The Malaysian palm oil model is set to generate considerable development benefits throughout Africa, as stakeholders welcome greater foreign investment in the agricultural sector. The Malaysian palm oil model is recognised as a promising mechanism to foster small farmer agricultural co-operatives that have the potential to drive development and improve food security.
The UN’s African Development Forum – attended by a range of stakeholders including governments, traditional rulers and civil society – recently adopted a Consensus Statement recognising the opportunities that foreign investment brings, particularly in strengthening the agricultural sector and promoting sustainable development.
The statement includes recommendations on how best to harness the potential of Africa’s “abundant agricultural lands… to address its food security concerns and serve as a basis for a model of structural transformation to boost employment, income and livelihoods”.
African countries noted that although increased foreign investment comes with some challenges, it “offers the continent an opportunity to address its yield gap and enhance agricultural technology, infrastructure, mechanization, market access and value-adding possibilities that can play an important role in boosting productivity and output”.
The Malaysian experience has shown that the key to a strong agricultural industry is investment in processing facilities and smallholder capacity through co-operative schemes. In the 1960s the Malaysian government created the Federal Land Development Authority (FELDA), which granted loans and plots to produce palm oil to over one hundred thousand landless families, as a means to alleviate poverty.
The Malaysian smallholder co-operative experiment is widely hailed as a success, providing smallholders with livelihood, driving rural development and generating economic growth on a national level. FELDA recently listed on the public stock exchange, in what was the second largest IPO (initial public offering) of all time.
This successful model is now being adapted to an African context in order to achieve similar development goals. Former Malaysian Prime Minister Tun Dr Mahathir Mohamad recently highlighted the potential for the Malaysian model to drive needed development in countries that have struggled with failing development indicators such as Sudan.