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Public Expenditure Tracking in Africa_2009

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"Public Expenditure Tracking in Africa", presentation by Babatunde Omilola at the AU Ministers of Agriculture Meeting, Addis Ababa Ethiopia, April 20-24, 2009.

"Public Expenditure Tracking in Africa", presentation by Babatunde Omilola at the AU Ministers of Agriculture Meeting, Addis Ababa Ethiopia, April 20-24, 2009.

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  • 1. Public Expenditure Tracking in Africa Babatunde Omilola and Melissa LambertRegional Strategic Analysis and Knowledge Support System (ReSAKSS) African Union (AU) Ministers of Agriculture, Land and Livestock Conference Addis Ababa, Ethiopia April 20-24, 2009
  • 2. Outline1. The importance of tracking public expenditures2. Regional review of public expenditures: How is Africa performing compared to other regions?3. Agriculture spending in Africa: Trends and Progress towards the Maputo Declaration target4. Tracking progress of expenditures and other key targets directly from ReSAKSS website5. Agriculture investment priorities in Africa6. Conclusion and Q&A
  • 3. 1. The purpose of tracking public expenditures• Public expenditures can be one of the most effective instruments for reducing poverty• Close monitoring of investments allows for reevaluation and investment prioritization• Can encourage investments to go to sectors with highest productivity and poverty reduction returns
  • 4. 2. Overview of public expenditures across the worldHow does Africa’s public spending compare to public spending in other regions?
  • 5. Public expenditures across world regions, 2000 international dollars, billions 50002000 international dollars, billions 4500 4000 3500 3000 1980 1990 2000 2005 2500 2000 1500 1000 500 0 SSA (13 countries) N. Africa (3 countries) LAC (16 countries) Asia (11 countries) Total (43 countries) Spending in SSA and N. Africa Total spending increased by 6 increased by 3.7 percent from 1980- percent from 1980-2005, the 2005. In SSA alone, spending majority of which was from Asia increased by 4.9 percent Source: Calculated using data from International Monetary Fund’s (IMF) Government Financial Statistics Yearbook
  • 6. Public expenditures across world regions, Percentage of GDP (%) Public expenditures as a percentage of GDP is a more useful measure of the amount a country spends relative to the size of its economy 45 40 1980 1990 2000 2005 35Percentage of GDP, % 30 25 20 15 10 5 0 SSA (13 countries) N. Africa (3 countries) LAC (16 countries) Asia (11 countries) Total (43 countries) Under this measure, Africa has spent the most, although in SSA this share has declined since 1980. Sources: Calculated using data from International Monetary Funds Government Finance Statistics
  • 7. How have governments allocated their total spending? Since 1980, the share of spending on health, education and agriculture in SSA has increased slightly while spending on defense has declined. 100% 90% 80%Share of total spending, % 70% Other 60% Defense 50% Social Security 40% T&C Health 30% Education 20% Agriculture 10% 0% 1980 1990 2000 2005 1980 1990 2000 2005 1980 1990 2000 2005 SSA Asia LAC The share of spending on agriculture in SSA increased since 2000 but remains at the 1980 level and below 10%. Sources: Calculated using data from International Monetary Funds Government Finance Statistics
  • 8. Agriculture expenditures across regions Agriculture expenditures by region, Agriculture expenditures by region as 2000 international dollars (billions) share of agriculture GDP Agriculture expenditure share of agriculture 16 2502000 international dollars, billions 14 200 12 10 GDP, % 150 8 100 6 4 50 2 0 0 1980 1990 2000 2005 1980 1990 2000 2005 North Africa SSA LAC ASIA TOTAL North Africa SSA LAC ASIA The level of agricultural spending is Yet as a share of agriculture GDP, much higher in Asia than in N. Africa, expenditures on agriculture are highest SSA and LAC in N. Africa – but still lowest in SSA. Sources: Calculated using data from International Monetary Funds Government Finance Statistics
  • 9. Drawing conclusions from the figures• Although SSA has increased total spending and agricultural spending, the levels are much lower than other regions of the world• Therefore, SSA, as a region, will need to increase its level of public spending on agriculture in order to experience successful transformation that Asian countries did through the green revolution
  • 10. 3. Agriculture spending in Africa Country Progress towards the Maputo Declaration target
  • 11. 2003 Maputo Declaration• Recognized the importance of financing agriculture for Africa’s development – High rural population and majority employed by sector• Countries agreed to goal of 10% budgetary allocation to agriculture• Is also goal of CAADP (along with 6% agricultural growth target)
  • 12. Progress towards the Maputo Declaration target • The African continent as a whole has not met the 10% target (current spending at 6-8 percent) • But, this varies by country Only 8 countries have Agricultural Expenditures as a share of total (%), 2007 met the 10% 25 target 20 CURRENT, 2007 (Unless otherwise noted) 15% 10 5 0 Central African… Madagascar** Ghana**** Guinea Bissau*** Morocco** Gabon*** Mali Nigeria DRC** Egypt** Swaziland** Benin**** Burundi*** Tunisia** Chad*** Kenya**** Uganda**** Tanzania** Malawi Sudan*** Zambia* Gambia*** Senegal Niger* Cote dIvoire Lesotho** Togo Mauritius** Namibia** Ethiopia** Rwanda Botswana Mauritania*** Mozambique** Guinea*** Cameroon** Zimbabwe** Burkina Faso* *=2006; **=2005; ***=2004; ****=2008 estimates Sources: Various, compiled by ReSAKSS.
