Complying with the Maputo Declaration target: Trends in public agricultural expenditures and implications for pursuit of optimal allocation of public agricultural spending - Godfrey Bahiigwa and Sam Benin, IFPRI

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Complying with the Maputo Declaration target: Trends in public agricultural expenditures and implications for pursuit of optimal allocation of public agricultural spending - Godfrey Bahiigwa and Sam …

Complying with the Maputo Declaration target: Trends in public agricultural expenditures and implications for pursuit of optimal allocation of public agricultural spending - Godfrey Bahiigwa and Sam Benin, IFPRI

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  • Mention that the presentation is based on the 2012 ATOR, which is included in the conference packet. Methodology and data sources explained there. Data are from 5 main sources: Statistics on Public Expenditure for Economic Development (SPEED) (Yu 2012); African Union’s Agricultural Expenditure Tracking Survey (AETS) (AUC 2008); Agricultural Science and Technology Indicators (ASTI) (IFPRI 2013); Monitoring African Food And Agricultural Policies (MAFAP) database (FAO 2013); and various national sources, compiled by the ReSAKSS regional nodes and country SAKSS nodes (national sources).
  • The 7 countries are those shown in italics
  • Next three slides looks at the role of government and the accounting problem
  • Ghana subsidies include, fertilizer subsidy and agricultural mechanization, block farms, buffer stock program. Zambia support includes farm input support to farmers
  • Animation:Prior to CAADP (shown here in years 200 and 2001), only counted expenditures on crops & livestock, Forestry, Fisheries and ResearchAfter that, included expenditures on cocoa, presidential special initiative (PSI), and debt serviceMore recently included expenditures on feeder roads and Millennium Challenge Account
  • Next two slides is just to give a flavor of what can be done with good data.
  • Regarding existing detail analysis, can mention studies by IFPRI researchers on Ethiopia, Ghana, Uganda and Tanzania. Also evaluation studies of fertilizer subsidy programs in Malawi and others.
  • Auto animated on the first button. The main aim of the next five slides is to show how the agriculture budgets are allocated across/within the different categories in the NAIPs (we reviewed 19 of them)—what are governments planning to do? Bottom line is that very few NAIPS allocate budgets as such—so not clear how governments are planning to spend their ag budgets? Which makes it difficult to also collect expenditure data. Also muddies what to review.

Transcript

  • 1. Complying with the Maputo Declaration target: Trends in public agricultural expenditures and implications for pursuit of optimal allocation of public agricultural spending Godfrey Bahiigwa and Sam Benin, IFPRI ReSAKSS Conference Dakar, Senegal 12-13 November 2013
  • 2. Background and Motivation  In 2003, African governments adopted the Comprehensive Africa Agriculture Development Programme (CAADP) with two key targets » Achieve 6% ag GDP growth rate per year » Spend 10% of national expenditure on agriculture – Maputo Declaration  Public spending (fiscal policy in general) in agriculture is a key instrument for most developing country governments to achieve national development objectives: » Most of the poor work in the agriculture sector and in rural areas » Sector employs 65% of the labor force and accounts for 32% of GDP » Evidence that public agriculture investment (particularly in R&D) has large poverty-reducing effects » Experience of Green Revolution (especially India and China)
  • 3. Objectives and outline of presentation  Present patterns and trends in public agricultural expenditure (PAE) in Africa  Assess progress in achieving the Maputo Declaration target of spending 10% of national expenditures in the agriculture sector  Draw implications of the Declaration on spending behavior and optimal PAE allocation  Assess PAE data requirements for the joint agriculture sector reviews (JSRs)
  • 4. Progress at the Africa-wide level, 1995-2010 1995-2003 8 Percent 10 2003-2009 6 4 2 0 CA   EA NA SA WA Share of public agriculture expenditure (PAE) in total expenditures for Africa as a whole declined in 200309 (post CAADP) compared to 1995-2003 (pre-CAADP) Differences across different regions and countries
  • 5. Progress in Central Africa, 2003-10 Central Africa 10 Sao Tome & Principe Equatorial Guinea Congo, Rep . Congo, De m. Rep. Cameroon Burundi 0 Chad 5 Central African… Percent 15 Shares increased in Burundi, Rep of Congo, and São Tomé and Principe  Shares declined or stagnated in other countries, which already spend less than 5% 
