Edible oil: Private sector role tied to competitive rules, first

12May 2021
The Guardian
Edible oil: Private sector role tied to competitive rules, first

​​​​​​​AFTER more than two years of grappling with the problem, and in the wake of recent policy directions from President Samia Suluhu Hassan, what to do about the shortage or price rises in the edible oil subsector is becoming a vexing problem.

As with other areas, there are usually two approaches to solving the problem, one being the government spending large sums of money for state institutions to work in concert to end the problem. The other is to relax rules or use a series of incentives such thatl there is a goodo chance of private sector investment in the area, and the signal issued is that the twoo are mixed.

Problems relating to edible oil often inter-space with those relating to sugar, that at this point it is sugar that is in shortage and similar programmes come up, which involve state research and extension agencies, and private investors in farming and processing. There are intricate problems embedded with regulatory paths to gain for various stakeholders, for instance the issue of semi-processed edible oil imports, or the bulk importation and local repackaging of sugar by local planters who are essentially parastatal agencies and thus acting as government in that aspect, more or less. The issue is whether these roles infuse crises.

When therefore the government uses the rostrum of Parliament to ask or ‘challenge’ the private sector to venture into cultivation of edible oil-producing crops and processing to end the perennial shortage of the produce, a simple question rises. Who gains in the current situation and who loses, and what sort of levers  can be employed to change the mechanism to suit those who would gain by investing instead of importing this or that type of oil, or repackaging sugar? In both situations it would appear that removing privileges is the point of departure, and here it must be said state agencies hinder reforms as they can’t cut margins.

That is why the deputy minister for Agriculture, Hussein Bashe, needs to focus on altering institutional prerogatives so that investment becomes feasible, for instance foreign companies purchasing local firms and then producing for the wider regional market. This was one of the benefits espoused in the recent agreements in Nairobi during the president’s state visit, while blocking ability to obtain credit on the basis of land as collateral, and thus local goodwill, hampers ability to invest. It is unclear how far current methods focusing on developing improved seeds and delivering them to the regions can work, rapidly.

In the next financial year the government will inject 10.6bn/- into production of improved seeds by improving the work and capacity of Agricultural Seeds Agency (ASA) all over the country, on the basis of affirmations by the deputy minister. It is unclear whether the seeds aspect as well as the roles thereof can be liberalized, for we have for instance depended on buying maize seeds from Kenya and they were importing maize from us, so there is  room for widening the sources of seeds. Similarly there is no need to rely on take up of seeds and widening of acreage at the district level as impediments that have so far prevented that to happen haven’t been addressed, and the quickest way, as it was during the second phase government, is to liberalise markets. When investors are there and producing, a few things are rectified.

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