The failure of donor-funded programmes to transform African agriculture is resulting in more attention turning to the private sector as a potential source of better agricultural outcomes. Several multi-million dollar donor programmes have been launched with pomp and media saturation but the end has often not been as loud as the beginning. At the end of three or five years, most donor programmes quietly disappear or assume a new name.
Limitations of challenge funds
In the past few decades, donors have begun to promote challenge funds as a way of luring innovative private actors into the agriculture sector. While this approach sounds noble, challenge funds are accessed by a few privileged applicants with access to reliable internet and based in urban centres. On the other hand, successful agribusinesses have not been built through pitching business ideas in front of judges most whom have no clue about contextual issues surrounding the idea being pitched. Agribusiness is more about passion than expressing business ideas through rehearsals and 10 – 15 minutes presentations.
Unpacking Corporate Social Responsibility
The private has, for a long time, used Corporate Social Responsibility (CSR) as a route to supporting communities. Unfortunately, CSR has not benefitted farming communities. Most proceeds have been directed to non-agricultural sectors such as elite sport like cricket which are not found in farming areas. Resources that are used for CSR are normally generated through sales. It is the same money that the company gets from consumers that is returned back as CSR. It means every product has an embedded CSR component. If an agricultural company ploughs back US$1 million into a community that money will have come from the same pockets but is presented under a new name – CSR.
Why not just offer better prices?
Where a company was supposed to buy sorghum or any agricultural commodity from farmers at $500/ton but decides to lower the price to $450 so that $50 is later used as CSR, it makes sense to offer better prices right from the beginning. Rather than a retail food chain store buying vehicles worth $1 million to be won by a few consumers, why not reduce prices of its products by $1 million so that more consumers and communities benefit? It is also not clear who owns, generates and provides resources for CSR. In the case of agribusinesses, resources come from farmers or consumers. For instance, where a private company is dealing with farmers, it will either under-pay farmers so that it then comes back with CSR money as if it’s a bonus when the farmers should have benefitted from better prices. From a consumer perspective, the food chain store will over-charge consumers so that some of the proceeds come back as CSR. Instead of giving back US$1million in the form of prizes and presents to be won by a few consumers, more consumers would benefit if commodity prices are reduced by $1 million.
CSR has remained a marketing gimmick funded by resources from farmers and consumers. The private sector does not get CSR resources from other sources but the very same people who use its products. It is like milking the same cow twice while giving it crumbs. Being profit-oriented, the main focus for companies embracing CSR is promoting a brand and widening the customer-base. CSR is an in-built blind-folding mechanism which makes farmers and consumers believe a favor is being done to them when it is their own money coming back with a different identity. Besides being a marketing gimmick, CSR is probably used as tax evasion by some corporates. If it is genuine CSR, who determines priorities? Who says funding cricket in urban centres is better than funding dam or road construction in farming areas? To be more inclusive in sustainable ways, CSR has to be informed by societal needs.
Towards Sustainable Business Models
Where a private company is contracting farmers to produce groundnuts or sorghum at $450/ton, it is better to offer $500/ton so that from every ton, $50 goes back to the community for local development. What is the rationale of first getting all the money into a company’s coffers and then returning the crumbs? Moreso, CSR does not ensure benefits go back to people or communities that generated the income. If a company is working with farmers in Muzarabani or Hwange, benefits should go to these communities instead of funding cricket in urban areas. Rather than paying CSR at national level, why not decentralize the benefits to local levels so that benefits are extended to local customers? That is how agribusiness becomes a partnership where the essence of corporate does not just mean the whole ownership of the business is in the hands of the corporate sector.
While the corporate sector provides the market, communities contribute either as producers of raw materials or consumers of finished products. An inclusive business model should see corporates aggregating the market while producers and consumers continue contributing in various ways. While the corporate sector has power to mobilize income from producers and consumers, it should not personalize results or outcomes. Why would agricultural proceeds that should benefit producers end up subsidizing elite urban sport? How can one person win a vehicle worth $50 000 when such income can go a long way in developing a community? In a new world economy dominated by SMEs, corporates should re-think their CSR models. CSR should come in the form of affordable services and products. Rather than donating to elite conferences, banks should just lower their interest rates in ways that benefit more borrowers.
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