“Bioenergy for Sustainable Development in Africa” Lessons Learned from COMPETE

Brussels, 24-25 November 2009

PANGEA Quarterly Newletter

Winter 2009 / 2010

The following recommendations for African policymakers are aimed at ensuring sufficient local value creation and retention from bioenergy development to provide African countries with sustainable socio-economic development opportunities for the local population, according to COMPETE. These policy recommendations address: policy development, market development, stakeholder involvement, as well as research and capacity building.

1) Development of suitable policies and implementation strategies

• African governments should set clear and realistic policy goals and objectives to define the desired development pathways for bioenergy in Africa. It is hereby acknowledged that the desired scale of bioenergy projects influences the choice of policy options. Crucially, the scale and nature of bioenergy developments need to match the needs and context of the communities within which they will be embedded.
• African governments should develop and implement policies and regulations to create favourable environments for investment and infrastructural development in their respective agricultural sectors.
• Policy development should follow a holistic approach linking energy, agriculture, rural development, and industry development. Furthermore, bioenergy policies should address traditional biomass for household applications as well as modern bioenergy solutions for the transport, electricity and heat sectors.
• African governments should clearly define their own social and environmental sustainability requirements and guidelines for investors in bioenergy projects to ensure benefits for the local population. This may be achieved in cooperation with sustainability criteria developed in the framework of international initiatives. African civil society should be mobilised to place pressure on policymakers to develop suitable policy frameworks for bioenergy ensuring local and national value-creation.

2) Development of bioenergy markets

• Stable markets for bioenergy and by-products should be created on local and national levels. Bioenergy development in Africa should include the household sector as well as small and medium-scale projects. Export of bioenergy may be an important part of the bioenergy development strategy, but should not be the sole focus.
• Market development in African countries should be demand-driven and involve local investors by focusing on projects, which increase access to energy and improve household energy systems.
• Market development investments in the agricultural sector are urgently needed (infrastructure, technologies, mechanisation, modernisation).
• Agricultural production needs to be diversified (multipurpose crops for food and bioenergy production) and productivity in the agricultural sector increased.
• Full value chains need to be established that take into account food, bioenergy, and other by-products to create win-win situations for investors and the local population.
• The trans-boundary infrastructure between African countries should be enhanced to facilitate regional trade.

3) Stakeholder involvement

• Stakeholders should be involved in the definition of social and environmental sustainability requirements and guidelines for investors.
• Out-grower schemes and community engagement should be promoted to ensure ownership of the local population and the participation of national stakeholders in the full bioenergy value chain.
• The establishment and empowerment of farmer organisations should be promoted. Local and indigenous knowledge should be duly respected, and clear communication channels should be established between local communities and other national and international stakeholders.
• Fair and transparent pricing agreements for bioenergy feedstock need to be established between farmers and bioenergy producers.
• Gender equity needs to be incorporated as a key element in the assessment of socio-economic benefits and impacts of bioenergy projects.

IFPRI: Climate Change to Malnourish 25 Million Children

Twenty five million more children will be malnourished in 2050 due to the effects of climate change, according to a report by the International Food Policy Research Institute (IFPRI). This study, the most comprehensive assessment of the impact of climate change on agriculture to date, compares the number of malnourished children in 2050 with and without climate change. 

The report says the impact of climate change on poor people can be averted with $7 billion additional annual investments in rural development. It warns that developing countries will be hit hardest by climate change and will face bigger declines in crop yields and production than industrialized countries. The negative effects of climate change are especially pronounced in Sub-Saharan Africa and South Asia. Compared to the average biophysical effects of climate change on yields in the industrialized world, the developing countries fare worse for almost all crops. 

“Agriculture is extremely vulnerable to climate change, because farming is so weather-dependent. Small-scale farmers in developing countries will suffer the most,” notes Mark Rosegrant, director of IFPRI’s Environment and Production Technology Division and report co-author.  “However, our study finds that this scenario of lower yields, higher prices, and increased child malnutrition can be avoided.”

In addition to increased funding for rural development, IFPRI recommends more open agricultural trade to ensure that food will reach the poorest populations in times of crises. 

“If governments and donors begin now to invest seriously in adaptation for poor farmers, we can avert this bleak future,” says Rosegrant. 

"This outcome could be averted with seven billion U.S. dollars per year of additional investments in agricultural productivity to help farmers to adapt to the effects of climate change. Investments are needed in agricultural research, improved irrigation, and rural roads to increase market access for poor farmers. Access to safe drinking water and education for girls is also essential,” observes Gerald Nelson, IFPRI senior research fellow and report lead author. 

The study, “Climate Change: Impact on Agriculture and Costs of Adaptation,” was prepared by IFPRI for inclusion in two separate reports from the Asian Development Bank and the World Bank, both released today in conjunction with international climate change meetings in Bangkok. 

It says further that without new technology and adjustments by farmers, climate change will reduce irrigated wheat yields in 2050 by around 30 percent in developing countries compared to a no-climate change scenario. Irrigated rice yields will fall by 15 percent. 

Even without climate change, food prices will rise, but climate change makes the problem worse. Without climate change, 2050 wheat prices will increase globally by almost 40 percent. With climate change, wheat prices will increase by up to 194 percent. Rice is projected to increase 60 percent without climate change, but it will go up by as much as 121 percent with climate change. 2050 maize prices will be more than 60 percent higher without climate change, but they will be up to 153 percent higher with climate change. 

The first of its kind, this study combines climate models that project changes in rainfall and temperature and a crop model to capture biophysical effects with IFPRI’s economic model of world agriculture. The latter projects changes in the production, consumption and trade of major agricultural commodities. 

The modeling does not include the effects of increased variability in weather due to climate change, the loss of agricultural lands due to rising sea levels, climate change-induced increases in pests and diseases  and increased variability in river flow as glaciers melt. The report says all these factors could increase the damage of climate change to agriculture.

By Jossy Muhangi,

Kampala.

Non-edible Biofuels Power Up in Africa

By Paul Shorthouse

GLOBE-Net (June 30, 2009) - The debate over biofuel production has moved beyond the food-versus-fuel debate, but new non-edible oil producing plants have become the focus of discussions in parts of Africa. In Tanzania, the native plant species Croton megalocarpus is challenging the India-import Jatropha curcas’s position as the best solution for biofuel production.

East Africa has been dependent on imported fossil fuels for power and transportation for the last half-century. In fact, most countries in Africa, with the exception of Nigeria and Liberia which have their own oil reserves, have been at the mercy of oil price fluctuations. Being able to produce renewable energy through biofuels has created a revolution of sorts for people in countries like Kenya and Tanzania, not only as an energy source, but also as a source of income for largely indigent farmers.

One of the hot issues in the biofuels revolution has been the food-versus-fuel debate, where people have chosen to grow plants like sugar cane, corn, wheat, soy beans, and palms for ethanol and biodiesel production, as opposed to growing crops to feed people and livestock. Not only has this compromised food-stock supplies - resulting in food price increases - it has also led to major problems of deforestation and population displacement not just in Africa, but also in places like South East Asia and South America.

Preferable alternatives are non-edible biofuel crops with high vegetable oil content which grow in arid lands unsuitable for food production. Of these plants, one of the most popular in Africa at present is jatropha.

Jatropha (Jatropha curcas) is a large shrub endemic to India that has recently been promoted as the biofuel answer in many places, as it grows on marginal conditions with minimal inputs. Jatropha produces black seeds that are between 30 and 40 percent rich in oil that can be used in lanterns and cook stoves, or processed to power modified diesel engines. In December 2008, jatropha biodiesel made history when it was used to power an Air New Zealand Boeing 747-400 during the world’s first commercial aviation test flight using a biofuel blend.

Multinational companies have jumped at the opportunity to grow jatropha on a massive scale throughout Africa. The British firm Sun Biofuels has negotiated a 9,000 hectare land parcel agreement with the Tanzanian Government to grow jatropha. The contract, with a 99 year life, was signed free of charge - the idea being that Sun Biofuels will invest $20 million in roads and schools for the area. Another company, German-based Prokon, expects to have 200,000 hectares of jatropha under cultivation in Tanzania before long.

However, jatropha’s popularity and acceptance has been somewhat controversial. In Africa, many smaller farmers, who were led to believe that planting the non-native jatropha would bring a reliable income, have been disappointed with the yields. Although the plant grows on marginal conditions, to get an abundance of oil-bearing seeds, water, fertilizers, and pest control measures are required. In addition, seeds ripen at different times and must be inspected and then harvested by hand to achieve maximum oil concentrations - this is a labour intensive process.

In addition, jatropha seed prices have collapsed as the demand for research material and planting stocks dwindled. The price will need to drop further for the crop to reach price parity with petro-diesel or kerosene, making it virtually impossible for the average farmer to compete in the market.

It seems that the crop will only be profitable if grown on a massive scale. As a result, rural farmers are restrained to growing jatropha for their personal biofuel needs.

