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

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China's agricultural and rural development: implications for Africa

  1. 1. China’s Agricultural and Rural DevelopmentImplications for Africa<br />Shenggen Fan<br />Director General <br />China DAC Study Group on Agriculture, Food Security and Rural Development, Bamako, April 27, 2010<br />
  2. 2. Key messages<br />Different strategies and pathways have led to different development outcomes<br />There are important lessons to be learnt, but with caution<br />There are opportunities for win-wins<br />
  3. 3. Growth is higher in China, but picking up in Africa<br />CHINA<br />SSA<br />%<br />%<br />Source: World Bank 2009.<br />
  4. 4. The share of agriculture in GDP has shrunk<br />Agriculture, value added (% of GDP)<br />But it continues to employ a large share of the workforce (44% in China, 86% in Ethiopia, 82% in Madagascar, 76% in Tanzania)<br />Source: World Bank 2009.<br />
  5. 5. Poverty remains entrenched in Africa<br />Share of people living below $1.25 a day, %<br />Poverty is even higher in rural areas<br />Source: Chen and Ravallion 2008.<br />
  6. 6. Hunger is on the rise in Africa<br />Number of undernourished people, millions<br />Source: FAO 2009.<br />
  7. 7. China: Major reforms<br />Improved smallholder incentives for production<br />Liberalized and reformed agricultural markets<br />Liberalized trade<br />Created a robust rural non-farm sector<br />Initiated programs targeted at the poor<br />
  8. 8. China: “Firing from the bottom”<br />Source: Gulati and Fan 2007.<br />Growth in agriculture contributed 4 times more to poverty reduction than growth in manufacturing and services <br />(Ravallion and Chen 2007) <br />
  9. 9. China: Gradual, trial-and-error approach<br />Experimentation with new policies in isolated areas<br />Scaling-up based on evidence from experiments<br />Heterodox policies as a result (e.g. two-track reform and gradual trade liberalization)<br />
  10. 10. Africa: Donor-influenced reforms<br />Adopted WB/IMF structural adjustment programs<br />Improved incentives for agricultural production through market liberalization<br />Did not correct for market failures in some cases (e.g. lack of access to key inputs and services)<br />Implemented reforms incompletely, in a “stop-and-go” manner<br />
  11. 11. Africa: New Africa-owned framework<br />Comprehensive Africa Agriculture Development Program (CAADP) endorsed in 2003<br />Target of 6%annual agricultural growth by 2015<br />Commitment to allocating 10% of national public budgets to agriculture<br />Focus on<br />sustainable land and water management<br />market access<br />food supply and hunger<br />agricultural research<br />
  12. 12. China-Africa trade in agriculture is rising<br />SSA exports to China, US$ mil.<br />SSA imports from China, US$ mil.<br />Imports dominated by food<br />Exports dominated by raw materials<br />Source: UNCTAD 2009.<br />
  13. 13. But the share of agriculture trade is small<br />China-Africa trade by product group in 2008, %<br />Source: UNCTAD 2009.<br />Note: Agriculture = agricultural raw materials + food. <br />
  14. 14. Possible trade and FDI impacts on Africa<br />There are also indirect impacts through trade in third markets, Chinese impact on world prices, etc. <br />Source: Adapted from Jenkins and Edwards 2006.<br />
  15. 15. New approach of Chinese aid<br />Market-based framework<br />Innovative delivery methods: joint ventures, cooperation contracts, public-private partnerships<br />Switch from support for large-scale state-owned farms to smallholder farmers<br />
  16. 16. China’s aid to Africa is rising<br />Source: Brautigam 2009.<br />
  17. 17. 2006 FOCAC plan for Chinese assistance to Africa<br />Double assistance by 2009<br />Set-up $5 bil. development fund for firms investing in Africa<br />Send 100 senior Chinese<br />experts in agriculture<br />Set-up 10 agricultural <br />demonstration centers<br />
  18. 18. Implementation is on track and exceeding some FOCAC plans<br /><ul><li>China-Africa development fund established in June 2007, with initial capital of US$1 billion
  19. 19. 104 senior agric. experts sent to 33 African countries
  20. 20. 14 agricultural demonstration centers established in:
  21. 21. Mozambique
  22. 22. Sudan
  23. 23. Tanzania
  24. 24. Ethiopia
  25. 25. Cameroon
  26. 26. Uganda
  27. 27. Rwanda
  28. 28. Congo, Rep.
  29. 29. Zimbabwe
  30. 30. Togo
  31. 31. Zambia
  32. 32. Liberia
  33. 33. Benin
  34. 34. South Africa</li></ul>Sources: FOCAC 2009 and Brautigam and Li 2009.<br />
  35. 35. Benefits have come with challenges <br /><ul><li>Weak links with domestic markets
  36. 36. Concerns about labor practices (e.g. workers from China often work on aid projects)</li></ul>Failure to raise local environmental standards<br />Low transparency of aid and coordination with other donors<br />Poor not necessarily benefit<br />
  37. 37. Lessons need to be drawn with caution<br />Different initial conditions in Africa compared to China (e.g. rural infrastructure, institutional capacity, agric. research and extension)<br />Different external conditions<br />Different economic, political, ecological, and social environments in different African countries<br />Reforms need to be tailored accordingly<br />
  38. 38. Main lessons<br /><ul><li>Accelerate agriculture and rural growth</li></ul>Improve incentives for smallholders<br />Invest in agricultural R&D and rural infrastructure<br /><ul><li>Adopt evidence-based policy-making
  39. 39. Test policy experiments on the field
  40. 40. Invest in information and monitoring
  41. 41. Establish social protection system
  42. 42. Target vulnerable people, rural and urban
  43. 43. Use productive safety nets
  44. 44. Strengthen institutions and capacity</li></li></ul><li>Achieving win-win outcomes (1)<br />China-Africa cooperation needed to ensure<br />Fair competition<br />Stronger linkages with domestic markets<br />Greater engagement of the local workforce<br />Adoption of higher environmental standards<br />Greater transparency and cooperation with other donors in aid delivery<br />
  45. 45. Achieving win-win outcomes (2)<br />China-Africa cooperation needed in agriculture to: <br />Diversify trade towards agriculture<br />Increase FDI in agriculture<br />Build up agricultural research and extension systems in African countries<br />Continue investment in infrastructure and policymaking capacity <br />