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June 18, 2012

Trying to make sense of the African Development Bank’s muddily explained ‘fund of funds’ for agribusiness

Chido Makunike

The African Development Bank issued a statement on May 30 about its new ‘Initiative to Invest in Agribusiness in Africa.’

I saw the message heading of the Press Release in email inbox and reacted with interest and excitement. After all, although there is a tremendous amount of talk about availing more funds to African agriculture, the money that actually gets to the ground is a tiny percentage of the talking.

While now skeptical about announcements of new funding schemes, the email heading nevertheless piqued my interest. The AfDB is not a retail lender, but does get involved in various national-level interventions that means when it has a new scheme to roll out, it could be important to the affected sector in participating countries.

However, on reading the Press Release, not only did I not understand what its ‘Fund of Funds focused on agribusiness investments on the African continent’ is about, I went back to my usual cynicism that this is yet another of a long line of announced plans that will mean little or nothing to the average person or company working in agriculture in Africa.

To try to illustrate the reasons for my skepticism, let’s go through the AfDB Press Release together.

‘ARUSHA, Tanzania, May 30, 2012/ -- The African Development Bank Group (AfDB)  launched today, at the AfDB Annual General Meetings, a Fund of Funds focused on agribusiness investments on the African continent. This transformative initiative will address growing food security concerns and unleash the largely untapped potential of the African agriculture and agribusiness.’

Normally one would expect the first brief paragraph to not only explain what took place and the potential significance, as this one does. One would also expect that there would also be a description of what ‘this transformative initiative,’ the Fund of Funds, actually is!

Maybe their just whetting our appetite; saving the explanation for the second paragraph. Let’s not get prematurely impatient; lets read on, the AfDB is sure to soon make everything about this no doubt exciting new initiative crystal clear.

‘The launch of the initiative comes as African agriculture and food security gain increasing prominence on the global agenda, with the recent G8 Summit in Camp David pledging to promote investments in sustainable agriculture on the continent.’

Nothing yet about what the AfDB’s ‘Fund of Funds for agribusiness’ is yet. However, the G8 summit mention, before the elucidation of what the new scheme is, makes a certain cynic suspect that the AfDB is simply looking forward to getting some of the service charges and commissions from parceling out the monies it is hoped will be flying around from the G8-announced Alliance for Food Security And Nutrition.

The AfDB specifically wants us to know that its chief executive, whose photo is for some unclear reason included in the Press Release, taking up space that could have gone to provide a little more relevant and clarifying information, was actually in attendance at the prestigious meeting.

‘Speaking from Camp David,’ the AfDB statement tells us, ‘AfDB President Donald Kaberuka stated: “There was broad consensus that it is the right thing to do…” blah blah blah, waffle waffle waffle.

Mouhamadou Niang, an AfDB’s official, is quoted in the statement as saying some syrupy sweet things about the G8’s initiative. In the lush praise for the G8 we learn, in an almost incidental way, that the AfDB is the initiative’s ‘sponsor,’ whatever that means.

‘‘The Fund of Funds will be in compliance with a state-of-the-art environmental and social management system, currently being developed by AfDB in cooperation with the WWF (World Wildlife Fund.)’’

The WWF is referred to as the ‘environmental advisor,’ but it is not clear whether it is advisor to the G8 food security initiative, advisor to the AfDB’s Fund of Funds, or to both. And although we have been told how well it will be environmentally and socially managed, we still haven’t been told what the Fund of Funds is or what it will actually do.

However, we are given some tidbits, some small hints, as if it was a crossword puzzle to which you are given clues, but are expected to put the words and themes together yourself.

Here are those clues: ‘‘The initiative is in line with AfDB’s strategy to support private sector development on the continent... will catalyze investment into the agribusiness sector with the ultimate goal of inclusive job creation and promoting innovative, environmentally sustainable approaches throughout the agribusiness value chain.’’

Yes, but how will it accomplish all these politically correct, very noble goals that everybody talks about?

When the statement says it is ‘the first initiative of this nature on the continent,’ apart from simply being told that by the AfDB, how can we decide for ourselves if this is something new under the sun when we are not told what it is; who it is targeted towards, how it will work?

Is the AfDB’s briefly-worded and yet long-winded, unhelpful, uninformative statement simply a way of saying that thy have positioned themselves as middlemen to receive and then pass on (minus the usual service charges of course!) some of whatever money may actually end up in Africa as part of the G8’s newly announced agriculture support initiative? If so, how would that be new and different?

It’s possible that cynicism about the AfDB’s Funds of Funds is uncalled for and unfair. Maybe the person who wrote the Press Release did not try to put himself or herself in the shoes of the recipients, and instead wrote it as if it were a memo to AfDB colleagues who already have all the inside information a distant reader could not be expected to have.

Either that, or the statement was written to be purposefully as confusing and uninformative as possible, because the AfDB Fund of Funds is merely the umpteenth purported finance initiative that will fail to address the real challenges faced by African agriculture, but will certainly still be eagerly looked forward to and benefit certain strategically-positioned ‘stakeholders!’

The more words are spoken about addressing the basic problems of African agriculture, the more things stay largely the same.

I have read the statement they kindly emailed to me several times, but I still don’t have a clue what the African Development Bank’s Fund of Funds is. Perhaps it will turn out to be a wonderful new initiative that actually plugs the many gaps in funding that is relevant to the bulk of Africa’s agriculture, but it is impossible to tell from the statement as written.

However, not all was lost. I am pleased to end on a positive note, by mentioning that AfDB president Donald Kaberuka looked very smart and dashing in the photo that was embedded in the statement.

I assume a good time was had by all at Camp David.

African Agriculture

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