Cooperation with the private sector is highly valued in international development policy. The UN and the World Bank believe that private companies should be more involved in development aid. Without their resources, the UN 2030 Agenda for Sustainable Development would not be implemented in the poorest countries. Donor countries such as Switzerland also want to focus more on cooperation with private companies in the future.
However, this form of development aid is fraught with major risks, as shown by the commitment to rice cultivation by Gadco, a agricultural company in Ghana, which is now bankrupt. The case, which is scientifically documented for a dissertation, makes it clear that private companies need to be looked at very closely when they are involved in development aid and receive financial information from various development actors. receive support.
Bankruptcy after three years
In 2011, a Nigerian and a British investment banker founded the Global Agro-Development Company (Gadco). Both had no idea about agriculture, but they were looking for a new field of activity after the 2008 global financial crisis. So they decided to grow rice in the Volta region of Ghana. They were able to attract a number of development-oriented investors to this project. Among the partners and investors were the Syngenta Foundation for Sustainable Agriculture, the Alliance for a Green Revolution in Africa (AGRA), the Agricultural Development Company (AgDevCo), the Acumen Fund and the Africa Agriculture and Trade Investment Fund (Aatif).
Gadco's commitment met with a positive response internationally and also in Ghana – not least because the agricultural company promised that it would focus on sustainability, close cooperation with the population and the economic empowerment of women when growing rice.
Despite initial successes, great financial support and initial travel, Gadco was forced to file for bankruptcy three years after starting operations. In 2015, the Swiss company RMG Concept, based in Delémont, took over the company. The Swiss company had previously supplied Gadco with pesticides and fertilizers. RMG Concept, which also advertises itself on its website as a pioneer of sustainable agriculture and as a reliable partner of small farmers, has been running the large rice plantation and the associated Contract agricultural project - still under the name Gadco.
Chiefs benefit, majority run out
In Ghana, about 80 percent of the total land area is managed by local village leaders, the Chiefs. Their vast powers were largely created by the English colonial rulers and are enshrined in the Constitution. For Gadco, these chiefs were the central reference persons from the beginning, as eight months of on-the-spot research in 2014 and 2016 showed in a dissertation.
Together with the Chiefs, who mostly enjoyed a higher education, Gadco's company representatives worked out a community-private partnership agreement. The deal: The Community is providing investors with 2,000 hectares of land for rice cultivation and will in return receive a 2.5 percent stake in the company's profits. This profit should then be used exclusively for development projects in the local villages.
The on-site research, however, showed that little of the profits had arrived at the base. One young woman said, “I have no idea what they're using the money for - to this day we don't even have good drinking water in the villages.”
In the village of Bakpa Adzani, which had left the most farmland to the investors, the population was simply ignored. An elderly widow confirms: “We were not informed. We were just on the farm when the company representatives came and said they were going to plough our land. We implored them to wait at least until after the harvest.”
The search essaid revealed that the Chiefs decided on compensation on their own. So it is not surprising that mainly clan and family members of the Chiefs received compensation payments. These were the main beneficiaries of the local contract agricultural project called Fievie Connect.
Gadco also promised to strengthen women economically in the villages by growing rice. Half of all contract farmers should be women. But in 2014 and 2016, most outgrowers were well-heeled older women and men. Many of them did not go to the fields themselves, but hired poorer women at low wages. And men who were registered as contract farmers often sent their wives to the fields, which increased their already high workload.
In addition, several crop failures had negative effects, as well as the lack of transparency of the contracting Gadco. The agricultural company charged ever higher prices for fertilizers and pesticides, correspondingly shrinking the profit generated by contract farmers.
Gadco also failed to deliver on the promises made in the areas of working conditions. In 2014, only a minority of the approximately 150 employees had a contract of employment, and wages were so low that many of the people surveyed dreamed of returning to barren subsistence farming. Women were also almost exclusively employed as day laborers for the application of fertilizer, earning the equivalent of USD 3 per day.
The poorest are the losers
When transforming private and shared land into a rice monoculture, the poorest have paid the highest price, especially migrants and single women. In particular, the loss of large areas of shared land (the so-called commons), which government and company representatives like to call “unused” land, hit the poorest hardest.
A large number of fish ponds and small streams, which not only contributed greatly to the food security of the local population, but were also the only water sources for several villages, were destroyed by Gadco – as well as all trees and shrubs. The many trees scattered across the country were previously used as firewood for their own use and formed the basis of life for many poorer women who processed and sold the wood into coal. One of them reported: “We used to prune the trees to produce coal, but now they (Gadco) have cut down all the trees and we have trouble buying anything to eat at all.”
The village of Kpevikpo was completely surrounded by the rice plantation. Gadco expanded the access road to the village so that tractors could drive on it, and an irrigation canal was built right at the entrance to the village. During the rainy season, as well as every time Gadco irrigated the fields, people were effectively trapped in their village. Children could not go to school, women had to wade through chest-high water in the rainy season to go to the market. A woman from Kpevikpo: “I don't see anything positive about the company. They have only destroyed our country. We asked them if they could build a small bridge over the canal, but they refused.”
“We don't get involved”
Gadco did not feel responsible for the damage caused. Negotiations were generally conducted through the Chiefs. These crushed resistance and protests of the local population on a case-by-case basis, including the use of force. Gadco was well aware of the various problems. Former manager Adidakpo Abimbola even admitted that the Chiefs are regularly loaned a pick-up truck if there are problems with the local population. The Chiefs then armed some youths with sticks and beat the insurgents to escape.
Asked whether Gadco was aware that money spoken in the name of sustainable development would be misused for the profit interests of a few, the new manager Satyendra Kumar Singh said only: “How the local population handles the money is nothing. We have our business structures and they have theirs. We don't interfere.”