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RECENT PROGRESS IN THE ROLE OF AGRICULTURAL DEVELOPMENT IN REDUCING POVERTY IN AFRICA AND PERSPECTIVES ON THE WAY FORWARD ALEJANDRO NIN PRATT Research Fellow OUSMANE BADIANE Africa Coordinator International Food Policy Research Institute Tuesday, July 21, 2015 OUTLINE • Why is agriculture important for Africa? • Agriculture’s past performance and lessons to be learned • Success stories behind recent changes • The way forward SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 2 IMPORTANCE OF AGRICULTURE SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 3 AGRICULTURAL GROWTH AND POVERTY REDUCTION IN AFRICA • Agriculture contributes with a significant share of total production in Africa’s economy • Agricultural growth drives growth in other sectors of the economy • Agriculture plays central role in African exports • Most poverty still concentrated in rural areas • Agricultural growth drives overall income growth in rural areas • Implications: • Agriculture significantly contributes to economic growth • Reduces overall poverty, hunger, and malnutrition more than any other sector SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 4 EFFECTS OF AGRICULTURAL GROWTH ON OVERALL RURAL INCOMES 3 2.5 2 1.5 1 0.5 0 Niger Senegal Zambia Burkina Faso Incremental income from 1$ additional revenue from agricultural tradables SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE : O. Badiane, based on Delgado et al (1988) Page 5 AGRICULTURAL TRADE AND ECONOMIC GROWTH AGR. EXPORT AND DOMESTIC GROWTH AGR. EXPORT AND DOMESTIC GROWTH EXPORT GROWTH DOMESTIC GROWTH 1% Growth 0.04% To 1.83% SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE : O. Badiane Page 6 AGRICULTURAL GROWTH AND ECONOMIC GROWTH AGR. GROWTH AND INDUSTRIAL GROWTH AGRIC. GROWTH INDUST. GROWTH 1% Growth 1% To 1.32% SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE : O. Badiane Page 7 Congo, DR Ethiopia Tanzania Burundi Rwanda Madagascar $400 Uganda Kenya Per Capita Ag GDP (US$/person), 2002 LOW AGRICULTURAL INCOMES ARE GENERALLY CORRELATED WITH HIGH POVERTY RATES $350 $300 R2 = 70% $250 $200 $150 $100 $50 $0 20 40 60 80 100 National Poverty Rates (various years) SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 8 GHANA: AGRICULTURAL-LED GROWTH IS MORE PRO-POOR National poverty rate (with GDP growth rate of 5.7%) 35 33 31 29 27 25 23 21 19 17 2003 2005 2007 2009 Ag-led grow th SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 2011 2013 2015 Nonag-led grow th Page 9 FASTER AGRICULTURAL GROWTH IS KEY TO POVERTY REDUCTION IN AFRICA • The most effective way to reduce poverty is to raise the productivity of resources that poor people depend on for their livelihood • Agricultural land • Agricultural labor • Off-farm rural labor SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 10 AGRICULTURE’S PAST PERFORMANCE SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 11 TRENDS IN AGRICULTURAL AND GDP GROWTH Agriculture, value added (annual % grow th) Percent (%) GDP grow th (annual %) 9 6 3 SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE : M. Johnson 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 -3 1980 0 Page 12 AGRICULTURAL GROWTH IS SPREADING SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE : Badiane and Ulimwengu Page 13 SO IS ECONOMIC GROWTH SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE : Badiane and Ulimwengu Page 14 TRENDS IN AGRICULTURAL PRODUCTIVITY 2.5 Value of Ag Inputs TFP 1.5 1.0 SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 2003 2000 1997 1994 1991 1988 1985 1982 1979 1976 1973 0.5 1970 Index (1970=1) 2.0 Page 15 SUCCESS STORIES EXPLAINING CHANGE SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 16 POLICY CHANGES Agriculture, value added (annual % grow th) GDP grow th (annual %) Percent (%) 9 6 3 2006 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 -3 1980 0 2.5 Value of Ag Inputs 2.0 Index (1970=1) • “One of the most fundamental shifts in the development strategy for Africa was to view agriculture not as a backward sector but as the engine of growth, an important source of export revenues and the primary means to reduce poverty.” (Kherallah et al. ,2000) TFP 1.5 1.0 2003 2000 