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Sub-Saharan Africa: The state of 
smallholders in agriculture 
Geoffrey Livingston, Steven Schonberger and Sara Delaney
Session 3 
Breakout Session 1 
Sub-Saharan Africa: The state of smallholders in agriculture1 
Geoffrey Livingston, Steven Schonberger and Sara Delaney2 
Paper presented at the IFAD Conference on New Directions for Smallholder Agriculture 
24-25 January, 2011 
International Fund for Agricultural Development 
Via Paolo Di Dono, 44, Rome 00142, Italy 
1 Copyright of the paper is reserved by IFAD. The paper may not be reproduced in part or in full and in any 
form without written permission of the Conference Organisers at IFAD (e-mail: at.rahman@ifad.org) 
2 The authors Respectively are Regional Economist at East and Southern Africa Division, Regional Economist 
and Consultant at Western and Central Africa Division, IFAD.
Sub-Saharan Africa: The state of smallholders in agriculture 
SUMMARY 
This paper provides an overview of agricultural and economic characteristics of sub-Saharan 
Africa (SSA), in comparison with other developing regions and the opportunities which the medium-term 
outlook holds for SSA’s small holder farmers. Seizing these opportunities will depend on 
shifting from extensive to intensive production systems. The paper reiterates a key conclusion of 
IFAD’s 2011 Rural Poverty Report: the ability of SSA’s smallholder farmers to increase on-farm 
investments in productivity is constrained by their capacity to manage the risk-return trade-offs in 
moving towards intensified agriculture. 
Risks are often specific to different types of supply chains. Generally speaking, smallholders 
in disbursed supply chains (cereals, rice) are exposed to a larger number of business risks and lower 
returns than those operating in integrated markets (fair trade cocoa, specialty coffee) where risks are 
more widely shared among supply chain actors. While there remains a need for more rigorous 
evaluation of the relative impacts on livelihoods of participating farmers, experience under IFAD-financed 
projects which aim to move farmers towards greater market integration has generally 
confirmed significant, positive impacts on both the level and stability of incomes of participating 
smallholders. However, evidence on the ground is highlighting that these investments, of themselves, 
are not sufficient in most cases for farmers to move effectively from a dependence on dispersed staple 
crop markets towards more integrated market opportunities. 
While there are a myriad of explanations offered, most emphasizing the weakness of 
institutions or governance, we suggest that a more focused and practical element merits greater 
attention: effective coordination of project interventions in terms of place and timing of development 
support.
Introduction 
The purpose of this paper is to provide a regional canvas for the broader discussion of the future 
directions on smallholders in agriculture. We do not attempt to provide a comprehensive overview of 
sub-Saharan Africa (SSA), its agricultural sector or even all of the challenges and opportunities 
associated with smallholder farming. Rather, the intention is to communicate our appreciation of the 
richness and complexity of the continent in comparison with other developing regions, and through 
discussion of the role of smallholder farmers in agricultural growth, focus the broader discussions of 
the conference on some of the key issues which, from our experience and that of IFAD projects 
working in SSA, are particularly relevant in our efforts to assist smallholder families definitively 
escape poverty through the transition towards ‘farming as a business’. 
We begin in Section One with a brief overview of the land, geography, people, economy and of 
course, smallholder agriculture in SSA. Following this, in Section Two, we look more closely at the 
opportunities for SSA’s smallholders, adapting the perspective of IFAD’s recently released Rural 
Poverty Report to our regional context, and use a risk management lens to connect overall ecological 
and market contexts to the specific endeavours of smallholder farmers. In Section Three, we move 
rapidly from the general to a specific focus on an issue which we feel merits much greater 
consideration – the importance of spatial and temporal coordination in reducing risk, increasing 
returns and allowing for project success. Finally, we conclude with some key recommendations on 
how these ideas can be transformed into an operational approach.
Table 1 Surface area of developing regions (km2) 
Sub-Saharan Africa (SSA) 24,241,910 
Latin America & Caribbean (LAC) 20,421,620 
East Asia & Pacific (EAP) 16,298,850 
Middle East & North Africa (MENA) 8,777,910 
South Asia (SAR) 5,131,070 
2 
1) Overview – Sub-Saharan Africa in Perspective 
Sub-Saharan Africa is a region of superlatives and contrasts. It has the largest land area of any 
developing region and the smallest countries. It has the oldest geology and the youngest population. 
It has the greatest concentration of high value minerals and the highest concentration of degraded 
soils. It has the fastest growth in agriculture and the greatest level of agricultural imports. It has the 
highest proportion of rural poor and the greatest potential for smallholder agriculture led poverty 
reduction. 
