Issue Note No. 20 January 2013 Options and Priorities for Raising and Maintain- ing High Agricultural Productivity in Africa Africa has seen substantial agricultural productivity growth since the mid-1980s. Due to the economic downturn in the preceding decades, Africa’s recent growth has resulted merely in recovery of the levels achieved in the early 1960s. As the Comprehensive Africa Agriculture Development Programme (CAADP) reaches its 10th year of operation, the region urgently needs to raise and main- tain high agricultural productivity in order to embark on a path toward agricultural transformation and to reduce poverty and increase food security. This brief summarizes the main findings of the CAADP M&E 2011 Report on agricultural productivity3 to help identify options for raising and maintaining high agricultural productivity across different parts of Africa and to promote more effective design and implementation of inclusive de- velopment strategies within the CAADP process. AcceleRAting tHe exPAnsiOn Of AfRicA’s tecHnicAl fROntieR Trends in land, labor, and total productivity4 vary widely across different parts of Africa. Despite the large spatial variation, many parts of Africa have experienced rapid agricultural productivity growth since the mid-1980s. While growth in land productivity has remained fairly constant over these periods, growth in labor and total productivity has been more variable (Figure 1). Furthermore, almost all of the observed total factor productivity (TFP) growth is explained by improvement in efficiency of factor use rather than by technical change (Figure 2). Only in a handful of countries, including South Africa, Swaziland, Benin, Cam- eroon, and Togo, was there an overall increase in TFP with significant technical change (Figure 3). For many African countries, labor productivity growth is a result of their ability to allocate more land into agricultural Yifei Liu1 and Samuel Benin2 1 Yifei Liu is a Senior Research Assistant at International Food Policy Research Institute (yifei.liu@cgiar.org) 2 Samuel Benin is a Research Fellow at International Food Policy Research Institute (s.benin@cgiar.org) 3 Benin, S., A. Nin Pratt, S. Wood, and Z. Guo. 2011. Trends and Spatial Patterns in Agricultural Productivity in Africa, 1961–2010. ReSAKSS Annual Trends and Outlook Report 2011. Washington, DC: International Food Policy Research Institute (IFPRI). 4 Land productivity is the ratio of output to total harvested area; labor productivity is the ratio of output to total number of hours worked; total productivity is the ratio of an index of agricultural outputs to an index of agricultural inputs. figure 1: land, labor, and total factor productivity growth in Africa (%, annual average 1980–2005) Source: Authors, based on World Bank 2012 and TFP model results (see Figure 5.1 in Benin et al. 2011). Figure 2: Total factor productivity, efficiency, and technical change in Africa (1961–2005: 1961=1) Source: Authors, based on TFP model results (see Figure 4.1 in Benin et al. 2011) Notes: TFP is total factor productivity; Eff is efficiency; and Tech is technical change. 1961 1971 1981 1991 2001 TFP Eff Tech 0.2 0.6 1.0 1.4 1.8 0.0 0.5 1.0 1.5 2.0 2.5 3.0 1980-1990 1990-2000 2000-2005 1980-2005 land labor TFP 2 production. However, rapid population growth and slow- down in land availability pose great challenges for sustain- ing high total agricultural productivity growth. Boosting land and labor productivity requires accelerating the expansion of Africa’s technical frontier through a combination of policy improvements and significant investments in agricultural research and development (R&D), together with comple- mentary investments in areas such as irrigation, market infrastructure, and institutions. incReAsing investMents in AgRicultuRe And AgRicultuRAl ReseARcH And devel- OPMent (R&d) Public investment in agriculture is essential for boosting ag- ricultural productivity in Africa. That is why, in 2003, African heads of states set a clear CAADP target for agricultural financing by governments at 10 percent of total national expenditures. At the continent level, the share of public agriculture expenditure out of total expenditures has barely surpassed 6 percent on average per year since 1995. This is well below the CAADP target. At the national level, only Burkina Faso, Ethiopia, Mali, Niger, and Senegal have reached the target (Figure 4). Ethiopia is the only one of the largest ten agricultural economies in Africa5 that has 5 The top ten largest agricultural economies in Africa are Nigeria, Egypt, Morocco, Algeria, Sudan, Kenya, South Africa, Ethiopia, Tanzania, and Cote d’Ivoire figure 3: total factor productivity (tfP) growth decomposition at country level (%, annual average 1985–2005) Source: Authors, based on TFP model results (see Figure 4.6 in Benin et al. 2011). -8 -6 -4 -2 0 2 4 6 8 10 Le so th o S en eg al S w az ila nd M ad ag as ca r G am bi a Zi m ba bw e M au rit an ia M al i G ui ne a K en ya Za m bi a E th io pi a C ot e d' Iv oi re B ur ki na F as o G ui ne a B is sa u C am er oo n To go S ud an M oz am bi qu e C ha d Ta nz an ia Si er ra L eo ne B en in S ou th A fri ca G ab on M al aw i N ig er ia G ha na A ng ol a Technical change Efficiency figure 4: share of public agriculture expenditure in total public expenditure (annual average %) Source: Authors, based on ReSAKSS data (see Figure 5.2 in Benin et al. 2011). 