In response to the quest for energy self-sufficiency and spurred by the economic exasperation felt by many East African communities, a Tanzanian biofuel company feels it may have found a suitable solution. Africa Biofuel and Emission Reduction (Tanzania) Ltd. has been researching a native, non-edible plant species named croton (Croton megalocarpus) for the last four years. The company feels croton proves a superior alternative to jatropha, producing enough oil to meet regional needs while at the same time providing the potential for a new cash crop to smallholder farmers.

Croton is thought to originate in the Aberdare Mountains of Kenya and grows readily in arid soils with minimal nutrient requirements. The croton tree grows tall with deep tap roots, therefore avoiding the need for irrigation and allowing other food crop species to be grown underneath. The nuts produce 32 percent oil by weight and drop to the ground in seed pods when ripe, allowing for easy collection. At the end of the tree’s productive life, approximately 50 years from planting, trees can be felled and the wood used for the production of furniture.

Africa Biofuel CEO Christine Adamow believes the company has found the most sustainable biofuel product available for the area and is in the process of establishing a commodity market for croton oil, to replace up to 10 percent of Tanzania’s oil requirements by 2018.

American-born Adamow has over 20 years of experience founding, operating, and managing start-up and early-stage companies. She has a strong belief that Africa Biofuel will be successful in bringing croton to market because, unlike others who have failed, the company’s business model is based on East African resources.

"Croton is the biofuel crop that is closest to carbon neutral and allows local areas to be economically leveraged" she told GLOBE-Net in a recent phone interview. In 2008, the company won the World Bank Development Marketplace Award.

The company intends to grow and cultivate croton as a source of biodiesel while it accelerates an early revenue stream through the sale of complementary cover crops, global university-based training programs, co-products from the land clearing and agri-business, carbon and clean development credits. Currently the company is working to develop a 20,000 hectare croton plantation with plans to supply the biodiesel to Tanzanian communities and to nearby Kenya, Rwanda, Burundi, and Uganda.

By 2011, the company expects to be the first African company to have designed and implemented a sustainable rural development model that enhances regional agriculture, supplies a locally sourced bio-fuel to replace petrol-diesel, and raises the standard of living of Tanzanians.

While jatropha, like many biofuel feedstocks, has promised and failed to provide economic benefits for the rural farmers who grow it, croton seems to have potential. Indigenous to East Africa and common throughout, the low-labour harvesting of the oil-rich nuts could make croton a regional solution that provides energy self-sufficiency, economic enhancements, and low environmental impacts in a way that jatropha could not.

It could be that East Africa’s biofuel problem could be solved by a plant that has always been there, but never seen as an energy source until now.

World First for Tanzanian Biofuel Nut Project

14 January 2009

By Darren Taylor

Washington

Voice of America – Pan Africa News

A revolutionary new development project in Tanzania is set to make biofuel from nuts – a first for Africa. It'll also be the first time in the world that environmentally friendly fuel is manufactured using the oil from the fruit of the Croton tree, a plant indigenous to East Africa. To replace up to 10 percent of Tanzania's oil requirements by 2018, through the production and sale of cheaper vegetable oil as bio-diesel. It will also provide a new cash crop to smallholder farmers.

In other parts of the world, biofuel is made using oil from coconuts and soybeans. Now, Tanzania is to manufacture it using nuts from the Croton tree - a "wonderful" and "amazing" plant, according to Christine Adamow, the woman at the helm of a company called Africa Biofuel and Emission Reduction, based in Dar es Salaam.

Her groundbreaking project will function in Tanzania's northwestern Kagera region, where the Croton tree grows prodigiously.

"Currently, the tree is not used for anything other than beauty. It has a very pretty canopy. Often, you'll see these trees planted as decorations at small farms and homes," Adamow explains.

But beyond the Croton's aesthetic qualities, it can also provide other benefits for thousands of Tanzanians. Adamow tells VOA, "The tree produces a nut, and this nut has three seeds inside the husk. The seeds contain 27 percent oil by weight. We've been analyzing the tree and the nuts for the past seven years. Our analysis tells us that this oil, as a source of straight vegetable oil, provides a clean source of biofuel for diesel generators and diesel motors."

Many people in Tanzania don't have electricity. Some rely on generators for power, and most on fire for their heating, cooking and other requirements. Few residents can afford the diesel required to power engines. Currently, fossil diesel in western Tanzania costs almost US $11 per gallon. But Adamow says her biofuel would retail at "about 60 percent of prices at the pump." At the moment, this translates to about six and a half US dollars.

According to research done by Adamow's firm, this reduction in the price of fuel would make it affordable to tens of thousands of Tanzanian families.

"Astonishing" scientists reveal Croton's mysteries

The entrepreneur makes a point of stressing that Croton nuts are non-edible and that her company doesn't advocate growing food crops for biofuel production.

"We've seen a worldwide increase in the maize price, for example, as a result of shortages because farmers in places like the US have started to grow the crop specifically for the purposes of making ethanol. We don't want any repeats of this," she maintains. "We want to help, not harm, poor people."

Adamow says it took seven years of painstaking research to unlock the secret of the Croton tree.

"I work with an astonishing group of international scientists and economists, and these people have been resident in East Africa for almost eight years. The main purpose and driver among this group of people has been to somehow find a way to bring an affordable source of clean fuel to very rural parts of East Africa. In so doing, these scientists had some requirements. Clearly it was paramount that none of the feedstock that they would choose to grow would compete with any food source."

The experts then studied several plants indigenous to East Africa and investigated their potential as biofuel sources.

Adamow says, "In doing the field studies, they found this tree first in Kenya and determined that because the seeds are non-edible, the nuts go unused. So it was natural for these scientists to evaluate the Croton nuts. And they found that they were very oily, and that the oil was great to be used in generators."

She adds that the scientists then did more research on the Croton and "where potentially we might be able to grow it under very regimented conditions in East Africa's agricultural sector."

They settled on Tanzania's Kagera area, near Lake Victoria, after also finding the Croton tree there in great numbers.

"The exciting thing about the tree also is that it doesn't seem to have a lot of irrigation requirements. In studying the 50-year water patterns and rain patterns in the regions where the tree grows, there have been several years of significant drought. Yet the tree has still done exceptionally well, because it has a very deep rooting system (that enables it to draw moisture from deep underground)," Adamow comments.

She explains that farmers will plant Croton trees between their traditional food crops.

"The other great part about the tree is that because it has such an open canopy it allows us and regional farmers to continue growing their food stocks alongside this tree (because the crops still receive adequate sunlight). Intercropping is a very, very important part of our business model."

Adamow describes Kagera as "extremely underdeveloped."

"The area that we've targeted as the core plantation is an….underutilized landmass. It's about 20,000 hectares, that had been maybe two decades ago used as a coffee plantation. That land lies unproductive at the moment," she says. "It is reasonable that since the tree grows very close to that region, and the land is not currently been used for anything, it would be a great place to begin the planting of millions of these trees."

Refinery to be built?

Adamow says when the Croton nuts are ripe they fall to the ground.

"We'll pick them up and put them through a manual crusher. It doesn't require any fuel or electricity. It's equivalent to a grinder, if you will. That separates the husks from the seeds. Once we've done this, we take the seeds and we put them through a manual press – very much like you would make any type of nut butter. You would just add a lot of pressure manually to a very large tank of these seeds. The oil (is) pressed out of those seeds," she explains.

"The remaining portion of the seeds doesn't have any oil in it and is called the 'press cake'… that we believe could be the basis for fertilizer…. and in some cases might even be converted into another material that might be used in the cogeneration of electricity."

Adamow says the oil can be used "straight, without any refining" in most diesel engines and diesel generators, but that her company might at some stage be "forced…to take the oil through a refinery process" in order for the fuel to be compatible with more advanced engines.

"We may need to alter the composition of that straight vegetable oil to create a bio-diesel fuel able to be used in highly sophisticated engines," she says. "If we have to do that, then a refinery will be built in the region, and a classic bio-diesel refining processor will be developed."

But Adamow is hoping to avoid this, as such a development requires "some pretty sophisticated chemistry" and she doesn't want anything to hinder the project and its benefits for the people of Kagera.

Local farmers will be company owners

Adamow maintains that her initiative will generate income for local inhabitants in three ways.

"First, local farmers will be working with us to grow the tree, so we'll be purchasing nuts from them. In addition, these same farmers will provide us with a seasonal labor force for harvesting our nuts on the core plantation. And third - which I think is most exciting and important - these same employees, who are local farmers and residents of rural Tanzania, will be owners in this company, and (will) share in stocks and equity opportunities."

She says her enterprise will dedicate itself to bringing "cash flow," affordable fuel and fair labor practices to the Kagera region, but will also consider it a priority to start turning profits as soon as possible.

"Without profit, all of those people working in the company and those who have stock ownership in the company would reap no value," she states. "When we generate profit, the profit gets plied back to those people…and to the region where the company is located."

Another objective, Adamow emphasizes, is "to get the kids back into school, which currently is very difficult to do, because there is no electricity in that region. And with the usage of affordable bio-diesel fuel, we can even spawn new educational opportunities for children."

