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Evolution: Economic and Agriculture Development in Sub-Saharan Africa

by 5m Editor
26 July 2011, at 12:00am

The five most important policy categories for economic development in sub-Saharan Africa are identified in this report by Dr Giovanni Gasperoni and Tricia Beal of Novus International. They focus particularly on empowering agriculture best practices and adaptation for rain-fed agriculture and climate change.

Agriculture is the backbone of overall growth for the majority of countries in sub-Saharan Africa (SSA) and is essential for poverty reduction and food security in the future, according to Dr Gasperoni and Ms Beal. It is critical for countries in SSA to embrace the potential of agriculture as a means to grow their economies, to become self-sufficient and to diminish the threat of food insecurity. This potential will be limited if agricultural policies that have been crafted by and for mature economies are adopted.

SSA is classified, in economic terms, as a developing region of the world. A strong agriculture industry for SSA will not materialise without concerted and purposeful policy action that is tailored to the current state of economic and infrastructure development. Sound policy should be based on the true needs of a particular country or region of the world – designed to align with and support that specific economic development.

Many of the agricultural policies under consideration in Africa today are based on the regulations of developed and industrialised countries. These may be appropriate for SSA after 10 to 15 years of positive growth. These policies do not fully consider the technological tools and infrastructure that is needed for Africa to grow in the near to mid-term.

SSA Today

Africa is the only continent where poverty has increased in absolute and relative terms (Collier, Bottom Billion, 2007). One billion people live in Africa and 30 per cent suffer from chronic hunger. In SSA, 38 per cent of children under 5 are permanently stunted as a result of malnutrition (FAO, 2009).

In SSA, lack of economic growth, based on a range of factors, has made this region more dependent on food imports, which has made it much more vulnerable to the shock of inflating food prices. The failure to grow economically has set back the demographic transition that significantly lowered population growth rates in other parts of the world. Low growth has aggravated the debt crisis and reduced domestic resources for infrastructure, agricultural development, health, education and nutrition.

Business climates in Africa still rank low in international comparisons. Transport costs are among the highest in the world. Electricity supplies are unreliable and costly. Financial sectors are underdeveloped, reaching only a few clients with low saving rates.

Private input and output markets remain under-developed and farmers continue to be severely penalised by inadequate competition in these markets. Farmers are also subjected to higher input prices and lower farm gate prices than in other regions of the world. Finally, the resulting lack of infrastructure has made an agricultural adaptation to evident climatic changes impossible (Binswanger-Mkhize, 2009).

Policy Evolution: Economic Development and Agriculture Industries

All countries of the world are in varying states of economic development. In some regions, such as Europe and the United States, the state of agricultural evolution has spanned the spectrum from subsistence farming to a mature state with near-zero food insecurity. In these mature environments consumer behaviour is driven by choice and they demand highly sophisticated, expensive food products.

In Europe, the agriculture industry and policies grew over time and as the region developed. As in other parts of the world that have made the transition from developing to developed economies, the pace of growth in Europe's agricultural sector depended on specific industrial, political and market conditions.

Europe is similar to Africa, in that the region is a conglomerate of many nations and these nations continue to progress at differing levels of economic development. From this perspective, history has proven that as a region develops economically, the most important advances in agricultural production and development occur first at the national level (Lains and Pinilla, Agriculture and Economic Development in Europe Since 1870, 2009).

As a region develops economically, the relative importance of agriculture as an industry tends to decline. The primary reason for this was shown by the 19th century German statistician, Ernst Engel, who discovered that as incomes increase, the proportion of income spent on food declines. It follows from this that, as incomes increase, a smaller fraction of the total resources of society is required to produce the amount of food demanded by the population. This occurs through industrialisation and consolidation of the agriculture industry. The graph below demonstrates this evolution in the United States, Germany and the United Kingdom between the years 1870–1990. As a point of reference, 65 to 80 per cent of the labour force in SSA is currently employed in agriculture (International Food Policy Research Institute).


