Development Benchmarks for African Agriculture

Development Benchmarks for African Agriculture
A local farmer harvests sorghum produced from seeds donated by the Food and Agriculture Organization (FAO) through the "Improving Seeds" project.
Fostering agricultural growth is commonly seen as a core strategy for overall development in Africa, particularly for reducing poverty, because the majority of Africa’s poor are largely dependent on farming. Therefore, different African governments have embarked on developing and implementing agriculture-led development strategies. Yet agricultural productivity and growth lags behind overall economic performance in Africa, and the continent’s volatile agricultural performance has fallen further behind the agricultural performance of other developing regions of the world. A little over a decade ago, in July 2003, at the African Union (AU) summit held in Maputo, Mozambique, African heads of state reaffirmed the agriculture-led development agenda for the continent and launched the Comprehensive Africa Agriculture Development Program (CAADP). In what came to be known as the Maputo Declaration, they set two overarching targets: first, to achieve an average agricultural growth rate of 6 percent each year; and second, to spend at least 10 percent of their national budgets in agriculture each year. This was followed in subsequent years by complementary declarations. For example, at the AU Assembly in Abuja in June 2006, African heads of state agreed in the Abuja Declaration on Fertilizer for African Green Revolution to increase the level of fertilizer use from an average of 8 kilograms per hectare (kg/ha) to at least 50 kg/ha. Then at the 2007 AU Assembly in Addis Ababa, they agreed to allocate at least 1 percent of gross domestic product (GDP) to research and development (R&D), a target that was later interpreted to mean allocating 1 percent of agricultural GDP to agricultural R&D. These agreements seem like a good recipe for successful African agriculture-led development. Some fundamental questions that arise, and which this paper seeks to address, are how Africa is performing against these commitments and what the policy implications are for honoring the agreements. Brief History of African Agriculture During the periods that Africa was under colonial rule, agriculture was the most impor-tant economic activity, and farmers were required or enticed by the colonial administrations to grow cash crops for export primarily to provide raw materials for production in industrialized countries, particularly in Europe. The dominant cash crops included cotton, grapes and olives in North Africa; cocoa, coffee, palm oil, rubber, groundnuts and cotton in Central and West Africa; sisal, tea and coffee in East Africa; and sisal, sugarcane and tobacco in Southern Africa. Food crops were not promoted, and farmers grew them for subsistence only. Colonial administrations put the bulk of their investments in Africa into a transportation system to move cash crops from the interior to the coastal ports for export, and to move imported manufactured goods into the interior. Investments in agriculture—including in farm support, research, extension and marketing infrastructure—were directed to these cash crops. Basically, the African economy during those times was oriented toward developing an agriculture-exporting economy, evidenced by the fact that today many African countries are the world’s top producers in several of the above-mentioned crops. This mode of agricultural production and trade continued after African countries gained independence from colonial rule, which occurred mostly in the 1950s and 1960s. Investments in agriculture were concentrated on promoting the same cash crops, which were now the main sources of foreign exchange for African governments. But the foreign exchange that was invested in the African economy was largely devoted to developing the urban sector and building industries there. Agriculture continued to be viewed as a low-productivity supplier of food, raw materials and surplus labor to a modern and more urbanized industrialization process. To ensure low food prices in urban areas, food price controls as well as government-run farms and food marketing cooperatives were established. Neglect of food crops and the resulting decline in food production and rise in food prices, in addition to leadership problems, economic mismanagement and corruption, fueled the political turmoil and internal conflicts that swept the continent in the 1970s and 1980s. This period is associated with the start of Africa’s economic downturn. The downturn ushered in the structural adjustment programs (SAPs) of the International Monetary Fund (IMF) and the World Bank. The SAPs constituted conditions that African or other developing countries would have to meet to receive new international development assistance, and they involved reducing government expenditures, dismantling government-run or government-led industries, ending commodity and input subsidies, removing price controls, devaluing currencies and stimulating private sector investments to fill the