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June 18, 2012

If Jain Irrigation is in trouble back home in India, can it raise $375 million to invest in Africa?

Why do foreign profit-seeking ventures in Africa have to so often be hidden as if they were free 'assistance?'

There is widespread new global interest in and excitement about the potential to make money in Africa, including in agriculture. The great potential itself is not new, but apparently there are more people across the world now willing to see it, partly by looking beyond the dominant ‘international media’ stereotypes about Africa.

But clearly, the paradigm switch from seeing Africa as a place of opportunity rather than as a perennial target of aid is proving very difficult for some. The CNN/BBC/’international media’ stereotypes are for many still much stronger on the imagination than the realization that along with its problems, ‘Africa’ is also a place on the move, with ‘normal’ people and great opportunities both because of and in spite of the many challenges.

Jain Irrigation, an India-based company is eager to exploit the opportunities that lie in providing irrigation equipment to the agriculture sector in African countries. The G8 Summit seemed to Jain like a good opportunity to express its Africa interest. Like many others, they can already smell money to be made from the newly announced G8 plan for the private sector to play a bigger role in agricultural ‘development’ in Africa.

Here are snippets from a May 21 Times of India article:

‘Jain Irrigation Systems said the company will invest $375 million over the next few years to improve income of small and marginal farmers in African countries, including Nigeria, Kenya and Rwanda…The company said that it is launching significant African expansion programme which aims to provide an integrated set of irrigation and infrastructure solutions for small-holder and commercial farmers. It would also invest in creation of storage, handling, supply chain and processing infrastructure in the African countries.’

It reads like yet another ‘project’ from a selfless, kind-hearted external ‘donor’ touched by the plight of Africa’s ‘small and marginal farmers.’ Yet behind the propaganda about investing to ‘improve the income’ of those farmers, what Jain obviously has in mind is to set up a presence in the countries mentioned in order to sell its products and services to these ‘small and marginal farmers.’

In other words, they want to do business in these countries. What is wrong with that? If they provide a good deal, indeed irrigation products accessible by small holder farmers should be a potentially very lucrative business opportunity for Jain. So why pretend to speak about it as if the planned/purported $375 million investment will be some kind of donation?

It turns out that the company may be in some trouble, and perhaps in not such a strong position for the currently fashionable ‘business philanthropy’ bandwagon that Africa is currently a target (victim?) of, and that Jain seems to want to join.

But according to ‘Jain Irrigation Systems: Can’t pay its huge debt and wants to conquer Africa,’ published in a different publication on the same day of the company’s Africa investment announcement, ‘from where will it get the money, still remains unanswered…because the company has huge debt on its balance sheet in India and has not been paying its dues to the banks. Even its receivables for FY11-12 were 343 days, which means the company has yet to receive cash for its sales done almost a year ago.’

Aha! So perhaps this is a company in trouble at home, hoping to make easy pickings in Africa?

Sure, it is a welcome development that the rest of the world is waking up to the fact that there are opportunities galore in Africa, and that perhaps much of the media they are exposed to gives them a very distorted, uni-dimensional picture. But boy, do those who naively think the ‘poor helpless Africa’ of their stereotypes is a place to just pick money off the streets have a steep learning curve waiting for them!

Here’s wishing Jain Irrigation good luck and good business, both back home in India and if and when it comes to Africa!

African Agriculture

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