Biofuels no threat to Africa food safety: institute

Thu Dec 04 15:44:06 UTC 2008

By Sylvia Westall

VIENNA (Reuters) - Biofuel crops are not a threat to food security but a potential boon for Africa where some regions could be as successful as Asian palm oil giants, an industry expert said on Thursday.

But Werner Koerbitz, director of the Austrian Biofuels Institute, said the infrastructure and political will were desperately needed.

He said countries particularly along the west African coast, such as Ghana, Nigeria and the Ivory Coast showed great natural potential to become major biofuel producers."Those countries could be as rich as Malaysia ," he said, referring to the world's second biggest palm-oil producer.

"I see the opportunities there which could be exploited to give people wealth and guarantee a living. The demand for fuel is there."

Biofuels came under the spotlight earlier this year following a spike in commodities prices.

The U.N.'s Food and Agriculture Organization said in a report in October the Western world needed to rethink its push for biofuels, which had done more harm pushing up food prices than it had good by reducing greenhouse gases. Some critics say biofuels are responsible for hunger in poorer countries.

But Koerbitz said biofuels could actually help developing countries and that the biggest problem was a lack of professionalism at both an agricultural and political level which would be needed for the countries to become big producers.

He said it was doubtful significant progress along these lines could happen in western Africa over the next 10 years.

"But if those countries do learn how to manage this, the potential is huge."

Koerbitz, whose institute acts as a consultant for companies worldwide, said produce would be most likely to be shipped to Europe for processing unless countries were willing to also build their own biofuel plants.

FLAGSHIP PLANT

There have been more encouraging signs in other parts of Africa, Koerbitz said, with experimental crops of jatropha in Madagascar, a country which has suffered from poor crop management in some areas.The tough, drought-resistant plant is one of the most promising future biofuel sources and is also being grown in India . It cannot be eaten but can be irrigated using waste water and can survive in soil where food crops would die.

It is not yet ready for widespread use because growers need to see how easily it can be bred and which varieties show the most potential. It also needed to be tested for its use as a biodiesel in vehicles, Koerbitz said.

"It is a 'flagship' non-food biofuel source," Koerbitz said, "These are early stages but tests have been very promising," he said, citing results presented at a recent jatropha conference in Germany.

"And genetic modification could help make the (development) process much faster."

In terms of future biofuel production, Koerbitz sees agricultural heavyweights such as Cargill, Archer Daniels Midland and Bunge dominating, rather than oil majors such as BP going further into a market where they have less experience.

The quality of biofuels will also play a significant role in future production, Koerbitz said.

"There is a very clear trend in new emissions regulations where in order to protect the health of citizens, engines must become more sophisticated."

"As a result, the fuel must become more sophisticated as well."

(Editing by James Jukwey)

Bio-fueled Jet Flies Cross-Country

Nov 10, 2008

Graham Warwick graham_warwick@aviationweek.com

     Green Flight International has completed the first U.S. cross-country flight with a jet-owered aircraft fuelled predominantly with biofuel. The flights used a first-generation biodiesel, and the team is now planning flights using algae-based bio-jet fuel.

     The Aero L-29 jet trainer was flown 2,4 86 miles from Reno, Nevada, to Leesburg, Fla. Of that distance, 1,776 miles were flown on 100% biofuel and 710 miles on a blend of 50% biofuel and 50% standard jet fuel.

     Virgin Atlantic Airways in February flew a Boeing 747-400 from London to Amsterdam with one of its General Electric CF6-80C2 turbofans burning a blend of 20% biofuel and 80% conventional jet fuel.

     "These flights prove that we have the capability of supplementing our energy requirements with safe, environmentally friendly alternatives to petroleum," says Green Flight President and CEO Douglas Rodante.

     The cross-country flight followed more than a year of ground and flight testing of the Soviet-era trainer's Walter M701 turbojet with biofuels from different feedstocks. Supplied by Lake Erie Biofuels, the biodiesel chosen was a blend of 75% soy and 25% animal fat, says Rodante.   Lockheed Martin performed laboratory testing of the biofuel.

     Because biodiesel has lower energy content than kerosene, the FAA required the L-29 to land with a 25% fuel reserve. This limited each leg of the cross-country flight to less than 300 miles. But Rodante says range on biodiesel was "not much less" than with jet fuel.

     To avoid any cold-flow issues with the biodiesel, the legs were flown at 13,000 to 17,000 feet to ensure the fuel would not freeze, he says. Extensive ground tests preceding the flight had not revealed any issues with filters or seals.

     A blend of biodiesel and kerosene was used on three legs of the flight to compare performance and demonstrate the ability to blend biofuel and existing jet fuel. "No one is going to run 100% with first-generation biofuel," he says.

     "Our original idea was to demonstrate supplementation of jet fuel with biofuel," Rodante says. Data is still being analyzed, but he believes there was negligible performance impact with the 50:50 blended fuel.

     Orlando-based Green Flight, formed and funded by Rodante to promote use of biofuels, is now planning flights early in 2009 using a next-generation, sustainable algae-based bio-jet fuel.

     "We are negotiating with a fuel supplier and plan further tests," he says.  Air New Zealand, Continental Airlines and Japan Airlines all plan demonstration flights over the next few months using second-generation bio-jet fuels derived from feedstocks such as jatropha that do not compete with food for land or water.

Opportunity knocks

Oct 9th 2008

From The Economist print edition

With world markets in turmoil, an unexpected and overlooked continent may benefit from its very isolation.

Take a snapshot of the main news stories around Africa. In Nigeria, its most populous country, the insurgency in the oil-producing Delta region grows fiercer by the day. Zimbabwe’s agony continues as President Robert Mugabe and the new prime minister, his opponent in the last election, Morgan Tsvangirai, fail to agree on the composition of a face-saving coalition government; meanwhile, the country’s official rate of inflation has topped 11m%, with the unofficial rate put at more than 531 billion%. The president of Sudan, Africa’s largest country, has officially been accused of genocide and war crimes by the International Criminal Court. In Somalia, the tragedy of a lawless and ungoverned country only gets worse. Even in South Africa, the continent’s biggest economy, political uncertainty has set in after the ousting of the former president, Thabo Mbeki, in a bitter political feud.

Yet all this has been accompanied by a steady drumbeat of optimism about the continent, and confidence in its prospects. Despite the litany of problems, the 48 countries of sub-Saharan Africa (hereafter referred to as plain Africa) are, by several measures, enjoying a period of unparalleled economic success. And despite the turmoil in the world’s financial markets, international investors still think they can make money there.

In 1990-94 annual GDP growth was a weak 0.9%; since then, growth has averaged closer to 5% (see chart 1). Before this autumn’s financial meltdown, the IMF was predicting GDP growth of 6.6% this year; now it is predicting only a slightly lower rate. Annual GDP growth per person was 1.1% in the late 1990s; from 2004 to 2006 it was around 4%. In 1990 47% of Africans lived in poverty; in 2004 41% did and, if present trends continue, only 37% will by 2015. Zimbabwe apart, most African countries have been bringing inflation down, even if the trend is now creeping up again, in line with the rest of the world.

Many countries have been helped by better macro-economic management and big inflows of Western aid, investment and debt relief—as well as by more unquantifiable investments from Asia, particularly China, and the Middle East. The surplus petrodollars of the Gulf states have been flowing into east Africa. The IMF estimates that foreign investment and loans to Africa rose from $11 billion in 2000 to $53 billion in 2007. Much of this has stemmed from the commodities boom. Oil-producing countries such as Angola and Nigeria, and even war-torn Sudan, have supplied the soaring growth figures, and much of the foreign investment has gone into extractive industries.

Moreover, there is a reasonable chance that Africa may survive the current world financial crisis less bruised and battered than some other parts of the world. The very factors that damaged the continent in the past may now be working in its favour.

Take the banking sector. Businessmen and budding entrepreneurs have always moaned about the excessive regulations and conservatism of African banks. Controls on foreign exchange often prevent them raising more money by investing in exciting financial instruments in the West. Foreign ownership of banks is unusually limited (to less than 5% in Nigeria and South Africa). Now, however, this very de-linkage from the Western financial system has turned out to Africa’s advantage. Its banks have almost no exposure to the subprime market causing such havoc elsewhere in the world. Benedicte Christensen, deputy director of the IMF’s African Department, says confidently that there is “no systemic risk that we can see in any African country in terms of banking.”

No one doubts that Africa will feel the effects of the crisis eventually. As world trade contracts, so will the demand for Africa’s oil and minerals, the main commodities behind its current boom. Oil prices dipped under $90 a barrel this week, down about 40% from earlier in the year; that will dramatically hobble the development of a country like Angola. The price of copper has been tumbling, which will sharply affect the futures of Zambia and Congo. And the foreign capital that African countries have relied on so much for their development will be in shorter supply; in the West, investors will have a decidedly smaller appetite for risk. The supply of aid money, too, will probably decline. But African leaders hope that these effects will be softened by other factors.

