Best Practice Report

Index

Public-private collaboration / Enabling green infrastructure and systems / Small and distributed systems and new growth areas
4.2.

Small and distributed systems and new growth areas

The larger scale infrastructure investments discussed above could generally be characterized as public goods to be initiated by the public sector and performed contractually by the private sector. This section, instead, focuses on infrastructure investment examples for smaller scale systems and for new markets which could be initiated by both the public and the private sector and where collaboration is often important for success. Examples include irrigation systems for smallholder farmers, infrastructure development for production and distribution of biodiesel, off-grid rural renewable energy, and the use of ICT infrastructure within the agricultural sector in developing countries. Such distributed investments, which may not be commercially viable for private investors but still economically and socially desirable, could be supported by the government through, for instance, land acquisition, financial support, favorable regulatory arrangements, or risk sharing (UNESCAP, 2011).

Collaboration to enable technological upgrading by smallholder farmers is particularly important for green growth. It is estimated that there are 400 to 500 million small farms, supporting two billion people (Conway, 2011). Agricultural development for smallholder farmers is a classic ’weakest link’ problem, in which each individual player depends on many others to succeed. For example, a fertilizer company will not invest in developing distribution channels targeting smallholder farmers, if those farmers lack access to financing or to markets for the extra output they could produce.

Collaborative initiatives can contribute to overcoming the weakest-link problems and reach scale thresholds to make finance available. The Chiansi Irrigation Project in Zambia (see Case 11) is an example where public and private players are working together to make financing available for an irrigation system for smallholder farmers. The key to success in this case was an innovative governance model that bundled financing needs from many smallholder farmers, and combined capital from the international public sector effectively with the expertise and entrepreneurial capacity of private companies. Additionally, to ensure broad buy-in and equitable representation, the governance arrangements allowed access to decision-making for smallholder farmers, a commercial agriculture company, and the local authority.

Case 12 opposite is another example of a small-scale collaborative project to enhance energy security in Mali and Burkina Faso with help of low emission energy technologies. In this project, the government provides support to the private sector through the provision of an infrastructure for production and distribution of biodiesel, providing a market to farmer cooperatives and supporting energy security.

Developments in ICT, in particular the growing use of mobile devices is a key area of public private collaboration towards green growth. OECD (2010) and Dutz and Sharma (2012) emphasize how such innovation helps decouple growth from natural capital depletion and environmental pollution and how innovative tools and approaches can increase resilience to environmental shocks.

In their joint initiative, FAO and the World Bank (2012) highlight the importance of ICT to improve land management and land use planning in agriculture, make farming practices more environmentally sustainable, get climate-smart agricultural information to and from farmers, and support climate adaptation and risk management in agriculture (see also Conway and Waage, 2010). The example of the use of mobile phones in agriculture shows how private sector commercial technology is applied for rural economic development (see Case 13). While the leadership in these collaborative initiatives primarily comes from private sector actors, the public sector plays a critical enabling role such as in the sale of spectrum rights, issuing of licenses to mobile operators, providing trusted information, and protecting consumers.

The aforementioned examples show how public sector involvement in infrastructure investments for small and distributed services and new growth areas such as ICT can enable more vulnerable groups to also benefit from these services. Dutz and Sharma (2012) conclude from empirical analysis that frontier green innovations are mainly concentrated in high-income countries, with innovations in most technology-sophisticated developing countries limited to a few technology fields, and innovation to meet the needs of poor consumers almost completely absent. Collaboration could strengthen skills and improve a country’s business environment for innovation, support technologies for neglected problems, facilitate technology access, and stimulate technology absorption by firms. Demand can be spurred by public procurement, regulations and standards, and can also help strengthen skills and improve a country’s business environment for innovation. Important conditions for successful collaboration in this area, as identified in this section, are that innovative governance models exists to bundle financing needs from (e.g., smallholder farmers) and to combine capital from the public sector with the expertise and entrepreneurial capacity of private companies. Moreover, the success of collaboration in small-scale infrastructure can be further enhanced by allowing access to decision-making for relevant stakeholders including smallholder farmers, a commercial agriculture company, and the local government.

Case 11: Chiansi Irrigation Project in Zambia

The Chiansi project area has long been characterized by poverty and under-utilization of available resources such as land, labor, and water. The abundant source of water from the nearby Kafue river would be able to transform the livelihoods of subsistence farmers reliant on rain-fed irrigation flows. The barrier was that small-scale, poor farmers could never afford the upfront costs of the irrigation system infrastructure that could make this water available to them. Neither was there the local capacity to design, finance, and implement such a system. Therefore, even though smallholder farmers hold water rights, they were not able to utilize these rights. The core idea of the Chiansi project is to provide irrigation to the smallholder farmers to support commercial-scale farming. An initial successful pilot project of 156 hectares is being scaled up to over 1700 hectares. This model is also being considered for other parts of Zambia, and Africa more widely.

The Chiansi irrigation project was brought to fruition because of collaborations between the public and private sectors. The actors on the public side, being international donor entities and the government of Zambia, were brought together by innovative private sector actors such as development finance specialists in London and African development project specialists.

Source: (Palmer et al., 2010)

Case 12: Biodiesel for energy security in West Africa

Farmers’ cooperatives in Mali and Burkina Faso integrate the Jatropha plant, which can be used for the production of biofuel, into their production systems. Jatropha is grown on unproductive land, thus avoiding a conflict over food and fuel production and doing no harm to food security. Biodiesel is produced by a private company, MBSA, which has also set up local foundations in both countries aiming to strengthen farmer capacity.

The governments of Mali and Burkina Faso have created an enabling environment for foreign and national private investment, and support in the form of technical services. In this way, more than 10,000 smallholder farmers could benefit from the co-operation with MBSA. The collaboration between the private and public sectors has thus been vital for the success of the project (IFAD, 2013).

Case 13: Mobile phones and agriculture

Agricultural productivity levels can vary widely from country to country. India, for example, is the second largest producer of cotton after China, but yields only one third of those in China. Many factors may contribute to differences in productivity, including lack of access to finance to invest in more productive technologies, insurance to manage weather risk, and small farm size. Another possibility is that farmers lack information about increasing their crop productivity. An alternative to traditional agricultural extension services is to deliver agricultural information to farmers via low-cost information and communications technologies like mobile phones. There are also an increasing number of examples, most notably in Africa, of using mobile phones to deliver a range of financial services such as payments, credits, insurance, and savings. Success stories seem to be scalable and transferable across countries, as evidenced by the experiences in Africa and also the adoption in India of mobile finance approaches first proven in Africa.

Source: (Foodtank, 2013)