Development of Agriculture Value Chains
Model: Operating Concession
Agriculture is a key sector of the economy of The Gambia. It represents about 30% of GDP, provides employment for more than 75% of the labour force and is one of the main generators of foreign exchange earnings. The Vision 2016 program aims to achieve food selfsufficiency by 2016. PPP is a key instrument to reach this goal through the development of public infrastructure and facilities in support of agriculture (irrigation systems, public storage facilities, laboratories,…). The Ministry of Agriculture and Natural Resources has established a portfolio of projects, among other in the context of the Commercial Agriculture and Value Chain Management Project funded by the World Bank. The next step is to select from this portfolio suitable projects for further development and implementation as PPPs.
Agriculture is a key sector of the economy of The Gambia. It represents about 30% of GDP, provides employment for more than 75% of the labour force and is one of the main generators of foreign exchange earnings.
Since 2010 the development of the agricultural sector has been governed by the Gambia National Agricultural Investment Plan (GNAIP) 2011 – 2015.
The government has recently launched a new strategic program for the development of the agricultural sector. The Vision 2016 aims at the realization by 2016 of:
- self-sufficiency in rice;
- fourfold increase of the area of cultivated land (from 66.000 to 280.000 ha);
- diversification of the agricultural sector and development of downstream activities.
The goals of Vision 2016 are to be pursued by the development of large-scale agriculture. Only large-scale agriculture, it is said in the Vision, is able to achieve the required productivity gains and commercial skills allowing to generate an exportable surplus.
The Commercial Agriculture and Value Chain Management Project (GCAV), funded by the World Bank has similar objectives. In particular, the project aims to:
- rehabilitate irrigation infrastructure to enhance the resilience of agricultural productionsystems to climate change-induced weather shocks;
- rehabilitate and build commercial post-harvest infrastructure to facilitate processing and marketing of agricultural products;
- strengthen technical, institutional, managerial and marketing capacities of smallholders and their organizations, as well as other stakeholders involved in agricultural production and value chains, to more effectively operate in a market-driven environment;
- improve the governance of the GNAIP.17
The GCAV project will focus on the value chains of rice and horticulture (vegetables).The central managing institution for all these plans is the Central Projects Coordination Unit (CPCU) of the Ministry of Agriculture and Natural Resources.
Given the limited resources of the government, more private investments in the agricultural sector are sought. In this context it is useful to make a distinction between PPP and the broader concept of Private Sector Participation (PSP). PPP is a form of PSP. However PSP also includes forms of private involvement in agriculture where the private sector is acting autonomously (possibly with the support of the public sector, but without close contractual ties as in a PPP). PPP is an instrument for the procurement of public infrastructure. It has proven elsewhere in the world to be an efficient and effective approach to build and operate public infrastructure and facilities that serve the agricultural sector, for instance: public irrigation systems, local roads, common storage facilities, laboratories for the testing and certifying of inputs and products, provision of education and training in cultivation methods.
In addition to implementing PPP projects, the private sector can undertake investments in commercial agricultural activities, such as plantations, processing plants,… These investments will often take place with the support of the government (granting of land leases and permits, financial incentives,…), but this type of cooperation falls short of a PPP as this term is commonly understood. Agriculture is in first instance an economic activity that must be left as much as possible to the private sector.
In the context of the GNAIP and the GCAV project the CPCU has studied and prepared a large number of project plans in the last years. Many of these projects are in principle suitable for PPP, but so far no concrete projects have explicitly been punt forward as candidate PPP projects.
The next steps are:
- selection of agricultural development projects sector that will be pursued as PPPs;
- undertaking of a feasibility study.
In the selection step the PPP eligibility of the candidate projects must be verified. A distinction must be made between PPP and non-PPP PSP projects as explained above. The objective of the feasibility study is to complete the feasibility assessment already performed by the CPCU (if any) and to address specific PPP issues (VfM assessment, structuring of PPP and development of the heads of terms of the PPP agreement).