the rural world and to identify the scope of government power required to assure a true democracy without running a high risk of power-abuse. Finally, the AAP and Growing Africa seek to increase the transparency of markets, agendas, and business practices to reduce the risk and facilitate investment in the agricultural sector. If the WBG truly seeks to incorporate sustainable development in their agenda, then it ought to include transparency of economic and environmental effects of projects on a local scale from the voices of local citizens so that businesses can honestly evaluate the effects of their practices in local areas. Not only will this advocate for subaltern voices of citizens who will be affected by businesses practices, but it will further reduce business risk by allowing for insight as to how the business will be received by citizens of the area.
The opposition to the agricultural agenda of the WBG advocates for a structure that places highest value on the democratic representation of the people who are most vulnerable to the forces of corporate-centered globalization. This structure allows citizens the ability to meet the needs of their communities from a local, democratic level. Furthermore, it allows for a system in which the people making the decisions are the same people being directly affected by those decisions. This applies socially and environmentally. However, the structures advocated by this viewpoint have no agenda for transformation, and do not acknowledge that the two models reviewed in this paper cannot exist simultaneously. Undertaking the enormous challenge of changing the system is something that could not only strengthen the anti-globalization position, but is also something that needs to be engaged in order to understand the model and its socioeconomic and environmental effects in a global context. The opposition models also did not address the economic values gained from globalization, and did not suggest alternatives to the growth model in terms of how it will become integrated with the global economy. Finally, the largest challenge posed in writing this paper was the scarcity of credible resources and tangible research in opposition to the current model of globalization. This identifies the need for more funding for research in this realm, and a stronger agenda of realizing this model. Blockchain technology has demonstrated the ability to democratize power and facilitate debts and financial agreements under a single, international currency. Therefore, the author recommends that - in defining the terms of negotiations among Sub-Saharan African states, agribusiness transnational corporations, and international financial institutions - blockchain technology be utilized for the execution of contracts and the amplification of voices that are most negatively affected by international agribusiness, and are otherwise not heard on the current platforms of international business.
As of now, this position is defining its opposition to globalization, and at this point in the timeline of global development, this is not enough to create change. The forces of globalization are already at work, and subaltern perspectives must put their own forces into motion in order to be viable contenders for dominance.
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