Transcript Facing the financial crisis: The imperative of regional action for

Facing the financial crisis:
The imperative of regional action for
agriculture in Africa
Fourth Annual African Economic Conference (AEC):
Fostering Development in an Era of Economic and Financial Crisis
Addis Ababa, 11 November 2009
1
Paper Motivation
1.
Focus is African agriculture


2.
2008 Food price crisis / Financial crisis



3.
Globalization and global influence
Opportunities in the sector – changing views on continued importance of agriculture
How to capture the opportunities in the sector
Regional cooperation, integration, and African anachronisms



4.
The paper is based on a joint AfDB/IFAD evaluation of the two agencies agriculture
sector policies and programs in Africa (2008/09)
Context analysis: challenges and opportunities old and new problems
This is not a new agenda
The goals and the rhetoric are right (AUC, NEPAD etc.)
Day-to-day reality is different
African Development Bank: a strong commitment to regional
integration – its raison d‘être (vision, medium-term strategy, organizational
structure, framework for regional operations)
2
Paper Objectives

Summarize arguments for a stronger regional
focus in agriculture and rural development (ARD)
(regional meaning multi-country)


Review performance and lessons learnt of
regional operations with relevance for ARD in AfDB
and IFAD
Draw conclusions for future policies and operations
3
General arguments for enhanced Regional
Integration (RI) and cooperation in Africa

The geography of Africa’s economies…





the small country legacy
landlocked countries
economies of scale
colonial trade routes and infrastructure heritage
Provision of regional public goods


Bridging the infrastructure gap, much of which has a regional
dimension
Management of natural resources and climate change

Political stability

Better withstanding global shocks…
4
The imperative of regionalization and transboundary actions for ARD in Africa

Regional and global trade for food security and growth
 expanded regional trade is good for stabilizing prices, food security,
and growth
 regional infrastructure and policies to reduce transaction costs
 regional trade requires harmonization of standards and sanitary
measures
 freer borders encourage private sector traders and competition

Natural resource management and protection, climate change
mitigation
 managing crucial and threatened forestry and fisheries resources;
land-degradation and desertification; preserving biodiversity
 developing trans-boundary river basins and ecosystems:
coordination and negotiation
 defense against plant and animal disease epidemics
5
The imperative of regionalization for ARD in
Africa (contd.)

Innovation and scientific research
 African agriculture depends on indigeneous scientific capacity
development; given small countries, sub-regional institutions are
required
 clustering of expensive biotechnology research with large critical
mass in fewer centers yields significant economies of scale (2 or 3
multi-country well-equipped institutions are superior to 48 under-funded ones)
 well trained scientific researchers can be better attracted and kept
by regional institutions with critical mass and necessary financial
support

Agriculture and rural financing
 regional approaches to rural financial architecture may increase
potential deposits and loanable funds and spreads risk.
6
AfDB and IFAD projects for Regional Integration
 Bank (10-15% of total portfolio)
 Transport infrastructure (70%)
 Power supply, communication, finance, and direct
agriculture support (30%)
 IFAD (< 3%)
 Research and extension (eg. cassava)
 Capacity building
7
AfDB and IFAD programs in ARD with regional
integration aspects

Bank
 Water management (OMVG, Congo Basin Ecosystem
Conservation program). Increased strategic orientation through
new AfDB Water Business Plan
 Disease control (Tsetse and trypanosomiasis free areas)
 Regional research (Nerica rice dissemination)
 Transport and market infrastructure (Cotton value chain –
West-Africa)

IFAD
 Partnership building: farmer associations, land coalition,
desertification (CILSS, ROPPA, UEMOA etc.)
 Technical capacity to regional HUBs
 Upscaling innovations
 Knowledge management (FIDAFRIQUE)
8
Operational performance – lessons learnt

Multi-national RI projects are more complicated to plan and
implement
 the risk of failure due to institutional problems is high
 problems also arise with inequality of neighbouring countries and
assymetric capacities

There should be joint assessments of countries’ interests
and benefits from RI projects. Costs need to be assigned
equally and fairly. Negotiations become indispensible.

National projects can have important regional integration
dimensions. Not only multi-country projects contribute to
regional integration. Yet RI aspects are rarely part of
appraisal and completion reports.
9
Operational performance (contd.)

Multinational projects usually require additional
resources for management, supervision, and
sustainability. Coordination during implementation needs to
be given particular attention.

Set realistic objectives in line with national and regional
capacity and will to coordinate and implement.

Multinational projects often require a degree of sectoral policy
harmonization between participating countries. Eg. river
management/dam projects may require environmental, agric.,
water, and electricity policy coordination
10
Operational performance (contd.)
IFAD experiences with regional projects
Good for lessons sharing on poverty strategies,
advocacy etc.
 But: high workload and costly
 Direct relevance for the poor farmers is limited


 Preference for country-led approaches and bottom-up
local and community activities
11
Institutions for regional integration and agency
financing mechanisms

Organizational regional structures
 African regional organs: AUC, ECA, RECs, NEPAD
 AfDB: NEPAD infrastructure team, incl. preparation facility (IPPF);
Dptm. of Regional Integration and Trade; 9 Regional Departments
 IFAD: Three regional departments

Business processes and allocation instruments for
regional development






Country programming and project cycle management
Field presence
Analytical and implementation capacity for RI
Agency incentives for carrying out RI operations
Allocation mechanisms
Bank Draft Regional Integration Strategy 2009
12
Strategic partnering for regional development.
Shared responsibilities. Principles.





Countries: main responsibility and ownership for regional programs
Sub-regional economic communities (RECs): prioritization,
coordination and M&E
Regional organs (AU and NEPAD): facilitation, resource
mobilization and peer review
International agencies (such as AfDB or IFAD, the EU, WB or
bilaterals): technical support, capacity building and financial
resources
Principles





Subsidiarity
Gradualism
Transparency of costs and benefits for each country
Inclusion of non-public actors (associations, private sector)
Shifting regions. Flexibility in defining them and pace of RI.
13
Policy Conclusions
If African countries wish to

… capture the ample regional and global market
opportunities in agriculture,

… rapidly enhance agriculture productivity, and

… provide buffers in times of crises
then they and their partners will have to do three things:
14
1. Invest in essential regional capacities
and public goods


Finance strategic infrastructure, research and extension,
plant and animal disease protection, NRM
Expand regional multi-country projects. But also
through individual country projects with specific RI
goals and dimensions


(For instance, the Bank’s 2007 high-level panel report suggested concessional finance
for projects that create positive regional returns)
Gradually build the necessary regional capacities in the
sector and beyond, particularly in less-endowed
countries
P.S.: What constitutes a’region’ may differ by purpose
15
2. Think more regionally to develop
agriculture

Reduce excessively high transport costs through
reduced barriers to inter-regional trade (infrastructure,
illegal road blocks, trade policy etc.)

Better manage natural resources (eg. rivers, fisheries)
and protect against trans-boundary diseases

Promote innovation and productivity growth, through
research (FARA etc.) and knowledge management (eg.
RESKSS)
P.S.: Lower the borders in the heads
16
3. Adjust internal agency business
processes

Further develop analytical and implementation capacity
for regional programs;

Provide more financing for regional integration
independent of individual country borrowing decisions;


Work with a range of new regional partners, from farm
producer associations, regional public institutions, and
the private sector;
Use the ‘convening power’ of the Bank to facilitate many
of these activities
17
Thank You
18