Principle 1: There is at least one core national public partner involved who represents the interest of the national government (Box 4). This may be the Ministry of Agriculture or other related Ministries, a national programme, local authority, a public research institute, a state bank, or other publically- funded agency engaged in the project to promote sustainable agricultural development objectives in line with national priorities. In Africa, confusion often exists between what ca be considered a genuine agri-PPP and what is simply a business-as-usual donor funded development project involving private sector actors. Defining core principles will help to overcome this. Donors, development organizations and foreign government entities are not considered as core public partners under this definition but may be involved in the partnership in other ways as secondary partners.
In addition to identifying a core public partner, governments could benefit from technical assistance to develop and optimize processes for development of agri-PPP. Currently there exists a sense that such modalities are treated on an adhoc basis without a clear process. Further there is much sensitization and discussion required within both government and/or public institutions & private sector to acknowledge that PPP’s are an imperative in our development journey.
Principle 2: There is at least one core private agribusiness/agro-industries[1] firm involved who is committed to supporting the transformation of African agriculture (Box 5). This is preferably a domestic firm with the potential to catalyze development in the national/local agribusiness sector.
In Zambia this is a rather difficult one apart from in a few sectors. To find local firms that strike a balance between having catalytic and/or transformative potential and enough incentive has been a challenge. The agri-business SME’s space is rather narrow, and the traditional obscene hand-out development approach greatly undermine success. It may be that you settle for firms with sufficient incentive and build in capacity development within the PPP facilitation.
Principle 3: Smallholder farmers and their organizations are considered as independent private sector partners that must be consulted and an active role ensured in the implementation of any agri-PPP[2] where smallholders have a clear stake in the project. (Box 6).
This is another difficult one and will be dependent on the quality of PPP facilitation.
Principle 4: A transparent evaluation and selection process is in place to call for the submission of solicited proposals based on national agricultural priorities, and allow for a small proportion of unsolicited proposals[3] from the private sector (Box 7). Selection of the core agribusiness firm(s) will be based on the principles of value-for-money, due diligence and value-for-people. This process may be managed by the core public partner, another public agency or outsourced to an independent third party. Where possible, priority will be given to selection of domestic agribusiness firms as defined in Principle 2, or foreign firms with a strong track-record of working successfully with smallholder farmers.
Due to many considerations, preference for bid solicitation and selection should preferably be through an independent third party. It would also be reasonable to expect that you end up with more unsolicited firms than the solicitated.
Principle 5: A formalized partnership agreement[4] exists between the core public and private partners which details roles and responsibilities of each partner for the duration of the partnership agreement. A series of linked bilateral agreements may also exist between other partners involved in the implementation of the PPP including agreements between the core agribusiness firm and smallholder farmers and their organizations (e.g. contract farming/outgrower agreements, input supply agreements etc.). Bilateral/trilateral implementation agreements may also be developed with financing institutions, Non-Government Organizations (NGOs) and donors/development organizations Specific agreements may also exist between partners to deal with issues of ownership of intellectual property rights (Box 8).
All these agreements would be based on clear quid pro quo arrangements and preceded by a gap analysis which ensures alignment of incentives suggested in the agreements.
Principle 6: Clearly defined and transparent targets are in place, outlining the public and private benefits expected from the partnership. These targets are set during the design phase of the partnership with public targets defined in accordance with national agricultural policies and investment plans, socio-economic objectives and other relevant national policies and programmes. (Box 9).
Principle 7: The partnership involves joint investment contributions from the core public partner and core agribusiness firm which are valued in monetary terms, with the share of investment by each partner and modality clearly defined (e.g. equity, in-kind contributions, grants, loans etc. Smallholders should also contribute with in-kind support to the PPP, such as through their commitment to supply certain specific quantity and quality of produce, or to apply specific farming techniques or use determined inputs, etc. In some cases, they can also be requested to invest some money for the purchase of machineries or to access training, usually through the use of financial credit backed by the public sector.
Principle 8: Mechanisms for risk sharing and mitigation are incorporated into the partnership design with the objective of transferring some of the risk away from the most vulnerable partners which may be smallholder farmers and their organizations. These tools may include agricultural insurance, guarantee funds, technical assistance and capacity building training in business management. (Box 10).
These should however be designed with longer term sustainability in mind so as not to temporarily distort market functioning leading to eventual failure from the initially managed risk.
Principle 9: Social and environmental sustainability are assessed during the design and implementation of the PPP, and inclusion targets are identified together with mechanisms for promoting the involvement of smallholders, women and youth.
Principle 10: A monitoring and evaluation strategy has been developed by the public partner or outsourced to an independent third-party. The M&E strategy will allow for corrective action and conflict resolution during the implementation of the PPP, and assess the achievement of public sector objectives including transformative impacts on the agricultural sector as a result of the agri-PPP. (Box 11).
Monitoring and Results Measurement as promoted by the DCED would help.
Principle 11: Exit strategy developed for phasing out of public sector support or transitioning to a regulatory role. The exit strategy will also allow for ultimate phasing out of public sector support with provisions in place to gradually handover (where appropriate) operations to agribusiness firms and farmer organizations. (Box 12).
[1] Agribusiness enterprises/agro-industries are any firms or business entities that produce or provide inputs, produce raw materials and fresh products, process or manufacture food or other agricultural products, transport, store or trade agricultural production, or retail such products. Family farms and micro- and small enterprises that operate in the informal sector are not included in the target set of agribusiness enterprises (FAO, 2016).
[2] Some exceptions exist: some agri-PPP projects do not directly target the upstream segment of the chain, but focus on mid-stream actors (i.e. business development services providers). The rule here must be to involve smallholders in all those cases where they have a clear stake in the PPP project.
[3] Findings from the review of the African PPP country case studies and validation workshop confirmed that allowing for unsolicited bids for agri-PPPs has the potential to deliver beneficial outcomes. When rigorously assessed, unsolicited bids can allow the private sector to identify bottlenecks hindering the efficiency of agricultural value chains, and work in partnership with government to develop pragmatic solutions to these problems that are often technology-based.
[4] Contract types may include: memoranda of understanding, standardized contracts, equity arrangements, and special purpose vehicle.
Mr. Mpulu Makayi