The agricultural sector’s growth has lagged behind national economic growth in Africa, according to an International Food Policy Research Institute study. Given that most poor people are dependent on farming, this slow growth is an obstacle to regional poverty reduction, the study finds, and African policymakers should include an emphasis on agricultural growth.
“The underperforming agricultural sector in Africa is not just delaying economic transformation, but is also contributing to higher poverty rates,” Ousmane Badiane, IFPRI’s Africa director, told a recent Brussels conference.
Speaking at a Brussels Development Briefing titled ”Drivers of Success for Agricultural Transformation in Africa,” hosted by the European Commission, Badiane explained how “negative diversification moved labor from underperforming higher productivity agriculture into the oversized lower production service sector,” and how the lack of an effective industrialization policy has “impeded growth in the manufacturing sector and forced specialization in low-value primary goods.”
“What we face now is a double challenge,” Badiane asserted, “as managing the growth process concerns raising productivity in agriculture and in the rural economy, while diversifying into higher value goods outside of agriculture.”
On the sidelines of the conference, Badiane shared his views with Devex on the potential of agriculture in Africa as an engine for growth and stressed the importance of foreign investments in the sector.
Here are some excerpts of our conversation with Badiane:
What role can agriculture play in Africa’s economic transformation?
Agricultural growth doesn’t only benefit the people in rural areas and the farmers, it also benefits the rest of the economy. It creates the conditions for other sectors of the economy, such as industry and the manufacturing sector, to have a market to sell to. Most of the industrial and manufacturing plants … produce household goods that are consumed locally — candles, sandals, bicycles, baskets. Those products aren’t produced for the export market, they’re produced for the domestic market.
In developing countries, the money that goes into the pockets of consumers comes primarily from agriculture. … If there’s no market to sell those goods, the industrial sector doesn’t produce them. If agriculture doesn’t create the demand for the industrial sector to grow, the sector won’t develop the “wings” to fly and won’t be able to sell abroad.
Agriculture stimulates other sectors, not just in terms of demand, but also concerning the raw materials. It creates the taxable base for the government to invest in education, health and infrastructure. Basically, agriculture is the “cow” that has to feed the family in the early decades of economic development.
What are the investment priorities needed to boost agricultural growth?
First and foremost, governments have to create the conditions for agriculture to be able to respond to investments. The policies … have to be conducive to a sector that grows, that can grasp the opportunities around it, that can respond to investments in research and in the local market. … It is fundamental to have a consistent and coherent policy around agriculture in terms of how prices are determined, how markets operate, how private entrepreneurs do business in agriculture [and] how farmers are earning their living through the products they grow.
All these conditions have to be in place for the investments to be able to pay off and propel the economy forward. Without the right institutional policies and economic environment, a lot of money can be invested just [to reap] half of the return expected in terms of agricultural growth.
It is important to invest in the development technologies that farmers need, in research and in future technologies. I believe agriculture is going to be extremely technological in the decades to come, but we are lacking investments in biotechnologies, in advanced science to support agriculture research, and investments in processing to create new products out of raw materials in agriculture.
How can foreign aid provide decisive support?
For foreign aid to be an add-on to what local governments are doing, two conditions need to be satisfied: The first is that the local government needs to be in the lead in terms of its commitment to rigor, effectiveness, consistency and coherence, but also in its commitment to raising the level of effort in the agriculture sector. The second is for aid donors to come and align with what the government wants to do.
And how can private sector investments be increased in an environment that lacks minimum levels of security concerning land regulation, not only for investors themselves, but also for farmers?
First of all, there is a fundamental difference between Africa and Asia: The poor and vulnerable in Africa, in most cases, live in the rural areas and, in most cases, have access to land. We can use that land, make it more productive and get them out of poverty. In Latin America and Asia, the poor are landless and it is therefore very hard to find a way to get them out of poverty.
Private investors coming to Africa should work with governments to make sure their investment is secure. Partnerships should be established between governments, private investors, the local community and farmers that own the land, so that the land can be put to use with all the guarantees, all the capital, all the security and the lowest level of risk possible for the investor. The investor should come in and bring the capital needed to the African farmers, while giving the local communities and the farmers a stake in that investment through the ownership of land.
This can be done through joint ventures, or other kind of deals, where local communities take part with their land. Private investors should work with local communities, giving them the guarantee that the land won’t be put up for sale. … To invest in land and get people out of poverty we need the capital, we need to find the modalities to be creative and innovative in packaging deals to minimize risks, and provide the local community with all the guarantees they need, while getting the local community to understand that the land has to be made more productive.
If they don’t have the means, they have nothing to gain by just sitting on their land.
And is that currently the case?
Many stakeholders in Africa think they can say “no” to foreign investments in land. But if African countries turn their back on investments, the money will go to other places and the food that Africa will be consuming in 10-15 years will have to be imported from somewhere else. Instead of Africa being the one supplying global markets and making money, Africa will be spending even more on food.
So we don’t have a choice: We can’t say “no” to foreign investment in land. We just have to make sure that we are proactive, that we define our rules and that we work in partnership with investors to create the modalities that will bring safe investments for the investors and productive investment for the African economy and local communities.
In order to increase the efficiency of agricultural production, can associated costs be reduced?
It is definitely possible. If you look at the level of yields of these countries, the kinds of technologies that are being used, infrastructure in the rural areas, the quality of seeds, the practices — there is room everywhere for better efficiency and cost reduction.
It’s just a matter of being systematic and, as a government, believing in it, committing to doing what is right to get a competitive agricultural sector. If we commit to doing what’s right and we look for the solutions, we will find plenty of them around.
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