Courted by the world

China and the Gulf states have been fascinated for some time by Africa, and there is no reason why this should end. Indeed, Africa’s leaders still like to think of their continent as a gorgeous bride, with a glittering dowry of oil and minerals, to be courted by a swooning world. It is, after all, not just the Chinese who have been queuing to pay over the odds for those enticing minerals (copper, iron and cobalt) and hydrocarbons. Scarcely a month goes by without some country or group playing host to African leaders to win their favour, all copying the Chinese-African jamboree in Beijing in November 2006. Last December it was the turn of the European Union in Lisbon; in March the Indians held an African summit in Delhi; in May the Japanese laid on a welcome in Tokyo.

China is the most prominent of the new deal-makers, but in some African countries, including Kenya and Sudan, India is not far behind. Malaysia has been investing, too. And the rising ambitions of these eastern nations in Africa have spurred the Americans into action, anxious not to be outdone in a continent which they feel should be in their orbit. The United States wants to get as much as a quarter of its oil imports from Africa within a decade, to lessen its dependence on the Middle East. Though the Americans have been focusing on the Gulf of Guinea, particularly Nigeria, they are also heavily involved in Angola, which is likely to become Africa’s largest producer.

America’s interest in Africa has also been revived by the administration’s “war on terror”. It has been offering money and military deals to many governments, especially across the Sahara and in the Sahel (the fringe just south of the great desert), to combat the threat of militant Islamists. To benefit from this military and diplomatic windfall, several African countries have accepted the role of front-line states in America’s war. Ethiopia and Kenya, both sharing long borders with Somalia (where the Islamist threat is real), have gained in this way; so have Mali and Nigeria, where the threat is less apparent.

All this attention and investment are not an automatic blessing. The men who make the deals are enjoying a sweeter life than ever before; but for most people the riches have trickled down slowly, and sometimes not at all. Africa’s record of governance remains, on the whole, poor and its respect for human rights patchy (see map). These are still the main reasons for the continent’s failure to march steadily towards prosperity.

Because aggregate growth has depended hugely on the worldwide commodities boom of the past decade or so, the overall economic improvement also masks deep inequalities. A recent World Bank paper illustrates the difference in economic well-being between countries with minerals and oil and those without. Landlocked countries without resources grew by an annual average rate of just 3.6% from 1995 to 2006, whereas oil-exporting ones grew by 9.1%. Although some of the poorest countries did well in 2007 (Sierra Leone, for instance, grew by 11.6%) the base was low. Ethiopia grew by 6.2%, and has had more than seven years of peace, but it is still threatened by famine. And the 14 African countries that the World Bank classifies as “fragile” have grown by only 2.5% a year over the past decade.

A lot of hot private capital has been attracted to a very few countries, such as Nigeria, where fund managers have been impressed by reforms in the banking sector as well as by its healthier economic state. Mobile-telephone companies have been doing extremely well almost everywhere. The IMF says that a select group of countries—Botswana, Ghana, Kenya, Mozambique, Nigeria, Tanzania, Uganda and Zambia—are now stable enough to rank as emerging markets. [Emphasis Added] But the World Bank paper is skeptical of claims that Africa’s economic fundamentals—savings, investment, productivity and export diversification—have improved enough in the good times to keep the recovery going when commodity prices fall. That scepticism will now be put to the test.

Angry young men

The bad news is that, even in some of Africa’s bigger and beefier countries, the benefits of growth have been balanced by soaring increases in population (see chart 2). In short, even the more successful countries have not managed to provide anything like enough formal jobs, above all for the young. So there are millions of frustrated, bored and angry young men in Africa’s burgeoning slums and shanty towns. With few prospects, they are ready to explode, as they have done ever more frequently in the past year or so.

Take Kenya, which boasts east Africa’s wealthiest economy. In rich countries, the average woman has 1.6 children in her lifetime. In Kenya, she has nearly five. The population has grown sixfold since 1950, to 37m, with a bulge in the cohort of young men aged 15-24; most will be, at best, under-employed. All it needed was a spark, after the country’s rigged election on December 27th, to ignite a collective rage.

Or look at Ethiopia, its neighbour. Here the population, now 85m, is growing by about 2m a year, one of Africa’s fastest rates. Despite recent economic successes (exporting flowers, for example), poverty remains endemic. Some reckon that 70% of young Ethiopians are jobless. In Nigeria, with 149m people, the problem is extreme. Many young men in the oil-rich Delta region have given up all hope of work. Instead they have joined an insurgency, kidnapping and stealing oil to earn a living.

This economic and political frustration is a lethal mix in what are supposed to be Africa’s more hopeful countries. It cuts across ethnic, tribal and religious lines. Crooked elections, as in Kenya, often ignite the violence. Young people, their expectations raised, believe that their votes will produce politicians who will address their grievances and bring some economic and social justice. As such hopes are repeatedly dashed, a youthful rage has built up across the continent.

For countries that have no oil to export, high fuel and food prices have made matters worse. The high cost of staples has led to riots in nine African countries this year, including relatively peaceful ones, such as Senegal. It is also stoking inflation.

Rich and rotten

Even those countries which seem, on the surface, to be doing well from selling their oil and copper to Asia are in danger of damaging themselves in the longer term. The “Dutch disease” was a term coined by The Economist in 1977 to describe how the exploitation of natural resources can cause a decline in other forms of economic activity, particularly manufacturing. This briefly happened in the Netherlands when natural gas was discovered; the same may be happening in Africa. And despite—or perhaps because of—Nigeria’s massive oil wealth, several of the country’s civil institutions, together with human rights and the rule of law, have all withered in the past few years.

In four of the five states of Nigeria’s Delta region, for example, accountability, openness and democracy seem to have diminished in proportion to the increase in oil money flowing into the states’ coffers. Elections have become long spells of organised thuggery. The former head of Nigeria’s anti-corruption commission, Nuhu Ribadu, has called Nigeria’s mode of government “gangsterism”. Politicians, particularly at local level, form criminal syndicates to squeeze the public coffers dry. The more money is available, the more unscrupulous they become.

When Mr Ribadu’s anti-corruption investigations got too near the top of government earlier this year, he was promptly relieved of his post. The same fate befell another anti-corruption chief, John Githongo, in another relatively rich country, Kenya, in 2005. Mr Githongo now concludes gloomily that a whole era, starting in the mid-1990s when African governments at least tried to take corruption seriously, is over.

In Sudan, another country awash with oil, the bonanza should once again have benefited a country that suffers from both poverty and drought. Instead, oil wealth has exacerbated existing tensions and grievances. Sharing out the most productive oilfields is a deadly source of tension between the Christian-animist south and the Muslim- and Arab-dominated government in the north. As a result, the long war between the south and north, which was ended by an ambitious peace accord only three years ago, is threatening to break out again. Botswana, in southern Africa, remains the only country that has managed its resource wealth (mainly diamonds) well.

Raising the financial stakes in Africa often seems to have persuaded those who benefit most from the new riches to cling ever more tightly to power. There are, for sure, more elections than ever before. But heeding disagreeable election results is for wimps, judging by the attitude of Kenya’s Mwai Kibaki or Zimbabwe’s Mr Mugabe. Uganda’s president, Yoweri Museveni, has changed his country’s constitutions in order to hang on. Cameroon’s leader, Paul Biya, has shown a desire to follow this bad example, and has provoked riots as a result.

Neither will Africa’s politicians be deterred from this attitude by their new high-spending friends, the Chinese. China is welcomed for its much needed investment and its building of roads, pipelines and ports. But the Chinese may also be encouraging governments and politicians to ignore their people’s demands for more democracy and cleaner government. Kenya’s opposition was much irritated by an editorial in January in the People’s Daily, the official newspaper of the Chinese Communist Party: “Western-style democratic theory is just not suited to African conditions. Rather, it carries with it the roots of disaster. Kenya’s election crisis is just one example.” Words like this seemed almost to approve Mr Kibaki’s disastrous rigging of the election.

Good-news countries

Several of the African countries making the most promising strides are those with very few natural resources. Poor, landlocked Mali is combining slow but steady economic improvement with political stability. Mozambique, recovered from war and rich in minerals, is also progressing slowly in the right direction.

Ghana, at independence in 1957 one of Africa’s richest countries per head of population but subsequently ruined by dictators and mismanagement, is also making a comeback. In December 2006 it floated a five-year bond for the first time. The issue was oversubscribed. Last year Ghana struck oil for the first time off its coast. But the Ghanaians, wiser after their descent from high hopes to kleptocracy, kept their celebrations muted and are now inviting the Norwegians in to advise them on how to exploit their windfall sensibly. Ghana’s elections, due in December, will provide a test of whether the country can avoid the violence and fraud that stalked the ballots in Kenya and Zimbabwe.

The emphasis in these good-news countries is on boosting the private sector, reducing corruption and getting the politics right. Their efforts are allowing them to qualify for America’s Millennium Challenge Account, worth hundreds of millions of dollars in aid. Even though the underlying problems remain daunting, and even in the midst of the world financial crash, sub-Saharan Africa has a chance to build itself anew.

Small Scale Farmers: Key to Africa's Future

By Owens Ochango, Director IMWO Agro Vets.

In Kenya, Agriculture which is a major contributor to the country's GDP is predominantly practiced by small scale farmers who account for 75 percent of the total output. Most of these small scale farmers are poor, food insecure and live in rural areas.