  • 6. 25 20 15 10 5 0 Uganda Tanzania Sudan South… Seychelles Rwanda Mauritius Madagascar Kenya Ethiopia East Africa Djibouti Percent Progress in East Africa, 2003-10 Many countries in East Africa spend 5-10% percent of total expenditure on agriculture  Shares have increased over time in several countries (especially Ethiopia, Rwanda, Sudan) 
  • 7. Progress in North Africa, 2003-10 Percent 15 North Africa 10 5  Tunisia Morocco Mauritania Egypt Algeria 0 Shares have stagnated in Mauritania and diverged downwards from the 10% target in the other countries
  • 8. 30 25 20 15 10 5 0 Zimbabwe Zambia Swaziland South Africa Namibia Mozambiqu e Malawi Lesotho Botswana Southern Africa Angola Percent Progress in Southern Africa, 2003-10 Malawi is an outstanding performer, with nearly three times the target share in recent times  Apart from Zambia, shares have stagnated or declined in the other countries 
  • 9.    Togo Sierra… Senegal Nigeria Niger Mali Liberia Guinea-… Guinea Ghana Gambia Cote… Cape Verde 25 20 15 10 5 0 West Africa Burkina… Percent Progress in West Africa, 2003-10 Region where many countries have achieved target Shares have increased in many countries Burkina Faso and Mali (and Niger in recent times) have consistently cut back on the shares to the target level
  • 10. Summary of progress: and key questions (I)  Since 2003 when the declaration was made » only 13 countries have surpassed the target in any year—Burundi, Burkina Faso, Republic of Congo, Ethiopia, Ghana, Guinea, Madagascar, Malawi, Mali, Niger, Senegal, Zambia, and Zimbabwe » only 7 have surpassed it in many years  Where the shares have been increasing or are high: » Especially among countries in east and west Africa, is it because they have observed positive returns or because they think the 10% is optimal?  Where the shares have been declining: » Especially in Burkina Faso, Mali and Niger where the shares were higher than 10%, is it because they are not getting the expected returns?
  • 11. Summary of progress: and key questions (II) » For middle income countries with other sources of growth and development (esp. in north and southern Africa), is it because the return from additional spending in agriculture is lower than in the other sectors?  Where the shares have stagnated: » Is it because they have reached equilibrium, where returns from additional spending in agriculture and non-agriculture are equal?  These questions reflect the issue of the composition of public agriculture expenditure (PAE): » Role of government: large variation over time reflects changing involvement of government in the sector » Accounting problem: PAE depends of how PAE is accounted for and reported in different countries
  • 12. PAE trends reflect changing role of state (I) Botswana Egypt Ethiopia Ghana Kenya Malawi Morocco Tunisia Uganda Zambia 1980 9.7 4.4 6.9 12.2 8.4 10.2 6.5 14.5 32.5 13.4 PAE as percent of total expenditure 1985 1990 1995 9.8 6.5 6.0 4.2 5.4 5.0 9.9 6.9 9.1 6.2 6.1 5.1 10.4 6.0 5.5 8.4 11.1 11.1 5.0 5.0 4.2 8.3 8.5 8.3 3.9 2.2 2.9 10.7 5.6 2.5 2000 4.2 6.8 10.4 3.2 6.8 8.8 3.5 9.3 2.6 2.1 Compared to pre-structural adjustment periods, share of PAE has declined substantially. Governments were directly involved in agriculture production, cooperatives, marketing boards, etc.
  • 13. Ghana 2010 2005 2000 1995 1990 1985 1980 2010 2005 2000 1995 1990 1985 14 12 10 8 6 4 2 0 1980 % of total expenditure PAE trends reflect changing role of state (II) Zambia  New form of direct governmental involvement in the sector in recent times in form of heavy farm support subsidies  Issue is extent to which these programs have been refurbished to take account of their negative experiences in the past
  • 14. Percent of total expenditure Accounting/Composition of PAE: Case of Ghana 12 Feeder roads 10 Debt service PSI 8 Cocoa 6 Research 4 Fisheries 2 Forestry 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009   Crops & livestock Accounting changed over time. Is it merely to show compliance with CAADP target? Or is effectiveness of portfolio considered? Also reflects changing role of MDAs in the sector
  • 15. How has PAE been allocated?  by sub-sector  by current and investment spending  by function
  • 16. 100% 75% 50% 25% 0% Congo, Rep. CAR Congo, D. R. S. T. & Prin Burundi Chad Djibouti Seychelles Uganda Madagascar Tanzania Namibia Malawi Zambia Lesotho Swaziland Senegal Togo Cote d'Ivoire Sierra Leone Mali Percent of PAE PAE by subsector, annual average 2003–2007 Central Fishery Eastern Forestry Southern Western Crops and livestock Expenditures on crops and livestock dominate PAE.  Share of PAE on forestry is higher in the central and eastern African countries; not surprising, given dominance of forests there.  Share on fisheries is higher in island countries and countries with large coastlines. 
