Article written

  • on 13.02.2015
  • at 12:40 PM
  • by Kevin

World Bank: “Agricultural growth can have very important effects on poverty in Africa” 0

Following the publication of the World Bank’s Africa’s Pulse report, World Bank Chief Economist for Africa Punam Chuhan-Pole and World Bank Senior Economist Luc Christiaensen, share with Afronline their analysis of issues shaping Africa’s economic future and suggest measures to increase agricultural productivity. The interview was released in the framework of Expo 2015.

Why is growth not happening as expected? What are the main factors?

On the growth front, there has been progress since the mid-1990’s, but on a per-capita basis, when you look at the overall output of the economy divided by the population, that growth has been less impressive. The population has been growing quite rapidly, so Africa’s per capita GDP growth is much lower than that of other developing countries. Further, we see that this growth has not translated into a fast enough reduction in poverty.

Issues such as inequality make a lot of difference in terms of who is participating in the growth:   the more unequal the structure of the economy, the more unequal it will be in terms of who’s gaining and who’s not. Most of Africa’s poor people work in agriculture, but most of the growth takes place elsewhere. Also if they don’t have access to capital, and to finance, they cannot participate in the opportunities that arise with growth.

What role is the agricultural sector playing in African growth today?

Most of the poor are employed in agriculture yet the agricultural sector has not been growing at a strong pace. This raises two question: the first being, can agriculture grow as fast as the other sectors? Historically you can see the manufacturing sector expanding at double digits, meaning more than 10 percent a year, and you rarely see that for agriculture.

The second question is: who benefits from this growth?  Are median wages going up? Are the poor actually seeing their fate improved?

Indeed if growth happens within the agricultural sector, even if it does not necessarily lead to stellar overall growth rates, it can still have very important effects on poverty.

What measures do you suggest to increase agricultural productivity? Can smallholder farmers play a key role?

The majority of the farmers in Africa are smallholder farmers. Because of this, it is key to increase the productivity across a large group of people, even if you do not increase it by a lot, many people can benefit from it. In order to do so, the starting point is agricultural research and development. The government needs to spend much more money on that. The spending on agricultural R&D is extremely low in African countries compared to some of the other countries, like China and Brazil who are among the largest spenders relative to their GDP. There’s very little use of inputs such as fertilizers, improved seeds, and limited access to finance, especially regarding fertilizers because it is considered risky, meaning if it doesn’t rain you have to pay back the credit but you have no crop to do so;  people might not even want to use fertilizer.

For many experts, access to fertilizer is a key challenge. Why?

There are many issues with access to finance and credit. Measures have been taken such as fertilizer subsidy programs, which imply giving the fertilizer to the farmers at half-price. Another important constraint for farmers is access to markets. You can produce more with higher productivity but you have to have access to markets where you can sell your production. And it’s not just access to markets for selling, but also access to markets to buy inputs, like fertilizers. Those are constraints in Africa because of remoteness, regional integration and limited infrastructure. And these constraints ultimately relate to policy issues: when decisions are made on where should the road be, or what kinds of roads to invest in, who would benefit from that, what are the implications.

Could you give me some concrete examples of countries that could be taken as models in terms of enhancing agricultural productivity and reducing poverty?

Rwanda has managed to increase its agricultural productivity, and so has Ethiopia. How you do it matters. It’s interesting to compare what Zambia and Rwanda have been doing. Two different countries, one has lots of land, the other one hasn’t. They also have very different governmental systems. Now in Rwanda, in order to increase productivity, the government provides concentrated support to a number of farmers on a particular staple crop. Farmers are subsidized for the first year, they are given fertilizers, and receive very targeted agronomic advice and extension services. With the same purpose, Zambia has developed a very different model, basically subsidizing fertilizers for a longer time and also with prices which were at times, above market prices. As a result, in both countries, we see that yields have gone up. Total maize production, total cereal production went up in both countries between the latter half of the 2000s and now. At the same time, yields increase, which is a good thing. But when it then came to poverty reduction, we didn’t see much poverty decline in Zambia, even though their agricultural output went up, and even their cereal yields went up. On the other hand, we did see quite a bit of poverty reduction in Rwanda, and this does link back to different underlying models.

The question is: if you subsidize fertilizer and you give a higher output price at the market, who benefits from it? Those who use more fertilizer and those who sell most maize. Now the smaller farmers who tend to produce less need less fertilizer. If you produce less you don’t have much to sell. So these policies helped in generating, in creating aggregate output but the way the benefits of these policies were distributed across the farmers was not equal. The lion’s share went to the larger farmers who are not necessarily the poorer farmers. So people started to produce maize because they got fertilizers, even though they might have been better off producing other crops.

If you had to give a few recommendations to African governments for the way forward, what would you highlight?

I think that one key message we are trying to get across today is that maintaining the focus on raising smallholder agricultural productivity is paramount. That remains still extremely valid. In doing that, an important point is not to just work on one instrument, but instead work with others. Fertilizers, seeds subsidies could potentially be one of a package, but that should not be eating up the majority of the budget you spend on agriculture. And there may be better ways of doing that than through subsidies, but at least you need to work on a whole range of issues. For example, the issue of access to markets, where reducing rural transportation costs could be a solution or investing in your extension services could be another.

 By Eva Donelli – Afronline.

Photo Credit:  Flickr/IWMI

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