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Abdul Kamara

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  • 1. Africa’s Economic Transformation: Trends and Prospects for Enhancing Food Security African Development Bank Group Economics, Value Chains and Policy Dialogue on International Food Security 2014, University of Alberta
  • 2. The Continent’s Transformation Process - Change is rapidly taking place, … where  change altering dev. landscape - The last investment & development frontier, with diverse countries; where need harness emerging - Global opportunities, … …, …. a challenge!  Reason for speaking on Africa’s Economic Transformation - Firstly, this dialogue is critical in the African context … transformation prospects depend on: - How we manage it; how we respond to opportunities; how we deal with the inherent challenges. - Secondly, … several regions in Africa still food insecure - Africa in need of gaining its rightful please in the global value chain - Still has not acquired it rightful share of global trade, … internal capacity constraints …. ; but also due to trade-related problems IF
  • 3. African Voices - Level of optimism (rising, moment, investment frontier, growth pole, etc) - Where is this optimism coming from? - What does it mean for food security/ - What are the policy implications, ….? Sources: AEO, ACR, WB-Doing Business, McKinsey Report: Lions on the Move Own Research, as Research Manger
  • 4. The African Story - unprecedented /sustained growth, > 5% on @; - Bet. 2000 & 2010, six of the 10 fastest growing countries of the world; - Growth is expected to remain strong, with IMF projecting, 7 of 10 fastest growing economies in the world over the next 5 years to be African - Caveat: diverse countries; varying opportunities; different levels of growth; some still stuck in low growth paths.; nonetheless, … - A continent-wide GDP of barely US$600 billion in 2000, reached US$2.2 trillion in 2013; … sig. -GDP growth in 2013 to average 6.6%.
  • 5. Drivers of Change
  • 6. Important Trends, but Challenges Remain  Lack of basic infrastructure  Disjoint regional economies  Undiversified economies driven by few commodities (oil, extractive resources)  Fragility & conflicts Countries differ markedly  Underdeveloped infrastructure (roads, power, energy, water infrastructure) hinders regional integration Increases cost of doing business makes firms less competitive, …. even harder to benefit from globalizatn Hinders structural transformation  Growth has not been inclusive, or ….  e.g. agriculture, employing 60-70% of pop. has seen little transformation (land, labor,.) - Poverty - Inequality (6 / 10) - $30 bn food import
  • 7. # What does this mean for food security, and what are the continents prospects for moving higher on the value chain? - Africa does not produce all the food it needs - Urbanization leading to more food imports, … … - Cost is huge; $30 bn a year; could double by 2020 - Situation gets worse during crisis (droughts), … … - In 2007-2008 food crisis; cereal prices went up - Response? Public protests in several cities, … - …, …, …., Africa a net cereal importer - Cereal import bill about $22 bn in 2008 (50% SSA) - Food price vulnerability analysis: Cereal Balance; Import Dependency; Ability to Pay; Urbanization.
  • 8. • BUT doesn’t Africa have some 400 mn ha of land waiting to be cultivated? • And isn’t Africa one of the last frontiers where such unexploited potential is still found? …Africa is net cereals importer because structural transformation is still a tall order
  • 9. …. But what about the drivers of global food prices? - Global level, food price risk due to volatility - Can be managed through regulating trade, … Short-Term: conflicts; natural disasters; oil prices increases; exchange rate fluctuations; hedge funds Long-Term: population growth; higher incomes; changing tastes; demand for biofuels, among others In Africa, … exacerbated low productivity, market distortions, infrastructure gap, also conflicts; disproportionate damage by climate change. - Global price could stimulate food production, but price transmission mechanisms in Africa operate with a lag  market distortions; capacity consts.
  • 10. This brings me to my third point: policy considerations for enhancing food security Many believe food Africa’s insecurity, … has to do with laws, policies and institutions that have held back agriculture.  Land ownership structure (not new! CGIAR)  Low agricultural productvy, since 1970, real growth at 2-2.5%, @ par or below pop growth,  Technologies, do exists, CGIAR, biosc. corps - BUT problem persists: i) GM method driven by private firms , …. brings both opportunities and challenges (FAO: world’s 10 transnational bioscience corps spend ca. $3 bn/year on R & D. (3x > CGIAR)  Bureaucracy ….; new seeds, fertilizer… regulated, years to approve: the result? Improved seeds get stuck at the border, … farmers stuck with low yields.
  • 11. And the challenge of climate change? - The developing world, esp. Africa contributes little to the causes of CC, but stands to be hit hardest by its impacts - Preliminary assessment suggest agric. prodtvty. decreases on @ of about 15-20% by 2080, & by up to 50% in highly vulnerable countries. - The risks of humanitarian food crisis likely to rise due to increased freq. of extreme weather events - In some regions, e.g. Southern Africa, this risk is exacerbated by that of HIV/AIDS.  These are in addition to the binding structural constraints discussed earlier, notably trade and infrastructure-related constraints
  • 12. Africa and the Global Value Chains Operationalizing the Strategy TakeAways! -African has a growth momentum -A good potential for true economic transformation -Formidable challenges lie ahead -Momentum creates a long awaited opportunity for Africa to move higher on the value chain EmergingPotentialof AfricanConsumers! - About 350 mn in 2010, up from 126 mn in 1980; - Consumer spending now at $720 bn/yr; AfDB projects to reach $1 trillium in 2020.  We believe that this provides the first foot in the door, for Africa to move higher on global value chian - Intra-regional trade in professed goods will be the first opp. for African firms to move higher on the VC.
  • 13. Africa and the Global Value Chains … contd. Operationalizing the Strategy TakeAways! RemovingConstraintsand BarrierstoTrade! - Though still modest, intra-Africa trade more than doubled bet. 2005 & 2011, rising from $49 billion to $108 billion - In 2010 it was 16% of African exports were to other African countries. Much higher ….! - Expected to be higher, once statistics is corrected; including coffee, tea sold to neighbors;  We believe this is the most logical place to start, …. by providing “smart aid” such as the AfDB’s “Aid For Trade” program, which seeks to remove trade related constraints.
  • 14. Africa and the Global Value Chains … contd. Operationalizing the Strategy TakeAways! RemovingConstraintsand barrierstoTrade! - By some estimates, lifting barriers to food trade (inc. structural constraints) , from farm to market, could double Africa’s production of cassava and rice; triple maize, millet and sorghum; and quintuple wheat. The region could feed itself!  This could mean higher incomes for farming families, and more secure food supply for urban dwellers; and better employment opportunities  This is why the African Development Bank Infrastructure its core business; along with Regional Integration; Private Sector Development; Governance; and Capacity Building to enhance Skill and Technology.
  • 15. Africa Going Forward Operationalizing the Strategy TakeAways! AfricaisOpenforBusiness! - With this unmatched potential, Africa is open for business, and organizations, like the AfDB, have laid so many foundations for trade, growth and investments. - The Bank has helped build a network of roads, rail, water, electricity, and build institutions to fight corruption! - During the food crisis in 2007/2008, we launched $1 billion trade finance initiative; over the past 3 yrs, we have supported a cum. level of trade of $2.5 billion; in 2013 along we committed some $6.7 billion dev. projects, about 60% of which is geared towards infrastructure constraints  We believe this is the most logical place to
  • 16. Development Aid only as part of the way forward Domestic Investments PRIVATE SECTROR Africa Going Forward

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