Economic Transformation Africa:Some Gaps in Research and Policy

Kimsey SavadogoPTCI & Universite de Ouagadougou

African policy orientation from the 1960s to today

• The early twenty years: 1960-80– Emphasis on industrial sector– State involvement in commercialization: marketing boards– Occasional subsidies for agriculture

• The 1980s and early 1990s– Denouncing the inefficiency of past public policies– SAPs: Trade liberalization, privatization, abolition of

marketing boards, state retrenchment (reduction of public expenditure in agriculture), and currency devaluation

African policy orientation from the 1960s to today

• The late 1990s to the first decade of the years 2000– Poverty reduction strategy policies (PRSPs)– Lack of a global view of growth and development– Advent of CAADP as a unifying framework for

policy making in Africa• The second decade of the year 2000– Inclusion of growth concerns in donor assisted

programs

African policy orientation from the 1960s to today

• Summing up – Policy shifts observed every decade– Frequent changes on what stands as priority areas– Fortunately a sharp turn starting ten years ago with

the advent of a unifying policy framework at continental level

• Lessons– In the future Africa has to keep in memory this period

of trials and errors of the past and resolutely engage in the design of policies to achieve a stable growth

Economic transformation and the role of agriculture

• Any economic transformation in Africa will have to build on the agricultural sector– The significance of agriculture in the national

economies is well known. Agriculture contributes to food security, employment, income for close to 80 percent of population

– Agricultural growth and GDP growth go hand in hand in Africa

GDP growth and agriculture

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Figure 1— GDP and agricultural growth in Sub-SaharanAfrica, 1980–2011

Agriculture, value added (annual % growth) GDP growth (annual %) Linear (GDP growth (annual %))

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What may prevent the role of agriculture in economic transformation

• For agriculture to however be the engine of economic transformation, agricultural production has to become more predictable: looking at the graph above, one can note the ample year to year fluctuations of the inter-annual changes of agricultural value added (role of technology, soil conservation)

• The gains in the sector these pat years following the macroeconomic policies of the 1980-1990s need to be sustained.

• Africa still relies on rainfed cropping, the contribution of irrigated agriculture is dismal

• Governments have withdrawn from financing the agricultural sector, ODA has been reduce, but there is a tendency to reverse the decline in ODA and private funding has started to supplement government investment in agriculture, e.g. AGRA

Policy orientation? New Threats?

• In Africa, agricultural production is still dominated by the small farm, yet there is no clear vision of the role of the small farmer in the future of agriculture. For example, do we need different types of actors for agriculture to grow? (Case of successful China and the role of smallholder there)

• An ongoing phenomenon that threatens the sustained development of agriculture is climate change; among other things, climate instability creates swings in year to year production

• Another new, developing phenomenon is the one of foreign acquisition of African land for agricultural production

Possible Research Areas

• Recent event of land acquisition by foreigners– Is this a positive or negative thing for Africa (consider possible

benefits and the losses incurred? Are there contractual arrangements that may ensure gains for Africa?

– Does the answer depend on whether it is a long term or temporary phenomenon?

– Can there be any learning from foreign ventures on African soil?– What are environmental effects? Are foreign firms going to mine

the soils for some time and leave when the land becomes degraded? Will there be any land protection?

– What are the impacts on Africa’s food security? Are we going to witness a situation of export-reimport of products produced on African land?

Possible Research Areas• The issue of the small holder. Given that smallholders make up

the crushing majority of farms in Africa, what would be the right stand?– Is the smallholder the problem rather than part of a solution? Should

we consider smallholders to be social problems with solutions belonging to the area of social protection? Or is the smallholder an economic agent to be reckoned with?

– Can the Chinese situation apply to Africa?– What is the likely success of the approach praised by some countries

who consider agri-business to be the solution to agricultural development and food security? And what would be the right agri-business be? Consider the fact that in many African countries the political and urban elite become the landlords very often, and progressively large pieces of land pass hands from peasant farmers to these new land lords.

– Can Africa afford to do away with the small holders by treating them as a social problem?

Possible Research Areas• Technology, innovations and agricultural growth The role of technology

in agricultural growth has been addressed by many, at the farm level, usually for a region of a country. However, the effect of technology Africa wide is not known.

• Examine rates of return, and distribution of benefit, for major innovations/groups of innovations in staple food crops in several African countries

• What would be the impact of wide scale irrigation in Africa? Is such wide scale irrigation feasible ? (inter-country water right issues? Environmental issues?)

• What is the role of agro-processing in stabilizing agricultural growth? What are factors of hindrance to the development of agro-processing? What are the impacts of international trade arrangements on the success of aro-processing?