gaps left by disbanded government-run agencies. The impact of the SAPs in Africa is still debated, but the popular view is that their impact was negative, especially on poverty. Because the SAPs promoted economic output based on direct export and resource extraction, they also were a recipe for ignoring the rural sector, smallholder farmers and food crops. The austerity measures mandated by SAPs led to a drastic reduction in government spending in agriculture in general, and an erosion in investments in national agricultural research and extension systems in particular. Because private sector investments did not materialize as expected, new problems related to market failures surfaced. Fortunately, a combination of the spread of international agricultural research to Africa, the success of the Green Revolution in Asia, and adoption of high-yield technologies and agricultural area expansion helped trigger the recovery of agricultural productivity and growth in Africa in the mid-1980s. Still, African agricultural performance was very low compared to the levels achieved in other developing regions of the world. The start of the new millennium marked the beginning of the poverty reduction strategy papers (PRSPs), which are documents required by the IMF and the World Bank for countries requiring debt relief and seeking new loans. While it has been argued that the PRSPs are only a continuation of the SAPs, the PRSPs required participatory processes in strategic planning, public-private partnership and other principles to ensure that the benefits of growth would be widely distributed. Because a majority of Africa’s poor people are located in rural areas and dependent on farming, the PRSPs were expected to favor agricultural and rural development more than prior development assistance efforts had. Also, the success of Asia’s Green Revolution helped bring about a reassessment of agriculture’s role in overall development and particularly in poverty reduction. Not surprisingly, for example, agricultural input and farm support subsidies that were not allowed under the SAPs returned, particularly following the high food and input prices crisis of the mid-2000s. This facilitated increased adoption of Green Revolution technologies in Africa and helped raise agricultural productivity to or beyond levels achieved prior to the decline of the 1970s, although current levels are still much lower than the levels achieved in other developing regions of the world. Comprehensive Africa Agriculture Development Programme (CAADP) The CAADP, adopted in 2003, shares many of the principles introduced in the PRSPs, including poverty-focused growth, participatory processes in strategic planning and implementation, country ownership, public-private partnership, joint sector reviews and mutual accountability. The main difference between CAADP and prior development strategies on the continent, particularly with regard to agriculture’s role in overall development, is that CAADP seeks to make agriculture the engine that will propel African countries to a higher path of economic growth and development. Furthermore, CAADP deliberately focuses investment into four mutually reinforcing pillars—land and water management, market access, food security and agricultural R&D—and cross-cutting enabling factors, including institutional capacity strengthening. In addition to the specific targets at the national level, such as achieving 6 percent agricultural growth and spending 10 percent of the national budget on agriculture, CAADP outlines specific policies and programs to be implemented, and various processes at national, regional and continental levels have been put in place to facilitate implementation, monitor progress and promote learning. Major Achievements in Processes CAADP has achieved several things. Most importantly, it has raised the profile of agriculture in politics, contributed to more specific, purposeful and incentive-oriented agricultural policies and promoted greater participation of multiple state and nonstate stakeholders in agricultural policy dialogue and strategy development. Some of the specific tools, mechanisms and processes that have contributed to these achievements include: the annual CAADP Partnership Platform meetings that bring different stakeholders together to review progress and plan for the future; the four pillar framework documents to guide adaptation of the CAADP principles and targets into national and regional policymaking; the Regional Strategic Knowledge Support System to provide analyses and knowledge products to CAADP implementation; a monitoring and evaluation framework and a mutual accountability framework to track progress in implementation; and the CAADP Multi-Donor Trust Fund to finance CAADP processes at different levels. By the end of 2013, 37 African countries had signed a CAADP country compact and a majority of the 37 countries had subsequently prepared a national agricultural investment plan (NAIP). The CAADP compact is a high-level agreement among all relevant stakeholders regarding the national priorities, strategies and programs in the agricultural sector