China's agricultural and rural development: implications for Africa

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China DAC Study Group on Agriculture, Food Security and Rural Development, Bamako, April 27, 2010 …

China DAC Study Group on Agriculture, Food Security and Rural Development, Bamako, April 27, 2010

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  • 1. China’s Agricultural and Rural DevelopmentImplications for Africa
    Shenggen Fan
    Director General
    China DAC Study Group on Agriculture, Food Security and Rural Development, Bamako, April 27, 2010
  • 2. Key messages
    Different strategies and pathways have led to different development outcomes
    There are important lessons to be learnt, but with caution
    There are opportunities for win-wins
  • 3. Growth is higher in China, but picking up in Africa
    CHINA
    SSA
    %
    %
    Source: World Bank 2009.
  • 4. The share of agriculture in GDP has shrunk
    Agriculture, value added (% of GDP)
    But it continues to employ a large share of the workforce (44% in China, 86% in Ethiopia, 82% in Madagascar, 76% in Tanzania)
    Source: World Bank 2009.
  • 5. Poverty remains entrenched in Africa
    Share of people living below $1.25 a day, %
    Poverty is even higher in rural areas
    Source: Chen and Ravallion 2008.
  • 6. Hunger is on the rise in Africa
    Number of undernourished people, millions
    Source: FAO 2009.
  • 7. China: Major reforms
    Improved smallholder incentives for production
    Liberalized and reformed agricultural markets
    Liberalized trade
    Created a robust rural non-farm sector
    Initiated programs targeted at the poor
  • 8. China: “Firing from the bottom”
    Source: Gulati and Fan 2007.
    Growth in agriculture contributed 4 times more to poverty reduction than growth in manufacturing and services
    (Ravallion and Chen 2007)
  • 9. China: Gradual, trial-and-error approach
    Experimentation with new policies in isolated areas
    Scaling-up based on evidence from experiments
    Heterodox policies as a result (e.g. two-track reform and gradual trade liberalization)
  • 10. Africa: Donor-influenced reforms
    Adopted WB/IMF structural adjustment programs
    Improved incentives for agricultural production through market liberalization
    Did not correct for market failures in some cases (e.g. lack of access to key inputs and services)
    Implemented reforms incompletely, in a “stop-and-go” manner
  • 11. Africa: New Africa-owned framework
    Comprehensive Africa Agriculture Development Program (CAADP) endorsed in 2003
    Target of 6%annual agricultural growth by 2015
    Commitment to allocating 10% of national public budgets to agriculture
    Focus on
    sustainable land and water management
    market access
    food supply and hunger
    agricultural research
  • 12. China-Africa trade in agriculture is rising
    SSA exports to China, US$ mil.
    SSA imports from China, US$ mil.
    Imports dominated by food
    Exports dominated by raw materials
    Source: UNCTAD 2009.
  • 13. But the share of agriculture trade is small
    China-Africa trade by product group in 2008, %
    Source: UNCTAD 2009.
    Note: Agriculture = agricultural raw materials + food.
  • 14. Possible trade and FDI impacts on Africa
    There are also indirect impacts through trade in third markets, Chinese impact on world prices, etc.
    Source: Adapted from Jenkins and Edwards 2006.
  • 15. New approach of Chinese aid
    Market-based framework
    Innovative delivery methods: joint ventures, cooperation contracts, public-private partnerships
    Switch from support for large-scale state-owned farms to smallholder farmers
  • 16. China’s aid to Africa is rising
    Source: Brautigam 2009.
  • 17. 2006 FOCAC plan for Chinese assistance to Africa
    Double assistance by 2009
    Set-up $5 bil. development fund for firms investing in Africa
    Send 100 senior Chinese
    experts in agriculture
    Set-up 10 agricultural
    demonstration centers
  • 18. Implementation is on track and exceeding some FOCAC plans
    Sources: FOCAC 2009 and Brautigam and Li 2009.
  • 35. Benefits have come with challenges
    • Weak links with domestic markets
    • 36. Concerns about labor practices (e.g. workers from China often work on aid projects)
    Failure to raise local environmental standards
    Low transparency of aid and coordination with other donors
    Poor not necessarily benefit
  • 37. Lessons need to be drawn with caution
    Different initial conditions in Africa compared to China (e.g. rural infrastructure, institutional capacity, agric. research and extension)
    Different external conditions
    Different economic, political, ecological, and social environments in different African countries
    Reforms need to be tailored accordingly
  • 38. Main lessons
    • Accelerate agriculture and rural growth
    Improve incentives for smallholders
    Invest in agricultural R&D and rural infrastructure
    • Adopt evidence-based policy-making
    • 39. Test policy experiments on the field
    • 40. Invest in information and monitoring
    • 41. Establish social protection system
    • 42. Target vulnerable people, rural and urban
    • 43. Use productive safety nets
    • 44. Strengthen institutions and capacity
  • Achieving win-win outcomes (1)
    China-Africa cooperation needed to ensure
    Fair competition
    Stronger linkages with domestic markets
    Greater engagement of the local workforce
    Adoption of higher environmental standards
    Greater transparency and cooperation with other donors in aid delivery
  • 45. Achieving win-win outcomes (2)
    China-Africa cooperation needed in agriculture to:
    Diversify trade towards agriculture
    Increase FDI in agriculture
    Build up agricultural research and extension systems in African countries
    Continue investment in infrastructure and policymaking capacity