Political declarations, policy briefs, research findings and publications by distinguished scientists have all highlighted what needs to be done to lift the small scale farmer out of this state of poverty. What is missing is the goodwill from both the government and the private sector to take coordinated and integrated actions that will ignite full participation of the organized small scale farmers. Fostering organizations for and by the small scale farmers to make them efficient and competitive in the market place is one of the strategic interventions that can enable us improve the living standards of the small scale farmers in Kenya.

The current doubts about the viability of small scale farmers need to be overcome. Evidence shows that the inability of the small scale farmers to perform commercially and opposition by big supply chains is largely due to lack of recognition of the small scale farmer on the value chain. In fact, failure to recognize and foster organizations for and by small scale farmers has led to market failures in rural areas. Most farmers therefore just practice for subsistence purposes only.

Attempts have been made by the government, the private sector and the civil society to empower the small scale farmer but the impact is yet to be felt both on the local and the world market. Most of the attempts have only helped in raising awareness and a little capacity building but there is still lack of political will and commitment, a conducive policy environment, adequate infrastructure, institutional innovations and public-private sector partnerships.

There is need for all the factors named above to be enhanced in order to empower the small- scale farmer. Most small scale farmers in Kenya today are aware of the availability of improved certified seeds of maize varieties on the market but only a few plant them. Why is there this barrier to technology adoption? One reason may be that they don’t have a commercial motive when planning to plant maize and therefore they see no need for an improved variety. For those with a commercial wish, the cost of marketing their produce is too high to bear.

Access to credit as an individual to meet this cost of market is in itself another hurdle. The only panacea to this problem can be to link up all the stakeholders in this industry, that is, the small scale farmers, credit providers, input suppliers, large scale produce buyers and any other player through a model that shall have all of them improve their status.

Such a model should be one that that can provide guarantee to all the parties and leave no room for suspicion. If such is put into place, the value chain shall be complete. What the small scale farmer requires is a facilitator model that can make him relate to other industry players as an equal partner. Small scale farmers are the majority among the Kenyan population. The title “farmer” implies that they already have got a resource with them. If they become self reliant then Kenya shall be a rich nation.

Africa's 'Cocoon' Phase: Can Private Investors and Entrepreneurs Transform the Continent?

Published: September 03, 2008 in Knowledge@Wharton

In the past, business in Africa behaved like a "caterpillar" -- uninteresting, slow moving and easy to step on, according to Eric Kacou, managing and regional director for Africa at OTF Group, a U.S.-based consulting firm focused on emerging economies.

"The most blatant fact about Africa is that despite a vast amount of natural resources, we have very little to show for it," Kacou said at the Wharton Global Alumni Forum in Cape Town, South Africa. Today, however, the continent is poised to enter a "cocoon" phase, he added -- a metamorphosis in business that requires a "new mindset" relying less on natural resources and more on innovation and private sector growth.

Kacou was among the speakers on two panels -- one taking the investor's view and the other featuring grass-roots entrepreneurs -- that looked at business as a means for improving Africa's economic and social realities. The first panel, "Business as the Engine of African Economic Development," was moderated by Wharton finance professor Richard Herring, who noted that "Five years ago, the title of this session would have been thought to be a lot more hopeful than true, but in fact some very interesting things have been happening."

When investors think of Sub-Saharan Africa, Herring said, they do so "in terms of the high-profile conflicts that take place," such as the ongoing election disputes in Zimbabwe and recent post-election violence in Kenya. But armed conflicts have declined from 20 in 1999 to only five today, he pointed out, and long-running civil wars in Angola, Mozambique, Sierra Leone and Liberia have all come to an end.

"The sharp increase in Africa's economic performance" over the past five years "has been largely unnoticed," Herring added. Between 1997 and 2002, real income per capita rose 1.8%. "[At that rate] it would take nearly 40 years to double income per capita, and the world can't tolerate that." Since 2002, real income capita has been growing at a rate of 4.6%. "It's really heading in the right direction."

Herring compared Africa's current state to the development of the ASEAN (Association of Southeast Asia Nations) in the 1980s, "right before they became Asian tigers." In many African countries, he said, improved policies have "helped to lift the heavy hand of government ... stimulating a resurgence of private investment and a flourishing of entrepreneurial activity."

Angola's Oil

Kacou, who has advised government and business leaders in Rwanda, Uganda, Nigeria, Sudan and Mali, referred the audience to a chart showing the inverse relationship between various countries' "wealth" in natural resources and their GDP. (With the exception of certain countries like Dubai, which has been successful at reinvesting its oil wealth, countries with the most natural resources tend to do poorly in terms of income.) With regard to natural resources such as oil, diamonds and beaches, "Africa is wealthy," he said, "but we need to distinguish between wealth you can see and social forms of wealth," including human resources, knowledge, functioning institutions and a cultural attitude that is open to innovation and takes into consideration how natural resources are deployed. "Without the second [kind of wealth], you can't do much with the first."

Historically, African nations have suffered from what is widely known as the "resource curse" -- an inability to capture the value of their abundant natural resources. Stephen Priestly, managing director at JPMorgan and head of investment banking for Sub-Saharan Africa, noted one example -- Angola -- that has begun to move away from a mindset that allows other countries to come in and extract its resources by "moving up the value curve." Whereas many African nations like Nigeria, the continent's largest oil producer, export raw materials and often need to import the refined product for local consumption, Angola has developed its own refining capacity and now produces two million barrels of oil a day as a member of OPEC.

The effects are wide-reaching, from increased employment to capital inflows from investors like the Export-Import Bank of China, which has given Angola a multi-billion-dollar line of credit for infrastructure improvements in exchange for access to the country's offshore oil fields. (Angola is now China's largest supplier of oil, with Saudi Arabia in second place.) While the situation "may not be perfect" in everyone's view -- many are critical of China's dominant role in the country's oil industry and government corruption is still considered rampant following more than 25 years of civil war -- Priestly noted that the country stands apart from many others by "addressing fundamental barriers to growth through its oil proceeds."

The Angolan government's relaxing of foreign exchange limits has led to an increase in investments in other sectors, too, including banking and real estate. Despite a more open economy, however, the country still faces "absurd levels of poverty," Priestly says. Herring noted that Angola is a classic example of "imbalanced growth," where some sectors are growing much faster than others, but that these imbalances "are creating strong incentives for the private sector to jump in and help [Angola] catch up."

Indeed, priestly said that the rapid increase in business opportunities in Angola has highlighted some obvious areas for improvement. "Anyone who has tried to do business there knows that it is impossible to get a flight or find a hotel." Basic support infrastructure -- including ports, power stations and even employee housing -- is a key area for investment growth as commodity production increases, the panelists agreed.

'Smart' Capital

James Eric Wright, founder and CEO of African Venture Partners, a pan-African company focusing on telecommunications and technology, noted that a major consideration for all investors regardless of industry is management expertise. Wright, whose firm started a broadband company in Nigeria that was subsequently sold to Dimension Data, one of South Africa's largest data companies, said that although there are a lot of talented entrepreneurs in Africa, "they lack management depth." His firm's solution was to recruit Africans who had gone to school in the U.S. or Europe, so that they could bring both familiarity with Africa and a high skill level to bear on projects.

Priestly agreed, saying that finding entrepreneurs with the requisite management skills is the "biggest constraint to business development on the continent," and that often these skills need to be imported.

Richard Okello, principal at U.S.-based Makena Capital Management, which oversees $12 billion in assets, said that management skill is one way to distinguish between ordinary capital and what he calls "smart" capital, which takes into account global competitiveness and addresses risk on all levels, from widespread government red tape to the kinds of high-profile risks that Herring alluded to in his introduction. "We need to bridge the communication gap between those who provide capital and those in Africa who desperately need capital to grow," he said.

That process includes setting realistic expectations for risk-adjusted returns but also redefining risk. "What is risk in Africa?" Okello asked. "For most investors, it's what's happening in the newspapers." Those interested in finding a place for capital in Africa need to look "several layers beneath" these stories to determine whether a problem is really an opportunity, he said. "A political conflict in one country may be bad for hotels, but it could be great for shipping because those companies can raise their fees by 20% to 30%." As an example, he cited one fund manager in Thailand who would present potential investors with a page of reasons why they shouldn't invest -- followed by a list of specific measures the fund would take to counteract those risks. "Let's not give foreign capital an excuse not to invest in Africa."

Looking for Problems to Solve

For many investors and entrepreneurs, Africa's outsized problems themselves are the attraction. On a panel called "Societal Entrepreneurship," James Thompson, director of Wharton's Societal Wealth Program, described a project aimed at malnutrition in Zambia, which focused on improving the availability of animal feed.

At the time, Zambia was facing an unemployment rate higher than 50%, and HIV was rampant.

"It was not a particularly attractive market," Thompson said. Still, the program's goal was to take a "seemingly intractable problem ... and launch a business that alleviates it while simultaneously making money." Working in cooperation with the Veterinary School at the University of Pennsylvania, Thompson and his colleagues were able to increase the quality of feed while lowering the price by 20%, which put the group in direct competition with large agricultural conglomerates that tried repeatedly to shut the project down.