for achieving national development objectives, including actions and commitments of the different stakeholders toward implementation. A majority of the compacts and NAIPs are based on economy-wide models to identify subsector growth options for achieving the 6 percent agricultural growth rate target and to quantify the aggregate public agricultural resources required for pursuing the different growth paths. Progress in Meeting Commitments and Targets CAADP faces several challenges. For example, when it was launched in 2003, the heads of state set a five-year timeline for implementation. By 2008, however, only Rwanda had signed a CAADP compact. The heads of state then renewed their commitments at the AU Assembly in July 2009 in Sirte, Libya. Subsequently, 12 more countries signed their compacts in 2009, nine in 2010, seven in 2011, one in 2012 and seven in 2013—bringing the total to 37 countries by the end of November 2013. This delayed action in getting countries on board reflects inherent problems of political, institutional and administrative barriers across national and geopolitical boundaries. Performance against the 6 percent agricultural growth rate target. Since 2003 when CAADP was launched, overall agricultural growth in Africa has been cyclical. Compared to the average 5.6 percent achieved in 2003, agricultural growth peaked every three years, in 2006 (5.7 percent), 2009 (6.1 percent) and 2012 (5.6 percent). There are differences in performance across countries by income status. The middle-income group shows a similar intertemporal pattern as the one observed for Africa as a whole, and it surpassed the CAADP’s 6 percent target in 2003, 2006 and 2009. For the low-income group of countries, there was a steady decline in agricultural growth from 2005 to 2009, after which growth almost reached the CAADP target in 2010 and 2012, with rates of 5.8 percent in both years. Regarding performance at the country level, only nine countries managed to surpass the CAADP’s 6 percent agricultural growth target. These include: Mali (average of 6.4 percent per year in 2003-2012), Mozambique (7.4 percent), Sierra Leone (7.5 percent) and Ethiopia (8.7 percent) among the low-income countries; and Algeria (6.0 percent), Nigeria (6.7 percent, Botswana (7.2 percent), Equatorial Guinea (7.5 percent) and Angola (14.6 percent) for the middle-income countries. For many countries, the high agricultural growth rates reflect recovery of agriculture to pre-conflict levels or to levels achieved prior to the downturn in the 1970s and 1980s. Performance against the 10 percent agriculture expenditure target. With regard to the 10 percent agriculture expenditure target, the share achieved for Africa as a whole barely surpassed 4 percent each year since 2003. Only six countries—Burkina Faso, Ethiopia, Malawi, Mali, Niger and Senegal—managed to surpass the 10 percent target on average each year from 2003 to 2010. Although the low-income group of countries together spend a higher share of total expenditure on agriculture (an average of 7.5 percent per year) compared to the middle-income countries (which spend an average of 3.3 percent per year), the low-income group only accounts for about a quarter of Africa’s total agriculture expenditure. Performance against the 1 percent agricultural R&D spending intensity target. Regarding agriculture R&D spending, only four middle-income countries—Namibia, Mauritius, South Africa and Botswana—surpassed the 1 percent spending intensity target on average each year in 2003-2008. Whereas South Africa accounts for about 6 percent of Africa’s total agriculture value added, Namibia, Mauritius and Botswana together account for only 1.2 percent of Africa’s total agriculture value added. This means that the 1 percent agriculture R&D spending intensity target is far from being achieved for the continent as a whole. Actually, for both low and middle income groups of countries, the average achievement has been 0.5 percent on average each year in 2003-2008. Performance against the 50 kg/ha per acre fertilizer consumption target. The fertilizer application rate has barely changed since 2003, and is estimated to have been about 22 kg/ha of arable land on average per year in 2003-2010 for Africa as a whole. Whereas the total amount of Africa’s arable land is about equally distributed between the low-income (47 percent) and middle-income (53 percent) groups, the low-income group accounted for only 19 percent of Africa’s total consumption of fertilizers. The average application rate for the low-income countries is 9 kg/ha of arable land compared to 32 kg/ha for the middle-income group of countries. Only Morocco (with an average application rate of 53 kg/ha per year in 2003-2010), South Africa (56 kg/ha), Mauritius (266 kg/ha) and Egypt (584 kg/ha) surpassed the 50 kg/ha target. More than one-half of the 37 countries analyzed in this case achieved less than 10 kg/ha. Financing CAADP and African Agricultural Development The little progress made in meeting the commitments is concerning because it is not clear how the stated agricultural growth objectives can be achieved if the