SAGCOT: out of the starting blocks?

In a recent blog entry, Porter McConnell of Oxfam America makes a critique of the Southern Agricultural Growth Corridor (SAGCOT) initiative. The post, titled What if we held a private sector initiative and nobody came? points out, correctly, that since the launch of SAGCOT in early 2011 no major new investments have been made in the agriculture sector.

“The lack of investors calls into question the effectiveness of the public money that has been contributed to the partnership”, McConnell writes.

It is an important issue. Private companies should not be entitled to good PR from supporting a development initiative like SAGCOT unless they are willing to contribute meaningful resources. A sprinkling of corporate social responsibility dollars is not enough.

But McConnell lets the public sector off too lightly. The reality is that to date neither the private sector nor the donors have put significant funding into SAGCOT. There have been funding announcements but so far no money has actually flowed from government budgets into infrastructure or new financing mechanisms.

Given this, it is hardly surprising there has been no increase in private investment into agriculture. As the SAGCOT investment blueprint (2011) document says: “Private investment has been low in the past because of the high costs and risks of investing in commercial agriculture at its ‘infant industry’ stage”.

Not much has changed. As argued in the blueprint, private investment will remain low until at least two things happen: firstly, there is a catalytic fund to support investment in early stage agriculture businesses; secondly, there is increased investment by the government and donors in agriculture-supporting infrastructure (e.g. roads and power lines).

SAGCOT still has enormous potential. Understandably it takes time to implement a bold new public-private partnership. Every care must be taken to ensure that public money is used wisely and for the benefit of small farmers and local communties, not large businesses.

But patience with SAGCOT is running out. The donors and the private companies need to demonstrate soon that something is happening on the ground and not just in glitzy conferences. Private and public funding must begin to flow if SAGCOT is to get out of the starting blocks.