Sectoral shares of employment in the USA, the UK and Germany, 1870-1990
(Derived from Broadberry (1997b, 1997c, 1998)

Agricultural policies also evolve as economies develop and the developmental needs of a country or region evolve. We have witnessed this very clearly with the European Union. Subsistence farming was still present across many parts of Europe up until World War I. The Common Agricultural Policy (CAP) was established as part of the Treaty of Rome in 1957, which established the Common Market. In the beginning of the Common Market, the original six member states maintained strong individual policies in their agricultural sectors. These policies were particularly evident in regard to what was produced, the pricing of goods and how farming was organised.

Over time, the member states wanted to advance towards the benefits of free trade. The only way to achieve this relationship was to begin to harmonise their policies. In 1962, three major principles were established as underlying elements of the CAP: market unity, community preference and financial solidarity. Since then, the CAP has been a central element in the European institutional system. In the beginning, the CAP had a strong focus on traditional farm subsidies and on increasing production to meet the demands for food.

In the early 1990s, the CAP placed a new emphasis on environmentally sound farming. Farmers had to look more to the market place, while receiving direct income aid, and to respond to the public's changing priorities. Additionally, a new rural development policy encouraged many initiatives which helped farmers to restructure their farms, to diversify and to improve their product marketing.

Current CAP policies are demand driven. They take consumers' and taxpayers' concerns, who are wealthy by world standards, fully into account. Today, farmers still receive direct income payments to maintain income stability but those who fail to meet the production standard policies of CAP face reductions in their direct payments. CAP policies in the new millennium are very much geared towards the consumer-driven demands of a wealthy economy: environment, food safety, phyto-sanitary and animal welfare standards.

Specific Policy for Regional Needs

In Europe, the status of economies varies among nations but these are largely growing at a strong level or are mature. European farmers have benefited from decades of support that has provided subsidy and established markets, transportation and production infrastructures. European farmers are in a better position to adopt and comply with the mandated policies which restrict their operational practices.

Developing countries have different agricultural development needs and policy requirements from mature countries. In developing countries and regions, particularly SSA, there is generally a need to establish core infrastructure, educate industry stakeholders and integrate best technologies with indigenous practices. Consumers in developing economies, in many cases, are concerned about having the ability to purchase enough food to feed themselves and their families.

The policies of mature countries are crafted against and relevant for an agriculture industry that is well-established, well-tooled and highly functioning. These countries have already moved through and past the state of development of SSA. Adopting their policies can have a 'putting the cart before the horse' effect, with the danger of hindering development of the agriculture industry and the region.

Conclusions

The most important point of this paper, say the report's authors, is that investments to create policy should be focused on the issues that will make the difference for a specific country or region as they relate to the evolution of economic development. It is critical for countries in SSA to embrace the potential of agriculture as a means to grow their economies, to become self-sufficient and to diminish the threat of food insecurity. This potential will be limited if agricultural policies are adopted which have been crafted by and for mature economies.

The authors identify five important policy categories for economic development in SSA.

  1. Import policy
    African farmers still face the worst agricultural incentives in the world. Though there have been improvements against taxation, policy reform can better position SSA farmers to compete and prosper. Through import substitution, African farmers have the opportunity to re-conquer markets lost to imports in the previous 45 years.

  2. Support and development of small shareholder farmers
    Empowering small shareholder farmers to move their businesses and communities ahead will require the policy designed to develop well structured institutions that can address the primary needs of this sector including: education, infrastructure, financing and resource management.

  3. Agriculture education and R&D
    Africa in general invests significantly less in agriculture education than other regions of the world. Currently, SSA's agricultural research institutes and education extension services have very little capacity to engage in new scientific research or to push existing technologies to the farm level. This can only be addressed through policy which supports effective technology transfer/education programs which lead to technology utilisation.

  4. Empowering agriculture best practices
    SSA should follow the lead of the many countries with successful agriculture industries and infrastructure models that have moved through the regions existing state of development and developed the necessary technologies along the way. Adoption of simple, yet fundamental best practices by farmers will reap dramatic returns on investment.

  5. Adaptation for rain-fed agriculture and climate change
    Adaptation of practices and infrastructure to cope with ongoing climate change and adverse weather events is imperative for sustained agricultural growth in SSA. Biotechnology related to seed technology and access to arable land can both play a critical role in the adaptation process.

Further Reading

- You can view the full report by clicking here.


July 2011