commitments are not met. Bridging the gaps discussed above has enormous implications for public financing and budgetary reallocation. For example, results of the economic modeling used in CAADP planning indicate that although it is possible for many African countries to reach the 6 percent annual average agricultural growth rate target, doing so will require substantial additional investments to stimulate the necessary acceleration in growth in the key agricultural subsectors. In most cases however, the additional required agricultural investments are in excess of the 10 percent of the total expenditure target. To raise the fertilizer consumption rate to 50 kg/ha across the continent, for example, it would cost about $1.6 billion (in constant 2005 dollars) per year, which is equivalent to 14 percent of the annual government agriculture expenditure. About 70 percent of that cost would be generated by the low-income countries because of the larger fertilizer consumption gap in those countries. When the Abuja Declaration on Fertilizer for African Green Revolution was announced, for example, the Africa Fertilizer Financing Mechanism (AFFM) was established to promote greater fertilizer use. Although the agreement for AFFM, which is managed by the African Development Bank, was signed in December 2007, the fund is not yet operational because of a shortfall of $4.5 million. Inadequate funding to finance the CAADP NAIPs has also been an issue, with selected country case studies revealing a funding gap of at least 30 percent of the total NAIP budget in Benin, Gambia, Ghana, Malawi, Niger, Malawi, Rwanda, Senegal and Togo. CAADP Taking On Emerging Issues Another challenge facing CAADP is that of issues and initiatives that emerged after the launch of CAADP in 2003. A positive side to this situation is that emerging initiatives directed at Africa—such as the G-20’s Global Agriculture and Food Security Program and the G-8’s L’Aquila Food Security Initiative and New Alliance for Food Security and Nutrition—state that any African country to be supported under these initiatives must be CAADP compliant. However, it is often not clear how much the initiatives represent additional or complementary resources and capacities to the status quo. The emphasis on food security in these new initiatives, for example, may be causing resources to be redirected away from direct support to agricultural production toward more indirect measures such as supporting the design of incentive policies, promoting rural development more broadly and improving social and governance structures. Conclusions and Implications for Meeting CAADP Commitments With African agriculture on the rebound from the downturn that largely occurred in the late 1970s to the mid-1980s, CAADP seems to present a laudable agriculture-led development strategy to help African countries reach a higher path of economic growth, reduce mass poverty and increase food and nutrition security. However, African governments and their development partners and other stakeholders in the agricultural sector must put more effort to delivering on their commitments. These have enormous financial implications, and so the sources of financing will be critical. Because many African governments already depend heavily on external sources of funding, raising more external funds may not be the most strategic response, as external funds tend to appreciate the real foreign exchange rate and in turn reduce the competitiveness of the tradable sectors and economic growth. Therefore, reprioritizing the entirety of government expenditures, both across sectors and within sectors, will be important. There is a need to make better-targeted transfers and to undertake the type of investments that bring about substantial economic growth in the continent. African governments also need to leverage investments from the private sector and to secure larger grants and low-interest loans that integrate well with Africa’s own development initiatives. In sum, African countries have developed a coherent strategy for increasing agricultural development to propel overall economic development throughout the continent, but unless it is implemented more effectively, growth will continue to be inconsistent and uneven and reducing poverty and food and nutrition insecurity will be elusive. Editor’s note: A version of this article including citations and references is available upon request. Samuel Benin is a research fellow in the Development Strategy and Governance Division at the International Food Policy Research Institute, Washington D.C. His research interests focus on policy, institutional and technology strategies for agricultural and rural development in Africa. He is the author and editor of numerous articles, reports and books on the topic, including “Public Expenditures for Agricultural and Rural Development in Africa” (co-edited with T. Moques, Routledge 2012), and “Complying the Maputo Declaration Target" (co-authored with B. Yu; ReSAKSS Annual Trends and Outlook Report 2012, International Food Policy Research Institute).

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