Post on 11-May-2015
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China’s Agricultural and Rural Development
Implications for Africa
Shenggen FanDirector General
China DAC Study Group on Agriculture, Food Security and Rural Development, Bamako, April 27, 2010
Shenggen Fan, IFPRI, April 2010
Key messages
· Different strategies and pathways have led to different development outcomes
· There are important lessons to be learnt, but with caution
· There are opportunities for win-wins
Shenggen Fan, IFPRI, April 2010
Growth is higher in China, but picking up in Africa
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
-4
0
4
8
12
16 Agric. growth
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
-4
0
4
8
12
16Agric. growth
%
Source: World Bank 2009.
%CHINA SSA
Shenggen Fan, IFPRI, April 2010
The share of agriculture in GDP has shrunk
1980 20080
5
10
15
20
25
30 ChinaSSA
Source: World Bank 2009.
Agriculture, value added (% of GDP)
But it continues to employ a large share of the workforce (44% in China, 86% in Ethiopia, 82% in Madagascar, 76% in Tanzania)
Shenggen Fan, IFPRI, April 2010
Poverty remains entrenched in Africa
1981
1984
1987
1990
1993
1996
1999
2002
2005
0
30
60
90 ChinaSSA
Source: Chen and Ravallion 2008.
Share of people living below $1.25 a day, %
Poverty is even higher in rural areas
Shenggen Fan, IFPRI, April 2010
Hunger is on the rise in Africa
1990-92 1995-97 2000-02 2004-06 20090
50
100
150
200
250
300China
Number of undernourished people, millions
Source: FAO 2009.
Shenggen Fan, IFPRI, April 2010
China: Major reforms
· Improved smallholder incentives for production
· Liberalized and reformed agricultural markets
· Liberalized trade
· Created a robust rural non-farm sector
· Initiated programs targeted at the poor
Shenggen Fan, IFPRI, April 2010
China: “Firing from the bottom”
Growth in agriculture contributed 4 times more to poverty reduction than growth in manufacturing and services
(Ravallion and Chen 2007)
So
urce: G
ulati an
d F
an 2007.
Shenggen Fan, IFPRI, April 2010
China: Gradual, trial-and-error approach
· Experimentation with new policies in isolated areas
· Scaling-up based on evidence from experiments
· Heterodox policies as a result (e.g. two-track reform and gradual trade liberalization)
Shenggen Fan, IFPRI, April 2010
Africa: Donor-influenced reforms
· Adopted WB/IMF structural adjustment programs
· Improved incentives for agricultural production through market liberalization
· Did not correct for market failures in some cases (e.g. lack of access to key inputs and services)
· Implemented reforms incompletely, in a “stop-and-go” manner
Shenggen Fan, IFPRI, April 2010
Africa: New Africa-owned framework
Comprehensive Africa Agriculture Development Program (CAADP) endorsed in 2003
• Target of 6% annual agricultural growth by 2015
• Commitment to allocating 10% of national public budgets to agriculture
• Focus on sustainable land and water management
market access
food supply and hunger
agricultural research
Shenggen Fan, IFPRI, April 2010
China-Africa trade in agriculture is rising
0
400,000
800,000
1,200,000
1,600,000FoodAgricultural raw ma-terials
0
400,000
800,000
1,200,000
1,600,000Food
Agricultural raw ma-terials
SSA exports to China, US$ mil. SSA imports from China, US$ mil.
Source: UNCTAD 2009.
Exports dominated by raw materials Imports dominated by food
Shenggen Fan, IFPRI, April 2010
But the share of agriculture trade is small
Agriculture (3%)
Ores, metals, precious stones
Fuels Machinery and
transport equipment
Other manufac-tured goods
Other
Source: UNCTAD 2009.
Note: Agriculture = agricultural raw materials + food.
China-Africa trade by product group in 2008, %
Shenggen Fan, IFPRI, April 2010
Possible trade and FDI impacts on Africa
Trade FDI
Complementary Growth of exports to China
Increased inflows from China
Competitive Displacement of local producers by imports from China
“Crowding out” of domestic investment by FDI from China
Source: Adapted from Jenkins and Edwards 2006.
There are also indirect impacts through trade in third markets, Chinese impact on world prices, etc.
Shenggen Fan, IFPRI, April 2010
New approach of Chinese aid
· Market-based framework
· Innovative delivery methods: joint ventures, cooperation contracts, public-private partnerships
· Switch from support for large-scale state-owned farms to smallholder farmers
Shenggen Fan, IFPRI, April 2010
China’s aid to Africa is rising
2001 2002 2003 2004 2005 2006 2007 2008 20090
500
1,000
1,500
2,000
2,500Debt relief
Eximbank
MOF aid budget
US
$ m
illio
ns
Source: Brautigam 2009.
Shenggen Fan, IFPRI, April 2010
2006 FOCAC plan for Chinese assistance to Africa
· Double assistance by 2009
· Set-up $5 bil. development fund for firms investing in Africa
· Send 100 senior Chineseexperts in agriculture
· Set-up 10 agricultural demonstration centers
Shenggen Fan, IFPRI, April 2010
Implementation is on track and exceeding some FOCAC plans
• Mozambique• Sudan• Tanzania• Ethiopia• Cameroon
• Uganda• Rwanda• Congo, Rep.• Zimbabwe
Sources: FOCAC 2009 and Brautigam and Li 2009.
· China-Africa development fund established in June 2007, with initial capital of US$1 billion
· 104 senior agric. experts sent to 33 African countries
· 14 agricultural demonstration centers established in:
• Togo• Zambia• Liberia• Benin• South Africa
Shenggen Fan, IFPRI, April 2010
Benefits have come with challenges
· Weak links with domestic markets
· Concerns about labor practices (e.g. workers from China often work on aid projects)
· Failure to raise local environmental standards
· Low transparency of aid and coordination with other donors
· Poor not necessarily benefit
Shenggen Fan, IFPRI, April 2010
Lessons need to be drawn with caution
· Different initial conditions in Africa compared to China (e.g. rural infrastructure, institutional capacity, agric. research and extension)
· Different external conditions
· Different economic, political, ecological, and social environments in different African countries
Reforms need to be tailored accordingly
Shenggen Fan, IFPRI, April 2010
Main lessons Accelerate agriculture and rural growth
• Improve incentives for smallholders• Invest in agricultural R&D and rural infrastructure
Adopt evidence-based policy-making• Test policy experiments on the field• Invest in information and monitoring
Establish social protection system• Target vulnerable people, rural and urban• Use productive safety nets
Strengthen institutions and capacity
Shenggen Fan, IFPRI, April 2010
Achieving win-win outcomes (1)
China-Africa cooperation needed to ensure
• Fair competition
• Stronger linkages with domestic markets
• Greater engagement of the local workforce
• Adoption of higher environmental standards
• Greater transparency and cooperation with other donors in aid delivery
Shenggen Fan, IFPRI, April 2010
Achieving win-win outcomes (2)
China-Africa cooperation needed in agriculture to:
• Diversify trade towards agriculture
• Increase FDI in agriculture
• Build up agricultural research and extension systems in African countries
• Continue investment in infrastructure and policymaking capacity