Brokering Development: Enabling Factors for Public-Private-Producer Partnerships in Agricultural Value Chains Summary of Uganda Case Study Brokering Development: Enabling Factors for Public-Private-Producer Partnerships in Agricultural Value Chains A case study of the Oil Palm PPP in Kalangala, Uganda This is a summary of the Uganda Country Report, which was written by Eddie Nsamba-Gayiiya and Herbert Kamusiime of Associates Research Uganda. It is based on research carried out in 2014 in association with the Institute of Development Studies (IDS) as part of an IFAD-funded programme on the role of PPPs in agriculture. It is one of the four IFAD project-supported Public-Private-Producer Partnerships analysed for the research report ‘Brokering Development: Enabling Factors for Public-Private-Producer Partnerships in Agricultural Value Chains’. The report syntheses the four case studies and discuss the findings on how PPPPs in agricultural value chains can be designed and implemented to achieve more sustained increases in income for smallholder farmers and broader rural development. © IDS and IFAD, 2015 IDS disclaimer This publication is copyright, but may be reproduced by any method without fee for teaching or nonprofit purposes, but not for resale. Formal permission is required for all such uses, but normally will be granted immediately. For copying in any other circumstances, or for re-use in other publications, or for translation or adaptation, prior written permission must be obtained from the publisher and a fee may be payable. IFAD disclaimer The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the International Fund for Agricultural Development of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The designations ‘developed’ and ‘developing’ economies are intended for statistical convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process. This publication or any part thereof may be reproduced without prior permission from IFAD, provided that the publication or extract therefrom reproduced is attributed to IFAD and the title of this publication is stated in any publication and that a copy thereof is sent to IFAD. Design: Lance Bellers and Gary Edwards. BROKERING DEVELOPMENT: ENABLING FACTORS FOR PUBLIC-PRIVATE PARTNERSHIPS IN AGRICULTURAL VALUE CHAINS 1 SUMMARY OF UGANDA CASE STUDY Contents Executive summary 2 Introduction and overview 3 Objectives of the case study 3 Methodology 3 Country context 3 Overview of the PPP 4 Analysis 5 Key elements of the PPP 5 Development outcomes 9 Linking the PPP and development outcomes 12 Challenges 12 Capturing learning from the PPP 14 References 15 Endnotes 16 2 BROKERING DEVELOPMENT: ENABLING FACTORS FOR PUBLIC-PRIVATE PARTNERSHIPS IN AGRICULTURAL VALUE CHAINS SUMMARY OF UGANDA CASE STUDY Executive summary Developing country governments and donors are reported being able to afford to send children to increasingly looking to public–private partnerships school as a result). It has overcome the challenges (PPPs) to deliver growth and positive development facing smallholders by providing a guaranteed outcomes in agriculture. This research study focuses market for their produce, and through mechanisms to on the Kalangala Oil Palm Development (KOPD) – a set prices based on market rates. It has also brought component of Uganda’s Vegetable Oil Development many new job opportunities (in the mill, processing Project (VODP), funded by the International Fund for plant, and the construction and services sectors), Agricultural Development (IFAD)1 – which provides while improvements to infrastructure (particularly interesting lessons for other programmes with PPP roads and a new ferry service) have benefited the arrangements. entire local population. The PPP aimed to establish oil palm production (a But there have also been some less positive new cash crop in Uganda) through private sector-led outcomes. Many of the new job opportunities have agro-industrial development on Bugala Island, Lake been filled by migrants, putting pressure on local Victoria. Specific aims were: health and education services. The rising price of • to achieve import substitution land as a result of the development3 has increased • to reduce rural poverty by raising smallholder tensions and led to rising conflicts, particularly as incomes some absentee landowners have begun to return. • to improve population health through increased uptake of vegetable oil There are concerns about longer-term impacts on • to diversify exports. household food security when the oil palm trees become too large to allow intercropping. And the Its design involved considerable innovation