  • 17. 100% 75% 50% 25% 0% Chad Congo, Rep. CAR Congo, D. R. Burundi S. T. & Prin Seychelles Tanzania Djibouti Uganda Madagascar Namibia Malawi Swaziland Lesotho Zambia Sierra Leone Cote d'Ivoire Togo Senegal Mali Percent of PAE PAE by current and investment spending, annual average 2003–2007 Central Eastern Current Southern Capital Western Wide variation in share of PAE for investments—6% in Seychelles to 88% percent in Madagascar.  Artifact of how different countries classify current expenditures and investments. In many countries, all of the expenditures financed by donors are classified as investment irrespective of what they are actually spent on. 
  • 18. PAE by function, annual average 2006–2010 100% Other Inspection Percent of PAE 80% Marketing, storage, and public stockholding Feeder roads and other infrastructure 60% 40% Irrigation 20% Extension, training, technical assistance Research 0% Subsidies Burkina FasoKenya Mali Uganda Tanzania Bulk of annual PAE was spent on subsidies.  Share of PAE on research was moderate, at about 10–15 percent, although it was relatively low in Mali, at about 5 percent.  Overall, the functional distribution of PAE seems to be more balanced in Mali compared to the other four countries. 
  • 19. How has PAE trends contributed to growth?  Used simple correlations to assess co-trends between PAE and agricultural GDP growth rate  Results do not imply cause-effect relationships, which require detailed PAE and other data and advanced quantitative methods beyond the scope of this report
  • 20.   Positive correlation between PAE and agGDP growth; Different results for different regions, with largest correlations in east Africa, which is a top performer in both indicators of PAE Low significance using aggregate PAE points to the importance of composition of PAE agGDP growth rate (%)  20 15 10 5 0 -5 0 5 10 -10 -15 agGDP growth rate (%) PAE and agGDP growth: Africa-wide 15 20 y = 0.1521x + 1.65 R² = 0.0179 PAE (% of total expenditures) 20 15 10 5 0 -20 -10 -5 0 10 -10 20 30 40 y = 0.0952x + 1.7053 R² = 0.0644 -15 PAE growth rate (%)
  • 21.   Results uphold common knowledge that agR&D investments take time to manifest Results (magnitude of correlation, lags, and statistical significance) are different for different regions agGDP growth rate (%) Correlation is weak when the data for all countries are pooled in a single estimation for Africa West: Lag 3 years -20 10 5 0 -15 -10 -5 -30 5 10 15 20 agR&Dexp growth rate (%) West: Lag 6 years 10 8 6 4 2 -20 -10 y = 0.082x + 2.766 R² = 0.129 -40 0 -5 y = 0.047x + 2.673 R² = 0.015 agGDP growth rate (%)  agGDP growth rate (%) agR&D exp and agGDP growth: west Africa 0 -2 0 -4 10 20 30 agR&Dexp growth rate (%) West: Lag 9 years -30 y = 0.148x + 0.707 R² = 0.445 -20 -10 8 6 4 2 0 -2 0 -4 -6 10 20 30 agR&Dexp growth rate (%)
  • 22. PAE data challenges and requirements for JSRs  To answer the questions posed earlier in a comprehensive manner is very challenging; it is virtually impossible with existing data for many countries  Some analysis on the efficiency and effectiveness of PAE exists in a handful of countries only  We are faced with PAE measurement problems » Most of data are at higher aggregate level » Data systems reflect outlays associated with organizational structures of governments rather than objectives sought and functions performed » Several PAE undertaken outside traditional ag MDAs  We need to do better data collection and management for successful JSRs
  • 23. NAIPs and implications for PAE data and analysis  NAIP budget allocated: » Objectives and programs » Sub-sector » Commodity and commodity groups » Economic use and functions » Target population » Sources of financing  Need PAE data accordingly: for review, learning, and further planning
  • 24. % of NAIP budget by top 3 objectives/programs 100 Enabling Environment 75 Science&Tech 50 25   Benin, 2010-2015 Burkina… Burundi, 2012-2017 Cote… Ethiopia, 2010-2020 Gambia, 2011-2015 Ghana, 2011-2015 Kenya, 2010-2015 Liberia, 2011-2015 Malawi, 2011-2014 Niger, 2010-2012 Nigeria, 2011-2014 Rwanda, 2009-2012 Senegal, 2011-2015 Sierra… Tanzania, 2012-… Togo, 2010-2015 Uganda, 2011-2015 0 NRM Markets Productivity Food Security Food and nutrition security and increasing productivity dominate planned expenditures in many countries Improving markets and sustainable NRM also take a large share