0 10 20 30 B en in B ot sw an a B ur ki na F as o C am er oo n C .A .R . C ha d D R C C on go , R ep . C ôt e d' Iv oi re D jib ou ti E gy pt E th io pi a G ha na K en ya Le so th o M al aw i M al i M au rit an ia M or oc co N am ib ia N ig er N ie ria R w an da S T P S en eg al S ie rr a Le on e S ud an S w az ila nd T an za ni a T og o T un is ia U ga nd a Z am bi a Z im ba bw e 1995-2003 2003-2010 CAADP 10% target A fr ic a av er ag e 3 achieved this target, while most of the others spent less than 5 percent of their total expenditure budgets on agricul- ture, resulting in the low performance seen for Africa as a whole. Agricultural R&D is a key component of public expenditures on agriculture and is one of the most crucial contributors to agricultural productivity growth. Agricultural research infrastructure and capacities in Africa have been neglected for years, primarily because of lack of public funding for agricultural R&D (Beintema and Stads 2011)6. Although the New Partnership for Africa’s Development (NEPAD) has set a national agricultural R&D investment target of at least 1 percent of agricultural GDP, most countries have spent far less than this level so far. For example, in 2008 (see Figure 5), the share of agricultural R&D in agricultural GDP was about 0.6 percent on average in Africa. Only 8 countries out of 31 studied countries met the 1 percent target. With the exception of Kenya and South Africa, the big agricul- tural economies in Sub-Saharan Africa (SSA) covered in this study (Nigeria, Sudan, Ethiopia, Tanzania, and Cote d’Ivoire) spent less than 0.5 percent. The other 6 coun- tries that achieved the NEPAD target (Botswana, Burundi, Mauritania, Mauritius, Namibia, and Uganda) together ac- count for only 3.2 percent of Africa’s total agricultural GDP, indicating that their high performance has little impact on the performance for Africa or SSA as a whole. Continued and scaled-up investments in African agricultural R&D are urgently needed. In view of the current low levels of public agriculture expenditures and the high shares that go to salaries and other nonproductive or short-term pro- ductive items, agricultural investment requirements trans- late into total amounts that are much higher than the 10 percent of total expenditures agreed to under the Maputo declaration7. sustAining And scAling uP lOcAtiOn- sPecific AgRicultuRAl investMents And POlicies In addition to needing to improve the level of agricultural expenditure, public investment and government interven- tion should also be rooted and built up in specific agroeco- logical characteristics and production systems. Studies show that different types of spending across varied geo- graphic areas deliver considerably different returns and im- pacts on diverse development objectives. The returns and impacts also vary over time. Therefore to elevate the effec- tiveness of public investment in agriculture, the diversity of farmers should be taken into account with adapted prioriti- zation and sequencing of policies and programs. There are very successful agricultural productivity investment projects that are short-lived, usually three to five years, as well as thinly scattered across the continent. There is a need for more commitments and actions by African stakeholders to ensure that good interventions are sustained and scaled up figure 5: share of public agricultural R&d expenditure in agricultural gdP (%), 2008 Source: Beintema and Stads 2011. NEPAD 1% target 0 1 2 3 4 5 6 N ig er G ui ne a G ab on S ud an E th io pi a M ad ag as ca r Za m bi a S ie rr a Le on e M oz am bi qu e N ig er ia B ur ki na F as o E rit re a To go Ta nz an ia Th e G am bi a R w an da C ôt e d' Iv oi re B en in M al i M al aw i R ep . o f C on go S en eg al G ha na M au rit an ia U ga nd a K en ya B ur un di S ou th A fri ca N am ib ia M au rit iu s B ot sw an a Av er ag e Ag ric ul tu ra l R & D s pe nd in g as a sh ar e of A gG D P (% ) 6 Beintema, N. M. and G. J. Stads. 2011. African Agricultural R&D in the New Millen- nium: Progress for Some, Challenges for Many. Washington, DC: International Food Policy Research Institute (IFPRI). 7 See Diao, S., J. Thurlow, S. Benin, and S. Fan. Eds. 2012. Strategies and Priorities for African Agriculture: Economywide Perspectives from Country Studies. Washing- ton, DC: International Food Policy Research Institute IFPRI. 