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I am very pleased to provide some opening remarks at the launch of the Country Agribusiness Partnership Framework, the CAP-F, on behalf of the Donor Committee on Agriculture and Food Security (DCAFS). Last month only, I spoke here at BICC about EU's support to private sector development in Sub-Saharan Africa, at the occasion of the opening of the European Investment Bank Academy.
I spoke about the European Union's efforts to unlock private sector investment by blending grants and loans to leverage funds to improve access to finance for private sector development. I can see that some of it fits very well with the objectives of CAP-F, which is also about public and private sector investments reinforcing each other for the development of the agricultural sector.
The CAP-F that we are launching today provides a strategic tool to unlock private sector investments in agriculture, necessary to achieve national and continental goals for sustainable agriculture growth. It will promote agribusiness partnerships that will drive private companies, governments and farmers to strengthen coordination, to address policy constraints and enhance mutual accountability.
Allow me to congratulate you, Honourable Minister and the Government as a whole for developing the well-articulated National Agricultural Investment Plan (NAIP), launched in June last year, through an elaborate consultative process. I would like also to applaud the Government of Malawi for passing a number of critical Policies and Bills in recent years that improve the enabling environment for this NAIP, such as the revised Control of Goods Act, the National Seed Policy, the National Irrigation Policy and the Land Bills while some more policies are being reviewed at present.
The Government of Malawi has continued to meet its international commitment of investing at least 10% of its budget in agriculture since the signing of the CAADP Compact in 2010. However, in many years, the growth rate of the sector still falls short of the 6% percent target. Government’s investments have mainly focused on Farm Input Subsidies (FISP) and maize purchases: these are investments that in the past have delivered results, but with diminishing returns over the years.
Continued concentration on low yielding investment is crowding out drivers of growth such as extension, research, irrigation, diversification and market linkages.
We strongly encourage the Ministry of Agriculture to work closely with Ministry of Finance during the budgeting process to promote better opportunities for strategic investment; to not limit resources to FISP and maize procurements, but instead follow through on the analysis that informed the development of the NAIP and re-calibrate investments for optimal returns.
While we stand side by side with government on food and nutrition security, and the fight against poverty, and while we recognize the significant reliance upon FISP as a tool to support food security, there is a need for changes to how we do business to make best use of available resources in respect of the objectives that they serve. For example, social cash transfers are a more efficient way to address the needs of vulnerable labour and land constrained households, while support for agricultural inputs may fall on more fertile ground if targeting the more productive and skilled farmers, increasing impact of these resources.
The NAIP defines the investment strategy for the agriculture sector in the next 5 years to achieve the sector's policy goals. The NAIP budget, to the tune of 3.2 Billion US dollar, is achievable only if Government, the Development Partners and Private Sector join hands to invest in sustainable agricultural growth. Development partner's commitments to the tune of 1.7 billion USD have been made in line with the NAIP priorities for the next five years. But without leveraging resources from private sector, the ambitious goals of NAIP will not be achieved.
I would really like to emphasize that to attract private sector investments, Government need to continue delivering on its commitments to improve the investment climate, and, to provide strong and accountable leadership in policy dialogue. Adoption and implementation of the subsidiary regulations under the Control of Goods Act is a good starting point, particularly addressing the issue of unpredictable export bans that create uncertainty regarding export markets. We understand the regulations are being finalised by the Ministry of Justice and will shortly be cleared by the Ministry of Trade, we commend the part played by the Ministry of Agriculture in the consultation and finalisation of what we believe are a good, clear set of regulations. We urge all parties to ensure that the regulations are in place and in use so that Malawi can reap the full benefits of the upcoming expected bumper harvest. How the upcoming harvest will be managed, will impact significantly on food security, household poverty levels, and national economic growth for the coming years.
We recognize that the Private Sector has become an indispensable partner in development as an essential driver of market driven agriculture growth. But as we move forward implementing CAP-F, we need to draw lessons from the G7 New Alliance to which the Malawi government, Development Partners and private sector committed in 2013.
Through this G7 New Alliance, the Malawi Government, with support from USA and EU, has achieved good progress in reviewing a number of critical policies related to food and nutrition security and more broadly for the agricultural sector as a whole. Regular high level and effective dialogue including private sector and civil society has been integral part of the approach. Yet, over time, high expectations on implementation of reforms where not quite met and the initial enthusiasm weathered over time. From private sector side, a good number of investment commitments were made through letters of intent, but conversion of such commitments to commercial activities was also below expectations.
This calls therefore for a shift through CAP-F to a more action and implementation oriented approach by building concrete business deals between government and private sector at different levels; forming partnerships with a shared value and holding each other accountable to deliver on commitments. It is our hope that the CAP-F will re-energize engagement of both private sector and government in a more direct, transparent and accountable way.
While not directly linked to today's launch, I encourage government and private sector alike to look at opportunities that are offered through other international initiatives. Without going into further details, let me mention:
I am confident that the Donor Committee on Agriculture and Food Security as well as the Private Sector Development Donor group are and will remain reliable and strategic partners to the agriculture sector and private sector development in Malawi.
In conclusion, let me thank Grow Africa, NEPAD and the African Union Commission for accepting the Government of Malawi's request to support the introduction and implementation of CAP-F in Malawi and the Ministry for organizing its launch. With the Public Private Sector Dialogue and the Investment Facilitation Platform, this promises to be two very interesting days ahead of us.
We all agree with the saying that “if you want to travel fast, travel alone, if you want to travel far, travel together”. With Malawi's situation of low agriculture growth and increasing vulnerability and market volatility, it is clear that we need to travel together. Let's keep moving, steady but faster and with a renewed sense of purpose.
I thank you all for your attention.