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Private sector engagementconcluded

Cooperation with the Private Sector in Agriculture

German development cooperation measures are increasingly carried out in cooperation with private companies. This applies equally in agriculture, a sector of great economic importance in many developing countries. DEval evaluated the potential and the risks of this form of cooperation.

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Since the mid-1990s, the involvement of the private sector in official development cooperation has been steadily increasing. This is informed by the idea that development objectives can be achieved more effectively, rapidly and sustainably if the innovation and financial resources of private companies are made use of.

Critics of such cooperation believe that the projects tend to benefit the companies and lower the priority of development objectives such as poverty reduction and food security. They also fear that environmental and social standards will not be sufficiently acknowledged.

To find out what potential the private sector has for development cooperation, and where possible risks exist, is of particular interest to the agricultural and food sector, since it plays a decisive role in combating poverty and hunger and driving economic development for many countries in the Global South.

Findings and Recommendations

Cooperation with the private sector in agriculture is an appropriate way of contributing to the objectives of development cooperation in principle.

However, the intersections between development and corporate objectives should be spelt out more clearly than hitherto. The same applies with regard to the specific added value which development cooperation expects to accrue from cooperating with companies. Similarly, there has been insufficient discussion so far of the tensions arising from the different interests of companies and development cooperation.

The objective pursued by German development cooperation of building partnership-like relationships with the companies in the long term is not yet sufficiently implemented.

One reason for this is that the implementing organisations are not in possession of sufficient know-how concerning the private sector.

The mechanisms currently in place are not sufficient to verify adherence to human rights standards and principles.

To reliably identify possible risks, checking and monitoring must be strengthened. Corresponding checks should be carried out jointly by the implementing organisations and the companies to keep the workload within acceptable bounds.

 

The evaluation was completed in 2018. This is a summary of the results and recommendations; you can find the complete results and recommendations in the report.

Objectives of the Evaluation

By systematising the BMZ’s portfolio of cooperation with the private sector in agriculture and examining the extent to which this approach is an appropriate way of contributing to development cooperation objectives, the evaluation supports the BMZ, the implementing organisations (GIZ, sequa) and the DEG in using cooperation with companies more effectively.

The evaluation also elaborated the different interests of the various actors (the BMZ and implementing organisations, the private sector, and civil society organisations). To this end, it analysed the private sector’s assessment of the extent to which its business activities in developing countries benefit from its engagement with development cooperation. The evaluation also addressed the question of how far the companies’ contribution provides the BMZ and the implementing organisations with additional support to fine-tune the cooperation.

The evaluation further examined to what extent human rights aspects and adherence to environmental and social standards are acknowledged and monitored when cooperating with the private sector in agriculture. The aim was to document the status quo and highlight any areas of potential improvement.

Background

Since the mid-1990s, the private sector has taken on growing importance as an active partner of development cooperation, both in Germany and internationally. This means that the private sector is involved in both the financing and the conception and implementation of development cooperation measures. In the context of Technical Cooperation, private sector engagement takes place within different programmes (e.g. develoPPP) and measures (e.g. DEG  Business Support Services), and within the framework of bilateral projects (integrated development partnerships).

In agriculture as in other sectors, cooperation with the private sector is becoming increasingly important in such areas as the provision of advisory services or financial resources, knowledge and technology transfer, or building dependable business relationships. The objectives of the private sector and development cooperation are said to complement each other. While the private sector wishes to secure its supplies of raw materials (e.g. by means of contract farming), or to safeguard or extend its markets, the objectives of development cooperation are to strengthen the economy in rural areas, increase and diversify production and productivity in agriculture, and create additional jobs in and outside agriculture, in the aim of supporting environmentally and socially sustainable structural change in rural areas. 

Critics of the involvement of private companies in promoting agricultural development see a number of risks, such as the danger of private sector interests overriding development objectives such as poverty reduction and food security, and in particular, of not reaching poorer population groups. Another fear is that human rights standards and principles might be neglected due to the cooperation.

Despite the constantly growing importance of private sector engagement, especially in the agricultural sector, as yet German development cooperation has not carried out any systematic appraisal of the relevant strategies and support programmes and the underlying theory of change. Likewise, the question of to what extent the different forms of cooperation are appropriate ways of contributing to the achievement of development cooperation objectives has not yet been systematically pursued. Furthermore, in light of criticisms of the approach, the necessity arises to analyse which measures for acknowledging human rights standards and principles and environmental and social standards are integrated into the programmes. It is also important to find out to what extent mechanisms for monitoring adherence to these standards and principles are embedded and utilised by the BMZ and the implementing organisations.

Methods

To reconstruct the theory of change on cooperation with the private sector and to check its plausiblity, the evaluation primarily analysed documents from the BMZ and the implementing organisations. These consisted of strategy documents on cooperation with the private sector, on the relevant sectors (agriculture, rural development, food security, private sector promotion) and on the cross-cutting themes of human rights, environmental and social standards and gender equality. The evaluation also analysed documents from the programmes in which implementation of cooperation with the private sector in agriculture takes place.

A further key element of the evaluation consisted of qualitative interviews with representatives from the BMZ, the implementing organisations, the private sector, civil society and academia.

Team

  • Dr Marcus Kaplan Former Senior Evaluator DEval
  • Dr Sabine Brüntrup-Seidemann Former Evaluator - Team Leader
  • Dr Nico Herforth Former Evaluator DEval
  • Ezra Bender Evaluator
  • Dr Stefanie Krapp Former Head of Department, DEval

Contact

[Translate to Englisch:] Portrait Martin Bruder
© DEval

Dr Martin Bruder

Head of Department: Civil Society, Human Rights

Phone: +49 (0)228 336907-970

E-mail: martin.bruder@DEval.org

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