A GROWING chorus is suggesting that Africa does not need any more aid. They need investment. But the sesame boom in northern Uganda shows there are potential limits to even that approach.
“Uganda is a land of difficulties,” said Vicky Alobo. “Big and small.”
Alobo is a farmer in northern Uganda’s Ywaya village.
“There are caterpillars and aphids and other pests,” she said, counting on her fingers. “And weeds like star grass. We lack tools and pesticides. There is no capital, so we cannot get loans.” Nearby, a neighbour tended neatly planted rows of beans. Alobo (32) pointed to the grass-thatched hut where she lives with her four children.
The roads are bad, she went on. In the rainy season, they are routinely washed out, driving up the cost of supplies. And a shortage of oxen and tractors condemns many families to tilling the soil manually – by hoe, if they’re lucky, or by sticks and hands if they’re not.
While scratching out a meagre living, many hope to somehow make enough to pay school fees or build a house with a sheet-metal roof.
“That is the dream,” Alobo said. “But it can be very hard to get ahead.”
When US president Barack Obama wrapped up his trip to Africa in late July, he cited the continent’s economic promise. “Africa is on the move” he said. “A new Africa is emerging.”
Nevertheless, in a speech broadcast across the continent, the president noted that African growth is failing to keep pace. Africa’s population is expected to double to 2,4 billion by 2050, and economic growth, while brisk in some areas, is unlikely to satisfy growing demand for work.
“Africa will need to generate millions more jobs than it is doing now,” president Obama said. Uganda’s uneven economic performance is a case in point. While southern Uganda has posted rapid growth in recent years, in the rural north, poverty and malnutrition are widespread. In Ywaya village, as throughout the north, most languish in extreme poverty, which the World Bank defines as living on less than US$1,25 a day.
This is not for lack of assistance. From 2010 to 2012, US economic aid alone totalled more than US$1,1 billion.
Instead, some argue public money should be used to leverage private sector know-how and investment.
In some cases, this appears to be happening. In Uganda, programmes funded by the US Agency for International Development and the US Department of Agriculture aim to spark commercial activity and help entrepreneurs get off the ground. Rather than give away grants and ploughs, for instance, aid organisations are connecting local farmers with larger businesses selling pesticides, tools, and improved seeds, which are disease- and drought-resistant. By introducing tillage companies to farmers in distant villages, tractors-for-hire are available to till fields, boosting crop yields. And loan-guarantee programmes encourage banks and other financial institutions wary of issuing loans to poor farmers with little collateral to start extending credit.
According to farmers in Ywaya, these investments are revolutionising their agricultural business. They are getting access to bank loans, investing in their farms, and reaping better harvests. And as the market matures, other large private sector players are starting to join.
In 2009, high global sesame prices encouraged GADCO (a large agro exporter) to partner with Mercy Corps, a global humanitarian aid agency working on US-sponsored development programmes in Uganda, to start buying sesame from agricultural communities in the north. GADCO’s entry in the market helped spark a regional sesame boom. Local sesame prices doubled. Thousands of farmers like Vicky Alobo registered with GADCO to sell sesame. Other agro companies entered the market and productivity rose. In communities throughout the north, the average farm size grew from two acres to six-and-a-half. Today, sesame seeds grown in rural Uganda are found on buns in Germany and the Netherlands.
According to analysis by Mercy Corps, daily incomes for an estimated 36 000 families grew by more than 80%, from just over a dollar to two dollars a day, well above the World Bank’s extreme poverty line. But rising incomes have had some adverse consequences. According to farmers in Ywaya, the extra income has fuelled bad behaviour: fights between spouses, alcoholism, a spike in violent crime. Meanwhile, in many places, farming practices are environmentally unsustainable, exhausting the soil. This has led to itinerant planting: farmers move their fields every year, which, combined with expanding cultivation, is triggering land disputes.
CUSHIONING THE BLOW
In the face of this, aid groups need to be fleet of foot. Encouraging farmers to save more could also help communities weather pricing fluctuations. The growth of local financial institutions creates an opening for agro companies like GADCO to directly deposit farmers’ sales income to a bank account, rather than pay in cash, which is too easily frittered away.
The experience in northern Uganda shows that using market-oriented approaches can vastly improve the lives of those in the developing world. But economic growth can also expose people to new cycles of boom and bust, price and income fluctuations, and environmental degradation. For those living in poverty, the effects can be devastating.
The trick is to use public-private partnerships to promote growth sustainably and, when the inevitable busts come, cushion the landing so that the poorest don’t end up worse off than where they started.