Ian MacMillan, professor of management at Wharton and the panel's moderator, noted that traditional aid programs have failed to address such issues in a sustainable way. Societal entrepreneurship -- both through existing organizations and independent start-ups -- is a more viable path to economic development. "In the last 50 years, $3 trillion has been spent on aid in Africa, but we're worse off than before.... We've wasted a lot of money."

Dawn Hines, co-founder and partner at Aventura Investment Partners, also sees opportunity in feeding Africa's poor. Based in Senegal, Aventura invests "in the rural food system value chain" by providing farm equipment, supplies and -- perhaps most importantly -- irrigation. According to Hines, the climate in the Sahel -- the area just below the Sahara and north of the fertile Sudan region -- is ideal for farming with the exception of limited rainfall. "Sunlight is 90% responsible for the health of crops, and the Sahel has some of the best sunlight in the world. I was just sitting under it a week ago, wishing I had air conditioning."

With sufficient irrigation and equipment, a farmer who would ordinarily use a quarter or one hectare of land can utilize 20 hectares. Hines noted that investing in agriculture is usually seen as very risky because most of the companies needed to fill out the value chain are missing. "The entrepreneur who received the investment is often running around, trying to fill in those missing pieces." For that reason, Aventura invests in outfits that provide packing services, package making "or anything needed to stabilize the supply chain."

The goal is not only to provide more food for Africa's poor. (According to Hines, African agriculture meets only 50% of its food needs; 25% is met by importing food and 25% of the population goes hungry.) In fact, with Aventura's involvement, Senegal has become a large exporter of green beans and has surpassed Israel as the leading exporter of tomatoes to Europe.

As farming improves, workers will migrate to the various support industries surrounding it, says Hines. "The ultimate goal is to move people out of farming.... This isn't about just giving them shovels."

BIOFUELS DEVELOPMENT IN AFRICA: SUPPORTING RURAL DEVELOPMENT OR STRENGTHENING CORPORATE CONTROL?

Meeting held in Accra, Ghana, on 19 April 2008

As biofuels investment is growing globally, the implications for Africa in terms of food security, rural development, social well‐being and the environment are of great concern. Gathering in Accra, on the sidelines of a major conference on trade and development, representatives from African farmers’ groups and other NGOs examined opportunities and challenges arising from biofuels development in the region. Below are some highlights from the meeting.

Lack of access to reliable sources of energy is one of the main challenges Africa currently faces. This deficit is particularly acute in rural areas. Participants cautioned that the right balance needs to be struck between food security and energy security. Biofuels can provide opportunities but viable agricultural programs that are based on local production and consumption should be prioritized. Mubanga Kasakula, a farmer representative from Zambia, explained that jatropha cultivation for energy use is a successful experience in his country precisely because it has been produced and consumed locally. Yet support for local initiatives is not receiving much policy attention. On the contrary, most of the discussions around biofuels among decision‐makers are focused on production for exports, “to address energy crises in developed countries.” Much of the demand for African production for export stems from Europe, to meet its own energy mandates.

Foreign investment in biofuels in Africa is developing at a quick pace and there is little clarity about who is investing where. More research is needed to map the investment and other policy trends. African governments are providing incentives to foreign investors, which threaten to hurt small farmers’ and rural communities’ access to land and other productive resources. Biofuels are perceived by many as a new way to push an agro‐industrial model of agriculture into Africa that will increase deforestation, loss of biodiversity as well as competition for scarce productive land and water. Gebremedhine Birega Dagaga (African Biodiversity Network) and Ana Antwi (Action Aid Ghana) presented two recent cases, in Ethiopia and Ghana, respectively, where small farmers were pushed off their land to make space for foreign firms to set up large‐scale biofuels production.

Moreover, governments are not consulting with key sectors of society as they develop their national strategies around biofuels. In July 2006, the “Green OPEC1” was launched in Senegal. One of its objectives was to encourage the development of an African biofuels strategy, yet few in civil society have been consulted. Farmers and representatives from rural communities need to be given a voice in the debate. Biofuels policies are too often developed independently from agriculture and rural development policies.

The way forward:

There is no doubt that the push for more large‐scale biofuels production in Africa will continue to expand. In September 2008, African ministers are set to meet in Morocco to follow‐up on the “Green OPEC” commitments. In November 2008, Brazil will host a global summit on biofuels. In the meantime, negotiations continue in the World Trade Organization (WTO) to include biofuels as an “environmental good” so as to encourage quicker liberalization of trade in these products.

Participants called for more research on actual investment practices in biofuels production throughout Africa in order to identify what was happening where, and to assess the social and environmental implications. PELUM, ACORD, Action Aid and Oxfam are planning such research and will share results in the next few months. ROPPA is researching the policy directions of West African governments. They are also identifying the potential risks and benefits of Jatropha for family farmers. ROPPA will hold a regional discussion on bioenergy in the next few months.

African civil society groups are engaging with their governments to call for sustainable bioenergy policies, as well as other renewable energy sources, that further the potential for food sovereignty. From their end, European organizations are advocating for the EU consumption target to be dropped.

For a more detailed version of the meeting report, go to:

http://www.tradeobservatory.org/library.cfm?refID=102973

1 The « Green OPEC » brings together Bénin, Burkina Faso, The Democratic Republic of the Congo, Gambia, Ghana, Guinée, Guinea‐Bissau, Madagascar, Mali, Morocco, Niger, Sénégal, Sierra Leone, Togo, Zambia

Agriculture's Last Frontier

African Farmers, U.S. Companies Try to Create Another Breadbasket With Hybrids

By ROGER THUROW - May 27, 2008; Page A14

ARSI NEGELE, Ethiopia -- Babou Galgo, a 61-year-old farmer, proudly showed off his prized harvest from last season: two shiny gold medals from the regional and federal government and a slick certificate praising his "outstanding performance in increasing agriculture production and productivity."

What he had done was boost his corn yields on his small farm in southern Ethiopia an eye-popping sevenfold over the past several years. Even more impressive, he had boosted the well-being of his family as well: With the added income, they moved out of a traditional mud-brick tukul and into a brick and concrete house furnished with a refrigerator, television and DVD player, rare luxuries for a farmer in one of the world's poorest countries.

Indeed, not long ago, Mr. Galgo would have had no need for a refrigerator as meager yields had him struggling to feed his family. "It's the seeds," he says, noting the reason for his reversal of fortunes. "Hybrids."

Africa's nascent push to finally feed itself is turning the clock back to the early part of 20th-century America. It was in the 1930s and '40s when Iowa-based Pioneer Hi-Bred International popularized hybrid seeds in the U.S., swelling corn yields throughout the Midwest. Seven decades later, African farmers and U.S. companies are trying to recreate the same boom that turned America into the world's breadbasket, only this time in the harsh climate -- environmental and political -- of Ethiopia and greater Africa.

If agriculture has a final frontier, it is Africa. After agriculture transformations in Asia and Latin America since the 1960s, Africa remains the one place where the farming potential has barely been scratched. African agriculture has less irrigation, less fertilizer use, less soil and seed research, less mechanization, less rural financing, fewer paved farm-to-market roads than any other farming region in the world. Conflict in many parts of the continent has chased farmers out of their fields, and neglect by both local governments and international development experts have let Africa's agriculture infrastructure fall into dire disrepair.

American farming interests, like those of agricultural icons Pioneer and John Deere, have avoided large swaths of Africa in the past, believing that farmers were too poor to pay for their products or wary of political instability that has rocked some of Pioneer's other African operations. But now, with global grain surpluses down, demand rising and prices soaring, the calculations at home and abroad have changed and progress can't come fast enough.

In Ethiopia, only about one-quarter of the country's total corn area is planted with hybrid seeds. Hybrids, produced from conventional breeding to increase yields and to thrive in harsher climates and to resist pests, usually can double or triple harvests over the standard seeds passed down through generations. And there are only several thousand tractors for more than 50 million people who depend on farming to survive.

"Africa is the only continent where per capita food production is declining, so the need is there," says J.B. Penn, the chief economist of Deere & Co. and a former undersecretary at the U.S. Agriculture Department. The present food crisis "is solved only through higher production," adds Paul Schickler, president of DuPont Co.'s Pioneer unit. "That is what is needed in Africa, through the use of better technology, genetics and agronomic practices."

Chombe Seyoum sees the need and potential every day. A farmer himself, Mr. Seyoum began selling John Deere equipment in Ethiopia two years ago hoping both to accelerate the mechanization of his country's farmers and to fulfill his father's vision. In 1968, his father bought a small John Deere tractor and introduced machine farming to his region of the country's southern wheat belt. Several years later, Emperor Haile Selassie was toppled by a communist dictatorship, farmland was collectivized and some of the Seyoum family's machinery was confiscated.

Mr. Seyoum studied to become an engineer. But when the communists were ousted in the early 1990s, he returned to farming and saw how far his country had fallen behind as he worked to rebuild the family farm.

