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PPP can boost agric productivity — Study

By: Ama Amankwah Baafi and Cecilia Naawemuo

A study on Public Private Partnership (PPP) agreements in Ghana’s agricultural sector has revealed that there exist enormous potential for the sector to benefit significantly from PPP arrangements.

This, it said, could only be harnessed through improvement in the country’s agriPPP.

According to the study, the agriPPP environment was nascent and had room for significant growth, yet the payment of service charges by smallholder farmers for services rendered by agriPPP was a challenge.

Presenting the report at the 2018 Feed the Future (FtF) Agriculture Policy Support Project (APSP), Agriculture Policy Research Summit (APS), in Accra, a member of the research team, Ms Martha Adimabuno Awo, said the current agriPPP arrangements still had the government providing most of the finance and taking up a significant portion of the risks involved.

She indicated that the private sector mostly brought technical expertise to the partnership and the planning and implementation of some agriPPP projects were not optimal and, therefore, did not achieve their goals.

“The agriPPP environment in Ghana can be improved through education and sensitisation of the public, and the development of a sector-specific PPP policy or strategy for agriculture, which considers the peculiar attributes of both the sector and smallholder farmers,” she stated.

The National PPP Policy defines PPP as a contractual agreement between a public entity and a private sector party, with clear agreement of shared objectives for the provision of public infrastructure and services traditionally provided by the public sector. 

The key objectives include to leverage public assets and funds with private sector resources from local and international markets to accelerate needed investments in infrastructure and services; and to provide the framework for developing efficient risk-sharing mechanisms.

The study
The APSP was launched in 2013 by the United States Agency for International Development (USAID) to increase local capacity to use research results to implement evidence-based policy formulation and implementation, and to improve the environment for private sector investment.

It instituted the assessment on the PPP arrangement in the agricultural sector and another on the Planting for Food and Jobs programme, in partnership with the Ministry of Food Agriculture (MoFA) and academics from some Ghanaian universities.

The objective was to identify the key factors that drove the development of effective and sustainable agriPPPs and to develop guidelines for key stakeholders (public, private, developing partners) in the development of these partnerships in Ghana.

It is acknowledged that investment in agriculture, the main livelihood sources for majority of the people, accounts for one-fifth of the country’s gross domestic product (GDP) and supplies raw materials to two–thirds of the country’s non-oil manufacturing sector.

Thus, it is strategic for national development as an investment in the farming business which has the impetus to draw more people out of poverty.

However, public sector support for the agricultural sector, particularly in developing countries, has been dwindling over the years, resulting in the inability of the sector to unleash its potentials for the benefit of these countries.

AgriPPP challenges
Ms Awo cited the lack of transparency in tendering process, uncertainty associated with the sector and lack of contractual agreement as some of the factors that hinder successful PPP in Ghana.

On monitoring, she said development partners did that a lot unlike the public sector where monitoring was weak and there was no follow-up to ensure that delivery was done.

According to Ms Awo, the incessant decline in public support for agriculture in developing countries requires that PPPs provide an innovative financing mechanism through which African governments can crowd in private sector resources and expertise into the agriculture sector.

“A well-planned agriculture sector PPP can rake in manifold benefits to smallholders and further augment the development of agriculture value chains where gender-related roles can be identified,” she said.

The study showed that the Build-Operate-Transfer (BOT) model was uncommon in the agricultural sector of Ghana due to the challenge of payment of service charges, and most of the supposed PPP arrangements in the agricultural sector of Ghana did not meet the key elements in Ghana’s PPP policy document.

The government hardly shifts a significant proportion of the risk involved in partnerships to the private sector. In most agriPPP arrangements, smallholder farmers are regarded as investors and\or beneficiaries of the partnership.

There is no standardised financing structure for agriPPPs in Ghana; however, the public sector is the main financier of most agriPPPs in the country.

“The success of agriPPPs in Ghana is determined by the attractiveness of the sector to investors, the enforcement of contractual agreements and clarity of contractual arrangements. The national PPP policy is skewed towards the provision of infrastructure, bringing into sharp focus the need for a sector-specific policy or strategy for the agricultural sector,” Ms Awo stated.

The study recommended that local content should be a pre-requisite in any agriPPP development to safeguard the interest of smallholder households.

“The government must continue to create an enabling environment to attract private sector resources and expertise. However, the government must not fall into the trap of deferring the provision of all public goods and services to PPP arrangement,” Ms Awo added. — GB