Foreign aid for Africa is taking new form as private investment from both foreign and local agribusinesses. Why this could be a game-changer for many commercial smallholder farmers, but why they must also remain vigilant.

In the 2012 G8 Summit held at Camp David, newly re-elected President Obama proposed a new plan to lift 50 million people out of poverty by 2022. In conjunction with the African Union and Grow Africa, the New Alliance for Food Security and Nutrition Initiative provided a framework for opening up African agriculture to foreign investment, infusing a crippled system with private capital and, as a result, bolstering food security in the region. This policy has, however, come under heavy fire from many environmental NGOs and local African organizations. Their fear is that this wave of private investment is just neo-colonialism in disguise.

The approach of the New Alliance is indeed different from traditional aid programs. For example, at the previous G8 Summit, countries pledged to raise a total of $22 billion for investment in agriculture and humanitarian services as part of the L’Aquila Declaration. However, the G8 nations never came close to fulfilling these pledges, which is not surprising given intensifying economic strains. As a result, initiatives that facilitate agricultural investment from private corporations have become more common. The idea is to support crop producers by investing in every stage of the agricultural system, from seed to farm to market to export. So far, local and foreign agribusinesses have pledged a total of $3.7 billion of investment in African agriculture. In return, ten participating African countries have committed to policy reforms, mostly by loosening export and tax regulations and strengthening land ownership rights.

The policy commitments vary in type and scope among countries, some of which have chosen to focus on certain categories, like land and water, over others, like taxes or finances. Tanzania, for example, was one of the first to join the Alliance in 2012 and has since reduced or lifted value-added taxes on imported farm machinery and spare parts, has secured smallholders’ and investors’ land right certificates, and is considering expediting the process of reviewing and releasing new imported seeds.

For the investing companies, the large majority of pledges are going towards sourcing and trading agricultural goods. This strategy reflects corporations’ intentions to approach smallholder farmers as “sellers of their own products,” rather than as new customers for the company’s products. Some encouraging examples emerge: The Ghanaian processing company Premium Foods has pledged to integrate farmer training programs, mechanized tools, improved inputs, and postharvest warehouse storage in order to increase sourcing from 40,000 Ghanaian smallholder farmers. Global agricultural conglomerate Cargill intends to invest in a 5-10 year public-private partnership in Cote d’Ivoire by providing risk management, infrastructure investments, and vocational training to over 100,000 Ivorian farmers to increase yields and income.

Noting that small African farmers have been excluded from negotiations, critics of the New Alliance claim that this initiative has given agribusiness a seat at the table too close to decision-makers, and that resulting policies have little to do with improving food security and nutrition for Africa’s poorest and more to do with increasing accessibility to the continent’s sought-after land resources.

For one, rules for responsible corporate conduct are being developed. Most participating countries’ frameworks include preliminary Voluntary Guidelines and the Principles for Responsible Agricultural Investment, although these will not be finalized until October 2014. Various advocacy groups such as One Campaign warn that, until then, safeguards of farmers’ rights, such as fair compensation, free, prior, and informed consent, must be implemented. Likewise, many other African groups have warned about the economic vulnerability of smallholder farmers to corporate interests once market channels open and economic exchanges begin to face outwards to foreign companies rather than inwards towards commercial farmers. It is important to note too that a substantial portion of all pledged investment is coming from small- to mid-sized African companies. But the fact that dissenters include local African organizations and networks is significant. This casts a shadow over the Alliance, and at the very least certainly raises concerns about the clarity of communication between officials and the supposed beneficiaries of this policy.

Another worrisome factor is uncertainty about future leadership of the New Alliance program itself. The U.S. initiated the New Alliance 2012 during its G8 leadership cycle, and although the U.S. still plays a major role, ownership of the New Alliance has now shifted to Great Britain. Britain has demonstrated its commitment to the program, but the possibility that future G8 presidents will not share the same enthusiasm, yet still co-chair the initiative, makes keeping parties accountable in the future a shifty task.