What investments are needed to reach the SADC-RISDP and CAADP goals in Southern Africa?

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"What investments are needed to reach the SADC-RISDP and CAADP goals in Southern Africa?" presentation by Babatunde Omilola at the Southern Africa Regional Conference on Agriculture. Gaborone, …

"What investments are needed to reach the SADC-RISDP and CAADP goals in Southern Africa?" presentation by Babatunde Omilola at the Southern Africa Regional Conference on Agriculture. Gaborone, Botswana, December 8-9, 2008.

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  • 1. IFPRI What Investments are needed to reach the SADC-RISDP and CAADP goals in Southern Africa? Babatunde Omilola The Southern Africa Regional Conference on Agriculture Theme: Agriculture-led Development for Southern Africa: Strategic Investment Priorities for Halving Hunger and Poverty by 2015 Grand Palm Hotel, Gaborone, Botswana December 8-9, 2008INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 5/6/2009
  • 2. Introduction: Importance of knowing resource flows and investments required to meet key SADC-RISDP and CAADP Goals African governments and their development partners need to know: » how to sufficiently invest their available resources in key productive sectors such as agriculture, education, health, transport, communications, energy, etc to achieve desired goals » How and under what conditions should resources be allocated in order to have maximum impact » In agriculture, that is closely related to key RISDP and CAADP Goals: which types of sub-sectors of agriculture should investments target (e.g., research, extension, subsidies, credit, infrastructure such as irrigation, feeder roads, etc) Page 2 IFPRI
  • 3. Introduction-Contd. Impact projections of agricultural growth, food security and poverty reduction should be based on strategic analysis regarding investment expenditures and priorities to answer the following: » Could greater or better distributed outcomes and impacts be obtained by reconfiguring investment portfolios? » What are the different types of investments that can lead to greater and more sustainable growth as well as greater and better distributed outcomes and impacts? » Based on these, what new targets must be set and the levels of investments? » Which types of sub-sectors of agriculture should investments target? IFPRI
  • 4. Outline of PresentationIFPRI Part 1 1. Key SADC-RISDP and CAADP Goals 2. Recent Trends of Public Part 2 Investments in Agriculture in the SADC region Part 3 3. Investment Requirements for Achieving key SADC-RISDP and CAADP GoalsINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  • 5. IFPRI Part 1 Key SADC-RISDP and CAADP Goals CAADP-RISDP, CAADP and MDG 1 have key shared goals and targets for addressing poverty, food insecurity and hunger issuesINTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  • 6. Key SADC-RISDP Goals Achieving a GDP growth of at least 7% a year and halve the proportion of the population living on less than US$1 per day between 1990 and 2015. Doubling cropland under irrigation from 3.5% to 7% as a percentage of the total by 2015. Increasing fertilizer consumption from 44.6 kilograms per hectare ((kg/ha) of arable land to 65 kg/ha of arable land by 2015 (world average is 98.8 kg/ha). Increasing cereal yield in kg/ha hectare from an average of 1,392 to 2,000 (world average) by 2015 Doubling the adoption rate of proven technologies such as improved seed varieties, management of water and land by 2015 Increasing the daily per capita dietary energy and protein intake from 2,160 kilocalories (kcal) to 2,700 kcal and 49g to 68g respectively by 2015. Halving the proportion of people who suffer from hunger by 2015. IFPRI
  • 7. Key CAADP Goals and Principles» CAADP has revived interest in African agriculture» Strategic framework for agriculture-led growth to attain MDG 1» Dedication of at least 10 percent of public expenditure of each African country to agriculture and rural development by 2008» Attainment of an average annual growth rate of 6 percent in agriculture.» Four main pillars to guide public investments IFPRI