Now, from his office in Addis Ababa, he sells Deere equipment -- 100 in the past two years. While drought and hunger still plague parts of Ethiopia, the fertile Rift Valley and highland regions, given good weather, have the country rivaling South Africa as the continent's largest cereal and grain producer south of the Sahara. Rising corn and wheat prices have spurred demand for machinery from farmers hoping to expand their acreage. Making up for lost time, Mr. Seyoum welcomes customers ready to purchase big-ticket machinery.

"We are in a rush," says one customer, Abdi Abdullahi Hussein. Mr. Hussein once worked with nomadic herders before seeing the business potential in farming this year. The spring planting season was fast approaching and he badly needed a tractor. He and a partner have about 60 acres and he intends to rent the tractor to others. "Our idea is to introduce technology in our area and plow more land," he says.

Mr. Seyoum suggests an 85-horsepower tractor costing about $30,000. Mr. Hussein doesn't flinch at the price; He has pooled his savings with neighbors' who will share the tractor. In Ethiopia and throughout Africa, banks are reluctant to lend to farmers who have little collateral; pooling money is a common way to raise the funds. But he cringes at the four-month delivery time from Deere's factory in Brazil. Instead, he ponders a 65-horsepower tractor, which will be available sooner.

"We've got a long list of people coming to us for tractor service," says Mr. Hussein.

As Mr. Hussein leaves, another farmer arrives to complete a purchase of a combine. Haji Kawo, like most wheat farmers in Ethiopia, plants by hand and harvests with a machine. After years of hiring others to cut his wheat, Mr. Kawo decided to get into the harvesting business himself. He figures he can pay off the $70,000 combine within a year given that there are 20,000 small farmers in his area who need harvesting service. He envisions moving from farm to farm during the harvest season much like combine services that methodically move up from the southern U.S. and into Canada.

Offering to help with financing, Mr. Seyoum sees Mr. Kawo as a model farmer who can demonstrate the benefits of mechanization to others and drive sales. Ethiopian farmers "see a success somewhere, and they want to do it, too," says Mr. Seyoum.

Melaku Admassu, an Ethiopian who runs Pioneer's operations here, uses the same farmer-to-farmer sales method that Pioneer employed in the U.S. He began by handing out seeds from the back of his pickup truck, particularly to farmers like Babou Galgo who worked land near the major roads so more people could follow the growth of the hybrids. At harvest time, Mr. Admassu would return with small scales to weigh the yields and compare them to the harvests of farmers who weren't using the hybrids.

"When I heard that only 1% or 2% of the U.S. population are farmers, and they feed the whole country, I couldn't believe it," Mr. Admassu says. "I started dreaming that if every farmer in Ethiopia increases production, we can change the whole country. We can change Africa."

It has certainly changed lives in the Rift Valley lakes region. When Mr. Admassu first came to his village with the new seeds and advice on how to better till his land, Debebe Ayele, 47, was struggling to feed his family. "We were getting food aid," he says. "I was ready to try anything to improve my situation."

The new seeds were a risk. They were more expensive than the standard fare and they were new. He planted two acres the first year, then four and now he rents land from his neighbors to increase his acreage. His harvests multiplied and for the first time in his life he had regular surpluses to sell on the market. He replaced the thatched grass roof of his house with corrugated iron. He bought better furniture and better clothes. He wants his children to go as far as they can in school.

As Mr. Ayele recites his progress, Mr. Admassu beams. "When we see our farmers go from barefoot to shoes, we know that is because of increased production," he says.

Farmer Galgo is ready for another upgrade. Sitting in his comfortable living room, beneath wall murals of Jesus and a peace dove, he tells Mr. Admassu, "I want to expand my land and buy a tractor. A big tractor, with a lot of power."

Another tractor customer.

Write to Roger Thurow at roger.thurow@wsj.com

Europe May Ban Imports of Some Biofuel Crops

By James Kanter, New York Times Writer Tuesday January 15, 2008

PARIS — In a sign of growing concern about the impact of supposedly “green” policies, European Union officials will propose a ban on imports of certain biofuels, according to a draft law to be unveiled next week.

If approved by European governments, the law would prohibit the importation of fuels derived from crops grown on certain kinds of land — including forests, wetlands or grasslands — into the 27-nation bloc.

The draft law would also require that biofuels used in Europe deliver “a minimum level of greenhouse gas savings.” That level is still under discussion.

Currently, most of the crops for biofuels used in Europe consist of rapeseed (commonly known as canola in the United States) grown in parts of Europe, according to Matt Drinkwater, a biofuels analyst at New Energy Finance in London. Europe also imports some palm oil from Southeast Asia, soy from Latin America, ethanol from Brazil, and produces some ethanol domestically using wheat and sugar beets, he said. The ban would primarily affect palm oil and possibly the Latin American imports.

Amid rising prices for gasoline and diesel and worries about climate change, countries around the world have started using more fuels produced from crops or agricultural wastes.

The amount of ethanol used in the United States represents about 5 percent of total gasoline consumption, according to Matt Hartwig, a spokesman for the Renewable Fuels Association in Washington. Ethanol produced from sugar cane is widely used in Brazil. In Europe and to a lesser extent in the United States, vegetable oils have been converted into a type of diesel by a simple chemical procedure.

But a flurry of studies has discredited some of the claims made by biofuel producers that the fuels help reduce greenhouse gases by reducing fossil fuel use and growing carbon-dioxide-consuming plants. Growing the crops and turning them into fuel can result in considerable environmental harm.

Not only is native vegetation, including tropical rain forests, being chopped down in places to plant the crops, but fossil fuels, like diesel for tractors, are often used to farm the crops. They also demand nitrogen fertilizer made largely with natural gas and consume huge amounts of water.

Already, the draining and deforesting of peatlands in Southeast Asia — mainly to make way for palm plantations — accounts for up to 8 percent of global annual carbon dioxide emissions, said Adrian Bebb of Friends of the Earth, an environmental group.

In Indonesia, he said, more than 18 million hectares of forest, or 44 million acres, have already been cleared for palm oil developments. Environmental groups say the developments are endangering wildlife like the orangutan and the Sumatran tiger, and putting pressure on indigenous peoples who depend on the forests.

Western scientists are increasingly pointing out the need to distinguish between types of biofuels. On Monday, for instance, the Royal Society, a national science academy in Britain, said requirements to use a certain percentage of biofuels were not sufficient. Instead, the society said, there should be specific goals for emissions reductions.

“Indiscriminately increasing the amount of biofuels we are using may not automatically lead to the best reductions in emissions,” said John Pickett, head of biological chemistry at Rothamsted Research, a research center in Britain, who helped write the report for the Royal Society. “The greenhouse gas savings of each depends on how crops are grown and converted and how the fuel is used.”

Last week, scientists at the Smithsonian Tropical Research Institute in Washington also warned that biofuel production can result in environmental destruction, pollution and damage to human health.

“Different biofuels vary enormously in how eco-friendly they are,” said William Laurance, a staff scientist at the institute. “We need to be smart and promote the right biofuels.”

Experts say certain types of fuels, particularly those made from agricultural wastes, still hold potential to improve the environment, but they add that governments will have to set and enforce standards for how the fuels are produced. With its new proposal, Europe appears to be moving ahead of the rest of the world in that task.

The draft law probably would have the greatest impact on palm oil growers in countries like Malaysia and Indonesia, according to Mr. Drinkwater.

Some developments in Southeast Asia will almost certainly be blocked by these provisions,” he said, adding that the rules would make it much harder to plant on recently deforested land or to export fuels whose production process cause significant amounts of greenhouse gases to be released.

But farmers growing corn for ethanol could also be affected, because the European rules contain provisions on preserving grasslands, said Mr. Drinkwater.

The text, which could change before European commissioners meet on Jan. 23 to adopt a final version, also emphasizes that areas like rain forests and lands with high levels of biodiversity should not be converted to growing biofuels.

The European Union does not want to completely abandon biofuels because they could still contribute to reducing Europe’s dependence on fossil fuels.

In part, that is because biofuels — a blanket term covering fuels grown from crops to manufacture substitutes for diesel and gasoline — are seen as Europe’s main weapon in lowering emissions from transportation. And transportation has the fastest growing levels of greenhouse gases among all sectors of Europe’s economy.

On Monday, in answer to a reporter’s question, an organization representing major growers of crops for biofuels in Malaysia said the E.U. should be cautious before imposing new rules. It said that farmers in the region were adopting more sustainable practices, and warned that restrictions on imports could cause trade tensions.

“The Malaysian government is very concerned about the E.U. scheme for sustainability of biofuels,” said Zainuddin Hassan, the manager in Europe for the Malaysian Palm Oil Council in Brussels. The measures “should not be a trade barrier to the palm oil industry and it should comply with the W.T.O. rules as well,” he said, referring to the World Trade Organization.

Verifying that only environmentally sound biofuels are being imported into Europe would be left to individual countries. But the draft law calls for penalties for violating the rules, like exclusion from tax breaks, to be enforced across the region.

The draft law also says that biofuels should be tracked from origin to use “so that biofuels fulfilling the sustainability criteria can be identified and rewarded with a premium in the market.”