4 and out. fAcilitAting ecOnOMies Of scAle And tecHnOlOgy sPillOveRs AcROss cOun- tRies For countries with small economies, capacities and re- sources of agricultural infrastructure and R&D systems are scarce. Comprehensive regional agricultural R&D strate- gies and cross-border collaboration can help fill these technical gaps, facilitate scale economies, and promote knowledge and technology spillover. On the other hand, a regional strategy must overcome many institutional and administrative barriers to management and coordination across national boundaries, which often come with high transaction costs, especially given different levels of devel- opment of national R&D systems and political economies. To increase the effectiveness of technology generation and dissemination across countries, the African centers of ex- cellence initiatives have developed two large sub-regional programs, the Eastern Africa Agricultural Productivity Pro- gram (EAAPP, implemented by ASARECA) and the West Africa Agricultural Productivity Program (WAAPP, imple- mented by CORAF/WECARD), with assistance from the World Bank. To be successful, these initiatives will require complementary polices and agricultural extension systems that enhance and maximize the spillovers of the targeted technologies to different parts of Africa. tAckling tHe POtentiAl iMPAct Of cli- MAte cHAnge Growing evidence shows that climate change could pose severe threats to agricultural productivity and that the change is likely to have very different effects in different lo- cations. Generally, global warming is likely to increase live- stock income while decreasing crop income. The findings of Seo et al. (2008)8 for example show that climate change may have a zero net effect on the total agricultural income of households engaging in both crop and livestock produc- tion. Those engaging solely or mostly in crop production are projected to be vulnerable to climate change, as well as those in the Cereal-Root Crop Mixed, Dryland Mixed, AgroPastoral, and Pastoral farming systems (which charac- terize most of the savannah agroecological zones (AEZs). Those engaging solely or mostly in livestock are predicted to gain even from a severe climate change, as well as those in the Forest-Based and Tree-Crop farming systems (which characterize most of the sub-humid or humid forest AEZs). As a result, impact assessments of climate change should be taken into account as a component of agricultural growth strategies. cOnclusiOn With the majority of the population living in rural areas and making a living with a small farm, typically only 1-3 hectares, there is no more urgent development goal than accelerating agricultural productivity for Africa. The key to a sustainable development strategy for Africa must be to ac- celerate the expansion of Africa’s technical frontier for well- designed and location-specific technological innovations in agriculture, to significantly increase public investment in agriculture, particularly agricultural R&D that addresses the diversity of farming systems, to make full use of African regional and sub-regional alliances to facilitate economies of scale and technology spillovers across countries, and to identify suitable adaptation options to adjust to global climate change. 8 Seo, S. N., R. Mendelsohn, A. Dinar, R. Hassan, and P. Kurukulasuriya. 2008. A Ricardian Analysis of the Distribution of Climate Change Impacts on Agriculture across Agro-Ecological Zones in Africa. Policy Research Working Paper 4599. Washington, DC: The World Bank. 5 The Regional Strategic Analysis and Knowledge Support System (ReSAKSS) is an Africa-wide network of regional nodes supporting implementation of the Comprehensive Africa Agriculture Development Programme (CAADP) . ReSAKSS offers high-quality analyses and knowledge products to improve policymaking, track progress, document success, and derive lessons for the implementation of the CAADP agenda and other agricultural and rural de- velopment policies and programs in Africa. ReSAKSS is facilitated by the International Food Policy Research Institute (IFPRI) in partnership with the Africa-based CGIAR centers, the NEPAD Plan- ning and Coordinating Agency (NPCA), theAfrican Union Commission (AUC), and the Regional Economic Communities (RECs). The Africa-based CGIAR centers and the RECs include: International Institute of Tropical Agriculture (IITA) and the Economic Community of West African States (ECOWAS) for ReSAKSS–WA; the International Livestock Research Institute (ILRI) and the Common Market for Eastern and Southern Africa (COMESA) for ReSAKSS– ECA; and the International Water Management Institute (IWMI) and the Southern African Development Community (SADC) for ReSAKSS–SA. ReSAKSS has been established with funding from the United States Agency for International Development (USAID), the UK Department for International Development (DFID), the Swedish International Development Cooperation Agency (SIDA), and the Bill and Melinda Gates Foundation. This brief has undergone a standard peer review process involving at least one reviewer from within the ReSAKSS network of partners and at least one external reviewer. 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