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Although Kenya's GDP is amongst the lowest in the world, its tea industry is booming – accounting for 21 percent of the nation's experts and earning more than 1.2 billion dollars a year. The mystery behind niche industry successes in a depressed macro-economic climate is the focus of a new working paper co-authored by Harvard Kennedy School (HKS) Lecturer Ishac Diwan.
In "Looking like an Industry: Supporting Commercial Agriculture in Africa," Diwan and co-authors Olivier Gaddah and Rosie Osire examine the factors that influence growth in certain agricultural sectors independent of a country's aggregate economic trends. "The question we ask then is: how can we help more sectors in agriculture become more like an 'industry' and less like a 'country'?," the authors write.
Through both empirical analysis and case studies, the researchers find that while there are several examples of thriving agricultural enterprises on the continent – like the tea business in Kenya, the Burkina Cotton Board, and the Potato Growers of the Fouta Djallon in Guinea – many others stumble and fail, reflective of their national economic fortunes.
"Agriculture tends to be like a 'country' in the sense that many parts have to work for it to succeed. This is the bad news," Diwan writes. "The good news is that some particular crops behave like industry, in the sense that they can grow and develop as a successful enclave."
Diwan says that public policy has an important role to play in helping unleash Africa's agricultural potential.
"Even in instances where the private sector has succeeded in commercializing agriculture, the government has played a catalytic role. It is therefore important that governments continue thinking of new kinds of public private partnerships that can expand the set of possibilities in agriculture in an innovative yet feasible manner," he writes.
Successful strategies walk "on two legs," Diwan writes. "One – long term to slowly improve the overall environment for agriculture, and one – short term, targeted, to get business models that work to take hold for particular crops – these would tend to be public private initiatives."
Ishac Diwan is a lecturer in public policy and the director for Africa and the Middle East at the growth lab of the Center for International Development. He lived in Addis Abeba (2002-07) and Accra (2007-11), as the World Bank's Country Director for Ethiopia and Sudan first, and then for Ghana, Liberia, Sierra Leone, Burkina Faso, and Guinea. Diwan led several ambitious initiatives, such as Ethiopias Productive Safety Net, Ethiopias Protection of Basic Services Program, and in West Africa, initiatives to support commercial agriculture, natural resources development, and jobs for the youth.
Ishac Diwan, lecturer in public policy
"Agriculture tends to be like a 'country' in the sense that many parts have to work for it to succeed."