The measures are part of a plan for Europe to implement a binding target of making 10 percent of the transport fuels consumed by 2020 from renewable sources — most of which are expected to be biofuels.

Ferran Tarradellas Espuny, spokesman for Europe’s energy commissioner, Andris Piebalgs, said that European countries that used more than 10 percent of biofuels in their transport fuel mix could use their progress to help them to reach other European environmental targets. Those include a goal of a 20-percent share of renewable sources in overall energy consumption by 2020.

Europe already has a suggested target of making biofuels 5.75 percent of fuels used for transport by 2010. But that target is not going to met, according to the draft law. Biofuels were just 1 percent of transport fuel in 2005 and, if present trends continue, would account for 4.2 percent by 2010.

Jumbo Jet to Fly (Partly) on Biofuel

By Andrew C. Revkin, New York Times Writer Tuesday January 15, 2008

Richard Branson plays with planet Earth during an announcement of a $25 million climate-technology prize last year. He announced a biofueled jet flight on Monday. (Credit: Reuters)

Car makers are racing to put out new vehicles with ever higher fuel efficiency or — in the case of plug-in hybrids planned for 2010 by GM and Toyota — the prospect of traveling without combustion at all. Such vehicles eventually could (if the grid were powered by nuclear plants, dams, windmills, or solar energy) form the basis for the kind of “green mobility” I wrote about a few days ago.

For aviation, the challenge is far greater. There were recent pioneering piloted flights by ultralight electric airplanes. But jets require potent fuels to be able to overcome gravity and go fast and far.

Last year, the British transportation and music tycoon Richard Branson pledged to invest billions of dollars over 10 years to find energy sources for transportation, particularly airplanes, that don’t contribute to global warming. On Monday, he announced a February test flight by a Virgin Atlantic jumbo jet powered by a blend of conventional jet fuel and a biologically-produced fuel.

The company said one of its Boeing 747 aircraft (sans passengers) will fly from London to Amsterdam burning a mixture of 80-percent conventional jet fuel and 20-percent a concoction developed in partnership with Boeing and GE Aviation.

In announcements last year, those companies said they would be testing fuels produced from a range of plants — everything from soybeans to algae. The choice for the test flight was not named on Monday but the company said it was “truly sustainable” and would “not compete with food or freshwater resources.” (Do I detect a hint of marine algae?) A spokesman for Virgin, Paul Charles, said the fuel was undergoing final tests in the United States.

There’s a long list of challenges before the new normal for jet fuel will be a blend of traditional petroleum-based choices and something grown in a field or lagoon (and thus not adding ancient carbon to the atmosphere).

But if such a biofuel is grown and manufactured without much fossil-based energy, if it doesn’t come from fields or forests (Mr. Charles stressed there is no palm oil involved), this might be the first hint that aviation — still a small fraction of the overall greenhouse-gas pie, but one of the fastest-growing wedges — could avoid adding greatly to the climate challenge while subtracting just a little bit from the world’s energy challenge.

Look at it this way: You’re not likely to step onto a plug-in hybrid jetliner any time soon. So — in this case — biofuels could well be an answer. Stay tuned.

World Bank Reports Progress in Sub-Saharan Africa

By SHARON LaFRANIERE, New York Times Writer Thu Nov. 15

JOHANNESBURG, Nov. 14 - After enduring decades of economic collapse and stagnation, many countries in sub-Saharan Africa have turned a corner and are now growing economically at rates comparable to rates in the rest of the developing world, according to a report released Wednesday by the World Bank.

The report attributed Africa’s progress over the past decade in part to smarter economic policies, better government and fewer armed conflicts. The strong global economy, trade expansion and greater foreign investment have also helped the region.

"Africa is now moving in tandem with the rest of the world," John Page, the bank’s chief economist for Africa, said.

Over all, the region’s economy grew by 5.4 percent in 2005 and 2006, faster than the economies of many developed countries and similar to those of developing nations other than India and China. Nations that export oil or minerals led the pack, but 18 others — home to more than a third of the region’s population — also performed well, the report said.

Africa still occupies the bottom rung of the world’s economic ladder. Forty-one percent of sub-Saharan Africans live on less than $1 a day — an improvement from 47 percent in 1990, but still the world’s worst poverty rate. A lack of skills, low productivity, red tape and poor infrastructure hobble business development.

The recent economic progress merely made up for ground lost during the plunge that accompanied independence and the painful belt-tightening that followed. Over all, Africa has simply recovered its position of three decades ago, the report says. "The reason: when things go well they do not last, and when they go wrong, they go very wrong," the report states.

Still, Mr. Page said, Africa is at a turning point. He credits the improvement, in part, to the fiscal discipline advocated by the World Bank and the International Monetary Fund in the late 1980s and early 1990s.

But some African leaders now condemn the bank and the fund for persuading them to cut budgets and trim the ranks of teachers, nurses and other trained workers at a time when their countries, arguably, needed them most. And critics argue that in some nations with oil or other natural resources, growth has enriched an elite class but passed over the poor.

Mr. Page acknowledges some ill-advised outcomes. But over all, he said, many nations managed to reduce debt, tame inflation and set competitive exchange rates, setting the stage for economic growth. "The alternative would have been much worse," he said.

The report offers a varied picture of Africa’s economic strengths: It takes just 14 days to start a business in the Central African Republic, for instance, but 233 days in Guinea-Bissau. South Africa is ranked among the top third of the best nations in which to do business, but over all Africa ranks in the bottom fourth.

More than 60 percent of the region’s direct foreign investment in 2005 was in its oil-exporting nations. South Africa and Nigeria, the continent’s leading oil producer, accounted for more than half of sub-Saharan Africa’s gross domestic product.

For the poor, the report states, avoiding drastic economic downturns is crucial because they suffer most from declines. "The question for economic policy-makers in Africa, then, is how best to sustain the pickups in growth," the report states. "The answer: avoid crushing declines."

Dutch consider tough biofuels criteria

By ARTHUR MAX, Associated Press Writer Thu Apr 26, 4:09 AM ET

AMSTERDAM, Netherlands - It's the new climate change dilemma: finding alternatives for oil and gas without doing more harm than good. In the rush to develop biofuels, forests are burned in Asia to clear land for palm oil, and swaths of the Amazon are stripped of diverse vegetation for soya and sugar plantations for ethanol.

On Friday, a Dutch committee will unveil stringent criteria for growing biofuels in ways that don't damage the environment or release more greenhouse gases than they save.

Other European countries are working along similar lines and closely watching the Dutch initiative — the first to reach the level of government consideration. More than a year in the making, the report reflects a heightened awareness of the risks and complexity in efforts to reduce emissions of the gases blamed for global warming.

Among the criteria in a draft obtained by The Associated Press: Production of biomass cannot contribute to deforestation, deplete reservoirs of carbon captured in the earth, compete with food crops, degrade soil or water supplies, upset biodiversity, or displace local populations, The report is by the Cramer Commission, named for its former chairwoman, Jacqueline Cramer, who in February became environment minister. Without going into specifics, it suggests developing a track-and-trace system to follow a product from plantation to power plant, like an express delivery package. "It should be implemented on a European scale because it will be difficult for Holland to do it on its own," said Kees Koede, of the Dutch branch of Friends of the Earth, an environmental group.

"Everyone is aware that it's crazy to pour money into a system that is not sustainable," he said. But the European Commission, executive arm of the 27-nation European Union, is only beginning to look at the problem. "We are working on a system of green certificates to make sure no unsustainable biofuel makes its way into the European market. But this is very embryonic at the moment," said Ferran Tarradellas Espuny, an EU energy official.

An organization of palm oil planters, processors, financiers and environmentalists in Malaysia and Indonesia has been working for more than two years to devise criteria and verification schemes.

The campaign is driven by evidence that developers in the two Asian countries have burned vast tracks of rain forest to grow palm oil. The fires unleash millions of tons of carbon dioxide and smoke that shroud entire areas of Southeast Asia in eye-watering smog for weeks at a time. The Netherlands is Europe's biggest importer of palm oil, used in a wide range of supermarket products as well as a fuel oil supplement. One Dutch company has plans to build three 50 megawatt power stations exclusively running on palm oil.

The Cramer Commission envisions imported biomass from sustainable sources by 2020, but calls for a transition period. "Sustainability in the long term can only be achieved if a start is made with it now," the draft says.

It calls for greenhouse gas emissions to be cut by 70 percent for generating electricity, and 30 percent for transportation fuels. The draft criteria say new plantations must not be built in protected areas, plantations should leave 10 percent of their area in "its original state" to preserve diversity, and soil and water quality of the soil and water should be improved.

The Europeans have set high targets for cutting carbon emissions. In February, EU leaders approved a plan to trim them by at least 20 percent from 1990 levels by 2020. At least 10 percent of transport fuels will come from biomass, they decided.

With that goal in mind, a huge emphasis will shift toward biofuel production, risking even greater environmental damage. "You need to be very quick with implementing criteria," said Sander van Bennekom of the Oxfam charity, one of the report's 14 contributors, in an interview. "Maybe we are already too late."