Transcript 1. Aid, Trade and Business in African Agriculture

Technological Innovation
for African Productivity
Philipp Aerni
ETH Zurich &
Food and Agriculture Organization (FAO)
African Forum in Brussels, 26. June, 2012
Overview
1. Aid, trade and business in African Agriculture
2. Common Agricultural Policy and its side effects
3. Neocolonial Trade Patterns
4. Poverty and Agricultural Productivity
5. Enabling African development with fresh theory
6. Lessons for EPAs
7. Concluding Remarks
1. Aid, Trade and Business in African Agriculture
What are the best jobs for skilled Africans?
 Working for a multinational corporation (commodities, retailing)
 Working for an international NGO/Donor (aid, policy advocacy)
 Working for the government (more committed to foreign donors)
Most of these organizations serve non-African customers, donors
and constituencies
Problem: Heteronomous Development (not driven by Africans)
-
Africa has a great unrealized potential in the primary sector
- Africans better educated but low chance to succeed with a
formal business > complying with regulation can be as
expensive as in Europe (missing bottom-up dimension)
> Europe: part of the problem rather than part of the solution?
2. Common Agricultural Policy and its side effects
Welfare economics, a theory from the Cold War, still shapes minds
 The idea of a rational social planner leads to top-down approach
 Wrong baseline assumption: Private Sector and Technology as
part of the problem (e.g. Ag Treadmill). Agriculture is still about
food production, not just landscape management
 The missing historical context: We grew wealthy and learned how
to address problems thanks to university-private sector links
The problem of ecological fallacy
Transfer of CAP idea to developing countries as foreign aid
 Agricultural policy as prescriptive environmental regulation
> top-down paternalism that stifles innovation/sustainability
 Private Standards set by European Retailers: One size fits all
approach that makes retailers de-facto law-makers and gatekeepers in Africa
3. Neocolonial trade patterns
Most trade with Africa is Intra-firm trade of European companies
 E.g. Glencore in Zambia (complying with CSR but is it sustainable?)
 Many African governments tend to accept bad deals if some if it
helps to strenghten the ruling party’s power
 Aid agencies: negative selection (aiming to support to less able
rather than the more able) and foster dishonesty (evalution
reports done by locals often as a copy-paste exercise)
 European Partnership Agreements (EPAs): Trade between
unequals leads to unequal trade
• Trade liberalization makes sense as a means to an end, not an
end it itself > China knew that (local content requirements)
• CAP for Africa may cause more problems than solutions (child
labor) > small-scale farming is not a freely chosen life-style
 Ag Productivity increases are necessary to fight poverty
4. Poverty and agricultural productivity
High productivity in Asia was key in
the fight against poverty (Poverty
rate in China decreased from 30%
to 3% over the past 40 years)
 Once there is a surplus of food,
capital accumulates that can be
invested in other sectors
 Structural change eventually
creates an entrepreneurial middle
class that is able to articulate its
interests in politics. It starts but
does not end with fertilizer
 Average yield in African agriculture: 1 tons/hectare
 Average yield in Asia: 4 tons/he > China: TVE supported with
government input (irrigation, improved seed, crop protection,
extension services, fertilizer
A fertilizer tale
Sub-Saharan Africa
Africa
Eurasia
South Africa
8
21
Developing Markets
Developed Markets
Transitional Markets
World
25
47
Central America
Oceania
West Asia
North America
North Africa
Latin America
World
47
49
75
89
94
100
107
South America
117
Central Europe
117
South Asia
Western Europe
130
134
Asia
East Asia
Average NPK use rates (kg ha-1) by fertilizer markets in 2008/09
source: IFDC derived from FAO data
182
255
5. Enabling African agricultural development
with fresh theory
Shifting from Robert Malthus (population growth as a problem)
to Esther Boserup (population growth > induced innovation as
the driver of sustainable change in agriculture (tenure, labor
market, gender reform, social capital, empowerment to
increased technology adoption and adaption > She proved it
empirically
Shifting from welfare economics to new growth theory (Paul
Romer) > agriculture needs to become better integrated into
the global knowledge economy > catch-up growth is easier and
faster than ever before in history, if you have the right
institutions (closing the technology gap but also learning from
mistakes) > successful economies today practice it already
The Holistic Approach (E. Boserup)
Innovation
Population Growth
Institutions
Overcoming trade-offs (provisioning versus supporting services)
> innovation, creation of new markets, connecting urban/rural dev
6. Lessons to learn for EPAs
Preferential Trade may not contribute to development because
a) it benefits mostly the incumbents in commodities trade
b) cheap labor and market access privileges > bad for innovation
c) political lobbying of incumbents made new entries difficult
d) colonial heritage kept universities away from local private sector
e) growing influence of European stakeholders on politics/business
EPAs should not just be about diversification of ag-production but
a) Matching innovative entrepreneurs with European mentors
b) Support for innovation hubs/business venture at universities
c) Creating special economic zones (charter cities)
7. Concluding remarks
We need to move away from the paternalist approach practiced
in aid, trade and regulation with Africa
The need for a paradigm shift in sustainable development: An
idea that is sustainable in Europe must not necessarily be
sustainable in Africa. Africa needs to start with productivity
increases in agriculture in order to make its population growth an
asset rather than a burden to the environment
This would also require more awareness and perception change in
Europe
 Introducing the history of technological change in schools and
social science departments
 Move from old economics to new economics
 Save agriculture departments from environmental takeover