  • 25. % of NAIP budget by sub-sector 100 Forestry 75 50 25 0 Fishery Livestock Crops Benin,Burkina Faso, 2011-15Liberia, 2011-15 2011-15 2010-152010-15 2010-15 Cote d’Ivoire, 2010-15 Mali, Senegal, Togo,   Very few NAIPs had a breakdown by subsector, which is surprising given that PAE is typically reported by subsector In general, crops subsector dominates; share of other subsectors depends on country context
  • 26. % of NAIP budget by major commodities Country, plan duration Benin, 2010-15 Gambia, 2011-15 Malawi, 2011-14 Mali, 2011-15 Nigeria, 2011-14 Senegal, 2010-15  Commodities and budget allocation Rice=24.9%, Corn=18.7%, Pineapple=4.2%, Vegetables=4.1% Rice=20.1% Maize=37.2% Rice=30.1%, Corn=12.7%, Millet/Sorghum= 7.2% Cash crops=13%, Rice=2.8% Groundnut=8.9%, Maize=8.6%, Sorghum=4.5%, Cowpea=3.8%, Rice=1.4% All the NAIPs identified specific commodities to lead overall agricultural growth and development. Only few had specific budget allocations. Maize and rice received the largest shares
  • 27. % of NAIP budget by function 100 Farm Support and Subsidies 80 60 NRM 40 0 Benin, 2010-2015 Burkina… Burundi, 2012-… Cote… Ethiopia, 2010-… Gambia, 2011-… Ghana, 2011-2015 Kenya, 2010-2015 Liberia, 2011-2015 Malawi, 2011-… Mali, 2011-2015 Niger, 2010-2012 Nigeria, 2011-2014 Rwanda, 2009-… Senegal, 2011-… Sierra… Tanzania, 2012-… Togo, 2010-2015 Uganda, 2011-… 20 Irrigation Extension Research NRM and farm support and subsidies dominate planned expenditures, followed by irrigation  Research and extension are stated priorities with specific budget allocations in a few countries only 
  • 28. % of NAIP budget by target population Country, plan duration Target population and budget allocation Liberia, 2011-15 Women and youth=4.8% Smallholder farmers=35.5%, Commercial farmers=9.6% Nigeria, 2011-14 Tanzania, 2012-16 Youth=48.8%, Men and women=40.3%, Women=0.6%, Men=0.2% Mainland=92.6%, Zanzibar=7.4% Uganda, 2011-15 Northern region=2.4% Senegal, 2010-15  Very few NAIPs had a breakdown of the budget by target population, even though targeting and different target groups were discussed in all of them
  • 29. % of NAIP budget by source of funding 0% 20% 40% 60% 80% 100% Others Funding gap Benin, 2010-15 Ethiopia, 2010-20 Gambia, 2011-15 Ghana, 2011-15 Kenya, 2010-15 Liberia, 2011-15 Malawi, 2011-14 Niger, 2010-12 Rwanda, 2009-12 Senegal, 2011-15 Togo, 2010-15 Government Development partners Dependence on external sources for financing the NAIPs  Only in a couple of countries is government financing at least 50%  More than 50% financing gaps in Benin, Gambia, Ghana, Senegal, Togo 
  • 30. Conclusions and Implications (I)  The amount of PAE in Africa as a whole increased rapidly, but at a slower pace than the growth in total expenditures resulting in a decline in the share of PAE in total expenditures for Africa as a whole  Some governments’ reports on compliance with the Maputo Declaration have generated controversy on what to count as PAE » resulting in a debate that may be polarizing behavior around the fundamental issue of the investments needed to achieve development results » i.e. what types of investment, how much of each type of investment, where should they be invested, and when should they be invested
  • 31. Conclusions and Implications (II)  Prioritization of investments has to be based on analysis of the efficiency and effectiveness of different types of public spending. Therefore, disaggregation of public expenditure data by type, across space, and over time is critical. » Need public expenditure accounting and reporting systems with unique codes or identifiers that also reflect the objectives and functions that the outlays are undertaken for (Kenya’s Open data on public expenditure is a very good example). » This is important for review of the NAIPs (as in JSRs) » Will enhance the political accountability of government to its citizens
  • 32. Thank You