1997 1994 1991 1988 1985 1982 1979 1976 1973 1970 0.5 1996-2005 SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 17 AGRICULTURAL TRADE AND POLICY CHANGES Exports (X) Imports (M ) 14,000 Trade (X+M ) Period of policy change 12,000 Mill. $ 10,000 8,000 6,000 4,000 2,000 0 1968 1973 1978 1983 SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 1988 1993 1998 2003 Page 18 SUCCESS IN AGRICULTURE (I) • CASSAVA (Nigeria, Ghana and Southern Africa) • New varieties and modern disease fighting research (Nigeria and Ghana and Southern Africa). • MAIZE (West Africa) • Improved yield and nutritional content of openpollinating varieties instead of hybrids. SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 19 SUCCESS IN AGRICULTURE (II) • COTTON (Francophone West Africa) • Successful organization and coordination of the production chain with technical innovations (high yield varieties, fertilizer use, access to equipments) • RICE (West Africa) Burkina Faso cotton farmers (Brahima Ouedraogo/IRIN) • The Africa Rice Center (WARDA) produced their first inter-specific hybrids combining hardiness and wed suppression of African species with the high yields of the Asian varieties SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 20 SUCCESS IN AGRICULTURE (III) • SMALLHOLDER DAIRYING (Kenya) • Decontrol of milk pricing in 1992 + available technology (crossbred cows) spurred a surge in production and commercialization of milk in informal markets. credit: Smallholder Dairy Project • CUT FLOWER EXPORTS (Kenya) • Increased from $13 million in 1970 to $155 million in 1999 SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 21 INSTITUTIONAL CHANGES • NEW PARTNERSHIP FOR AFRICA’S DEVELOPMENT (NEPAD) • Address challenges facing African continent • COMPREHENSIVE AFRICA AGRICULTURAL DEVELOPMENT PROGRAM (CAADP) • Framework for restoration of agricultural growth, food security, and rural development with key principles and targets: • • • • 6% average annual sector growth Allocation of 10% of national budgets to agriculture Exploitation of regional complementarities and cooperation Accountability, partnerships, regional coordination SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 22 THE WAY FORWARD SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 23 Zimbabwe Burundi GuineaMadagascar Kenya Niger Lesotho Togo Cote d'Ivoire Central Chad Namibia Zambia Benin Guinea Gambia Malawi Senegal Swaziland Nigeria Mali Burkina Tanzania Mauritania Ethiopia Cameroon Uganda Ghana Mozambique Required annual Ag Growth Rate (%) IMPLICATIONS FOR COUNTRY AGRICULTURAL GROWTH Required annual agricultural growth rates to meet MDG1 18 15 12 9 6 3 0 SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE : S. Fan (2007) Page 24 SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE : S. Fan (2007) Page 25 Rwanda Guinea-Bissau Ghana Niger Burundi Togo Tanzania Burkina Faso Swaziland Zambia Central African Republic Senegal Nigeria Benin Mozambique Cameroon Malawi Ethiopia Kenya Uganda Mauritania Cote d'Ivoire Zimbabwe Lesotho Gambia Chad Mali Namibia Madagascar Guinea Percent of Ag to Total Spending (%) REALITY CHECK: Progress against CAADP 10% Budget Goal (2004) 25 20 15 10 5 0 Percent (%) POVERTY OUTCOMES UNDER CURRENT GROWTH TRENDS (Poverty Headcount, 1$/day, 2005) 60 Current 50 MDG target 40 30 20 10 0 1990 1995 2000 SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 2005 : S. Fan. 2007 2010 2015 Page 26 FOOD AND NUTRITION SECURITY IS POSSIBLE 60 Share of Malnourished Children in SSA Percent 50 40 33 30 30 33 28 20 17 7 10 0 1997 2015 2025 CURRENT TRENDS SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 1997 2015 2025 ALTERNTIVE SCENARIO : O. Badiane, based on Rosegrant et al (2006) Page 27 LESSONS FOR AGRICULTURAL GROWTH AND POVERTY REDUCTION STRATEGIES • Agriculture remains the main engine of poverty reducing growth for the near future • Recent performance is encouraging but still below required levels • What did we learn from success factors behind the recent growth performance? • How should we use this experience to sustain and broaden the recovery process? What should change? What should we bring into the process? SOURCE: INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 28