  • 13. Have countries increased their spending in response to the 2003 Maputo Declaration?• At the continental level, Level of agricultural spending as a share of total spending, 2002-2005 agricultural spending nearly doubled between 70.0% 2000 and 2005 60.0% % of reporting countries• In 2003, only 3.2% of countries allocated 10% 50.0% or more of their budgets 40.0% to agriculture – This increased to 33.3% 30.0% in 2006 before slightly falling to 25% in 2007 20.0%• 9 countries increased 10.0% their allocations from 0.0% less than 5% spending to 5-10% spending 2002 2003 2004 2005 2006 2007 Less than 5% 5%-10% More than 10% Sources: Various, compiled by ReSAKSS.
  • 14. Agriculture expenditures as a share of agricultural GDP • Measures government spending on agriculture relative to the size of that countrys agriculture sector • Under this measure, more countries fall into the category of low budget support to agriculture Agricultural expenditures as a share of agricultural GDP, 2007 80 60 The range is CURRENT, 2007 (Unless otherwise noted) considerable% 40 (1 to 60%) 20 0 *=2006; **=2005; ***=2008 estimatesOn aggregate , Africa spends between 5-7% Sources: Various, compiled by ReSAKSS. of agricultural GDP on agriculture, compared to 15% in Asia during its Green Revolution
  • 15. Development Assistance for African agricultureSince 1995, official development assistance (ODA) toagriculture in Africa has fallen and has been less thanODA to emergency relief and food aid Sources: OECD statistical portal, accessed November, 2008.
  • 16. Agricultural aid to Africa, by country 10 All countries spent Agricultural aid as a share of total aid, % 9 less than 10% of aid 8 budgets on 7 agriculture 6 5 4 3 2 1 0 2002 2003 2004 2005 2006• Agriculture has not been prominent on the donor agenda, perhaps not becauseof any conscious decisions but due to pressure to broaden the aid agenda• It is crucial for development agencies to also commit to the 10% budgetaryallocation to agriculture Source: OECD statistical portal, accessed November, 2008.
  • 17. 4. Tracking progress of expenditures and otherCAADP/MDG targets directly from ReSAKSS website
  • 18. ReSAKSS Website: www.resakss.org Page 18
  • 19. Users can The new ReSAKSS website customize the map allows users to easily track and charts based on progress against the specific the CAADP and MDG information theytargets while also accessing are looking for,a wealth of knowledge and whether that be data on agricultural regional development in Africa information…
  • 20. …or country-specific information. When a country is selected, the map, charts and bottom narrative change to provide all available information on that country.
  • 21. By zooming out, users can selectanother country… …thereby enabling cross- country comparisons over time.
  • 22. Downloadable DataAll data can be easily exported:- An image file of a color-coded Africa Wide map for one indicator and one year at a time- A bar chart of all indicators for one country in one year- A line chart of all countries for one indicator- An excel file (spreadsheet) of all data on the selected indicator OR all data for the selected country. Example of image export for population in 2000.
  • 23. 5. Agriculture investment priorities in AfricaWhich sub-sectors should investments target?
  • 24. Prioritizing agricultural investments• Simply increasing resources is not enough – spending must also be efficient, well-targeted and supplemented by investments in non-agricultural sectors• Pro-poor investment areas include: – Staples and livestock subsectors have large domestic demand and share of value addition – Irrigation: During the Green Revolution, Asia irrigated an average of 30-50% of total arable land. Today, Africa irrigates 3- 4% – Rural Infrastructure has high poverty reduction effects per unit of investment and links farmers to inputs and markets • Africa’s current road density is low at 26 km per 1000 km2 – Agricultural research and development (R&D): every 1% increase in yield from agricultural R&D can lift 2 million Africans out of poverty
  • 25. SSA’s agricultural Agricultural R&DR&D expendituredeclined by 0.2% Regional share of global agricultural R&D spending •The agricultural R&D spending ratio to agricultural GDP is lower in 47 out of 53 African countries than the developing world average of 0.56 •If Africa doubled its budgetary allocation to agricultural R&D in 5 years, the poverty rate would decrease from 48 percent to 25 percent Source: Beintema and Stads (2008)
  • 26. Conclusions• Compared to other regions, spending on agriculture as a share of total spending and as a share of agricultural GDP is lowest in Africa• Spending levels have increased in many countries, but governments will need to continue this trend to fulfill CAADP and Maputo commitments and achieve poverty reduction• Likewise, development assistance to agriculture should also increase – “10 for 10”• Investments to agricultural R&D are particularly low in Africa and could have huge impacts if scaled up• Complementary investments in rural infrastructure are also crucial
  • 27. Thank you!