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A legacy of private sector engagement in Africa

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More than 11,000 smallholder farmers benefit from support to develop regional agro-food value chains. Photo: UNDP

In the last 12 years, UNDP in Africa has invested into innovative programmes that produced encouraging results, incentives, and insights on how the private sector can contribute to inclusive growth through inclusive businesses and markets. UNDP’s long term goal in this area is to foster Africa’s capacity to produce and grow in line with the African Union Agenda 2063 and the universal Sustainable Development Goals (SDGs).

The UNDP Growing Sustainable Business (GSB) initiative built, from 2003 to 2011, multi-stakeholder partnerships to support businesses with a clear triple bottom line capable of impacting positively on profit, people and planet.

Bionexx, for instance, a company based in Madagascar, managed to grow the production of artemisinin, a key ingredient in anti-malaria pills, from 0 to 12 metric tons using an outgrower network of close to 10,000 farmers through financial support and technical assistance to set-up the outgrower scheme – a clear success in terms of providing a guaranteed higher value market to smallholder farmers and increasing their income.

GSB grew from a few pilots in Africa to established programmes in over 15 countries across four continents. In 2010, there were over 50 projects in the GSB global portfolio distributed among seven sectors. GSB has worked with over 75 companies, from local small and medium-sized enterprises to multinationals, and facilitated direct investments of up to USD4 million.

However, it became clear that reaching scale for sustainable development would require much more than working with individual companies. Working at market system level was required for bigger impact for which UNDP developed the Inclusive Markets Development (IMD) approach and advocated tackling the root causes of market failures and encouraging markets to work well for the development of entire sectors of the economy.

Looking at the markets in a holistic manner, UNDP developed a national Malawi Private Sector Inclusive Markets Strategy, as well as the Malawi Innovation Challenge Fund, a US$8 million competitive, transparent mechanism funded by UK Aid, that provides matching grant finance for innovative private sector projects in Malawi’s agricultural and manufacturing sectors. After just 2 years, $6.1 million of funding from MICF has been provided to match a $10.1 million private sector investment to develop, for example, tea, beef, groundnuts, water, cassava and milk commodities. These businesses are estimated to provide increased income for 33,300 households.

In parallel to the global efforts on the IMD, UNDP created the African Facility for Inclusive Markets (AFIM) in 2010 to foster more inclusive markets in Africa. AFIM worked with the private sector, the African Union, the Regional Economic Communities (RECs), UNDP country offices and their national counterparts. The AFIM project became the leading advocate for inclusive markets and business in Africa. Over 11,000 small holder farmers benefitted within 12 months from AFIM support to develop six regional agro-food value chains with the RECs. This pushed for better linkages between smallholder farmers and companies through Agribusiness Supplier Development Projects in six countries. Likewise, AFIM developed several knowledge products including the flagship Realizing Africa’s Wealth – Building Inclusive Business for Shared Prosperity report highlighting a framework for inclusive business scale up in Africa and elsewhere.  This framework is being used today through inclusive business ecosystem initiatives in solar energy, mobile money and inclusive tourism in 3 African countries.

UNDP remains strongly committed to advancing inclusive and sustainable growth in Africa. With its 2014 -2017 Regional Programme for Africa, UNDP continues to work with the private sector, big and small, and other stakeholders to develop more inclusive businesses and markets, with support from Swiss Agency for Development and Cooperation, among other donors. Current priorities include supporting the growth of inclusive businesses, impact investment, youth entrepreneurship, especially girls, the national and regional agri-food value chains, as well as helping the African Union create an African Inclusive Markets Excellence Centre (AIMEC).

These initiatives and many more are needed if the private sector in Africa is to grow in an inclusive and sustainable manner and to realize its promise as a major stakeholder and active contributor for its transformation.

Sustainable development Private sector Blog post Africa Tomas Sales Pascale Bonzom

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