  • 8. Linkage of Public Investment to the key SADC-RISDP and CAADP Goal of Poverty Reduction Total Government Spending Finance -Political -Economic -Governance Allocation: Education/Health, Infrastructure/technology, Targeted Programs Efficacy -Governance Spending Outcome: Education/Health, Infrastructure, Technology Non-farm Production Agricultural Production Wages Nonfarm Employment/migration Targeted Programs Food Prices Other Exogenous Variables -Population Growth -Agroecological Conditions -Urban Growth -Macro and Trade Policies -Asset (Land) Distribution Poverty Page 8IFPRI
  • 9. Part 2 Recent Trends of Public Investments in Agriculture in Southern AfricaIFPRI
  • 10. Current Status of Achieving key Goal of Poverty ReductionIFPRI
  • 11. Average Annual Change in Poverty Rates in Southern Africa IFPRI
  • 12. Current Level of Public Investment in Agriculture in Southern Africa IFPRI
  • 13. Agricultural Spending in LDCs Agriculture Agriculture as a Expenditure, 2000 share of Total Agriculture as a international dollars, Expenditure, % share of AgGDP, % 1994 1998 2004 1994 1998 2004 1994 1998 2004West Africa 1.5 1.7 3.2 3.0 2.9 3.4 2.1 1.8 3.1Southern Africa 4.2 4.8 4.9 2.7 2.6 2.4 14.3 13.9 15.1SSA 7.4 7.6 10.1 3.2 2.8 2.9 5.5 4.7 5.7Africa 12.7 13.2 17.5 3.7 3.5 3.7 6.9 6.0 7.2Asia 122.38 141.61 220.6 10.1 7.72 5.53 8.43 8.14 10.8LAC 19.19 17.68 23.7 3.41 3.25 2.82 11.02 9.72 11.8 IFPRI
  • 14. Public Spending for Agriculture in AfricaIFPRI
  • 15. Share of Agricultural ODA in Total ODA to SSA Share of Agricultural ODA in Total ODA, All Donors (1980-2005) 30Percent (%) 25 20 15 10 5 0 1980 1985 1990 1995 2000 2005 Source: OECD database, 2007 IFPRI
  • 16. Share of ODA spending in total agricultural spending Aid Dependency: ODA Spending as % of Total Spending for Ag Nigeria Zimbabwe Cote dIvoire Burkina Faso Kenya Benin Zambia Ethiopia Madagascar Cameroon Burundi Gambia, The Mali MalawiGuinea-Bissau Senegal Chad Guinea Ghana Tanzania Uganda Rwanda Mozambique Niger 0% 20% 40% 60% 80% 100% Source: OECD database and IFPRI public expenditures database (work in progress) IFPRI
  • 17. Composition of Agricultural Spending: The Case of Zambia Example of Zambia’s 2005 Budget Infrastructure 2% Irrigation Development 3% Personnel Emoluments Food Security Pack & 20% EDRP 12% Food Reserve Agency Operational funds Maize Marketing 11% 15% Fertilizer Support Program 37%Source: ReSAKSS-SA, MACO (Zambia), MSU (Zambia) IFPRI
  • 18. Part 3 Investment Requirements for Achieving key SADC- RISDP and CAADP Goals Evidence based on agricultural growth-poverty and growth-expenditure elasticities to estimate investments requiredIFPRI
  • 19. Returns to Investments in Sub- Saharan Africa Elasticity (% change Marginal returns in TFP per 1% (% change in TFP per 1 change in spending) billion US$ increase in spending) Agriculture 0.0152 9.0 Transport and 0.0094 6.0 communication Page 19Benin, Nin-Pratt and Radriamamonjy, 2007 IFPRI
  • 20. Agricultural Growth and Investment Requirements for Achieving Key SADC-RISDP and CAADP Goals in Africa Elasticity (% change Marginal returns in TFP per 1% (% change in TFP per 1 change in spending) billion US$ increase in spending) Agriculture 0.0152 9.0 Transport and 0.0094 6.0 communication Page 20Source: Fan et al., 2008 IFPRI
  • 21. Concluding Remarks Higher level of investments in long-term impact areas such as infrastructure (roads and transportation), extension, agricultural R&D, market information systems, postharvest handling facilities and agricultural inputs Most countries need to increase agricultural spending by 20-30 percent per year Required investments should be based on past progress in achieving key SADC-RISDP and CAADP Goals and the role of agriculture in the overall economy Increasing investment in agriculture is not enough, how increased investments in agriculture is allocated to different subsectors is very crucial. Hence, better systems for tracking investments are critical IFPRI
  • 22. Concluding Remarks Although overall ODA spending on African agriculture has risen, most of it are allocated to emergency humanitarian aid The agricultural sector is under-funded, and is lagging far behind its Asian and Latin American counterparts Sequencing and targeting of available investments and donor coordination are critical, and enabling institutional environment is important Although evidence indicate that investments in agricultural research and extension, rural infrastructure and rural education have the greatest impact on achieving key RISDP and CAADP Goals, investment prioritization should be based on the particular context of each country. This is because there is no common definition of agricultural spending. IFPRI
  • 23. Thank YouIFPRI