environmental impacts have led to a great deal and provides important lessons for supporting of public scrutiny, particularly given the size of smallholder development through a value chain the investment. Finally, at household level, there approach. The PPP was based on a tripartite has been a reported increase in domestic conflict, agreement between the Ugandan government, Oil although more positive impacts are evident in terms Palm Uganda Limited (OPUL) and the Kalangala of women’s empowerment and building capacity of Oil Palm Growers Trust (KOPGT). It aimed to farmers’ organisations. construct a crude oil palm mill and develop 10,000 ha plantations (6,500 by the private sector, 3,500 by smallholders). Kalangala is the first phase of a longer-term PPP between the government and Bidco Oil Refineries Ltd of Kenya (Bidco), encapsulated in a 2003 agreement, which includes a processing plant at Jinja (80km from Kampala). Bidco’s operations in Uganda are run by Bidco Uganda Ltd (BUL),2 which owns 90 per cent of shares in OPUL. The KOPGT owns the remaining 10 per cent. Evidence suggests that the PPP has certainly generated significant livelihood and employment opportunities in Kalangala – formerly one of the country’s poorest and most remote districts, with limited livelihood options based on subsistence farming and fishing (dominated by men). The PPP has increased household assets, formalised tenure rights for many smallholders (and expanded landholdings for some, including women) and provided more stable incomes (many families BROKERING DEVELOPMENT: ENABLING FACTORS FOR PUBLIC-PRIVATE PARTNERSHIPS IN AGRICULTURAL VALUE CHAINS 3 SUMMARY OF UGANDA CASE STUDY Introduction and overview Objectives of the case study of the economically active population (UBOS This report forms part of a series of case studies 2010, 2013). The sector is also a major source that seek to identify key success factors for public– of raw materials for local industries, with food private partnerships (PPPs) in rural development, processing alone accounting for 40 per cent of total based on learning from IFAD’s experiences with manufacturing. The idea of producing oil palm in PPPs in four countries (Ghana, Indonesia, Rwanda Uganda dates back to the 1960s, with seedlings and Uganda). The aim of this series is to support imported from West Africa in the 1970s for use in policy and decision-makers in government, business, trials in three areas (including Kalangala, which donor agencies and farmers’ organisations to produced the best results, influencing the choice build more effective PPPs that bring about positive of area for the Vegetable Oil Development Project development outcomes sustainably and at scale. (VODP) when discussions were taking place in the 1990s). The study identifies key elements of PPP design and implementation that lead to positive (or negative) Poverty development outcomes for smallholders and rural Uganda has experienced sustained growth in the communities, by exploring four questions: past two decades, reducing poverty from just over • What constraints was the PPP set up to 56 per cent in 1992/93 to 19.7 per cent in 2012/13, overcome, and what was its theory of change? although these figures mask a strong urban-rural • What were the key features of how the PPP was poverty divide (34 per cent in rural areas compared brokered, designed and implemented? with 14 per cent in urban areas). The Plan for • What have been the development outcomes for Modernization of Agriculture (2000), linked to the smallholders and rural communities to date? Poverty Eradication Action Plan, aimed to reduce • How have these outcomes been influenced by poverty by transforming subsistence farmers (who the PPP brokering, design and implementation? comprise 75 per cent of all farmers) into market- oriented commercial producers. Methodology Agriculture The study is mainly based on qualitative data The National Development Plan 2010/11–2014/15 collection through semi-structured key informant (NDP) has agricultural, business and rural interviews and focus group discussions, and infrastructure development objectives including rural a document review. Researchers interviewed economic growth and employment creation, with representatives of the main partners involved. a focus on agriculture and agro-processing. The Focus groups were conducted with smallholders government recognises the importance of PPPs (men and women) who participated in the project to enhance the competitiveness of the agricultural and some who did not (peers), which gave insights and agribusiness sectors and highlights increasing into outcomes