The Land 
Sub-Saharan Africa is big – with a surface area 
of 24 million km2 it is larger than all other 
developing regions (Table 1). (WDI 2010) 
This area is home to a large diversity of agro-ecological 
climates, ranging from the arid 
drylands of northern Mali, to the humid tropics of 
the Congo. Figure 1 shows SSA divided into six agro-ecological zones, differentiated by the length of 
the potential growing period for rain-fed agriculture. Rainfall ranges dramatically, from over 2,000 
mm/year in central Africa to less than 400mm/year in arid areas (Bationo et al. 2006). 
Sub-Saharan Africa is rich in 
minerals. The region’s 
geology has been the most 
stable of all continents with 
the result that it contains 
concentrations of many rare 
minerals, including 
diamonds, of which is 
produces 55% of world 
supply, cobalt (52%), 
chromite (37%), and gold 
(22%).(USGS 2008) 
This geological stability has 
also resulted in a high 
proportion of low-fertility 
soils. In the absence of 
volcanic rejuvenation, cycles 
of weathering, erosion and 
Figure 1 Agro-Ecological zones (FAO 2002) 
leaching on the continent over the years have left soils inherently low in nutrients. It has also resulted 
in wide diversity of soil types, differing dramatically in their ability to retain and supply nutrients to 
plants, to hold or drain water, to withstand erosion or compaction and to allow for root penetration. 
About 55% of the continent is considered unsuitable for cultivated agriculture. Of the remaining land, 
16% is considered high quality, 13% medium, and 16% of low potential (Figure 2). (Bationo et. al. 
2006)
Many of these already low-fertility 
soils have suffered further losses in 
nutrients, biodiversity and structure 
over the years due to management 
practices. This impacts greatly on 
the productive capacity of the soils 
and therefore farmer incomes. IFDC 
has estimated that SSA loses around 
eight million tonnes of soil nutrients 
per year, and that over 95 million ha 
of land on the continent had been 
degraded to the point of greatly 
reduced productivity. During the 
2002-2004 cropping season over 
80% of countries in Africa1 were 
estimated to be losing more than 30 
kg/nutrients per year, and 40% of 
countries an astounding 60 kg or 
more per year. (Henao & Baanante 
2006) 
Table 2 Political Geography (World Bank 2009, WDI 2010) 2 
3 
Figure 2 Land Classification (Bationo et al. 2006) 
Political Geography 
SSA has the largest number of 
countries per surface area, and one 
of the smallest populations per 
Ratio of 
Population per 
Population in 
country out of the developing 
countries to 
country (million 
landlocked 
regions (Table 2). 
area 
inhabitants) 
countries (%) 
EAP 1.44 125 0.4 
Further, sub-Saharan Africa has the 
LAC 1.52 24 2.8 
highest number of landlocked 
MENA 1.60 19 0 
countries, 15 out of the total 43 in 
SAR 1.67 196 3.8 
the world, and the greatest 
SSA 2.00 20 40.2 
proportion of population living in 
landlocked countries. (World Bank 2009) 
Instability, state fragility and conflict have, tragically, been much more frequent in SSA than other 
regions. Sub-Saharan Africa scored the lowest on the Center for Global Policy’s State Fragility Index 
of all regions, with seven countries experiencing major conflicts in 2009, four countries with recently 
ended conflicts and almost all countries in the region falling into the serious, high or extreme fragility 
categories. Some countries have made improvements, including Equatorial Guinea, Togo, Liberia and 
Angola. (Marshall and Cole 2009) 
The People 
Sub-Saharan Africa’s current population of 800 million makes it one of the most sparsely populated 
regions, but also the fastest growing. As in other regions, population has steadily increased over the 
last 50 years and is projected to reach around 1.7 billion by 2050. Population growth between 1988 
and 2008 was 66%, similar to that in MENA, but much higher than APR and LAC which both had 
growth rates around 30%. Birth rates in SSA, while currently the highest of the developing regions, 
declined at a similar pace to others during the period above. SSA’s rapid population growth has 
1 In this paper we focus on sub-Saharan Africa. When the term ‘Africa’ or ‘the continent’ is used it is because 
the statement refers to the continent as a whole, rather than SSA. 
2 Small-island nations taken out of calculations
4 
resulted in a young population. Youth under fourteen now make up 42% of the inhabitants of the 
region, with the next youngest region being South Asia (32%). (IFAD 2010, WDI 2010) 
Of the total 800 
million, around 500 
million (63%) 
currently live in 
rural areas. Only 
South Asia has a 
higher proportion 
of rural inhabitants 
(70%) (Figure 3) 
The trend towards 
urbanization, which 
is occurring in all 
developing regions, 
is happening slower 
and later in SSA, 
and the tipping 
point, at which the 
2,000,000,000 
1,800,000,000 
1,600,000,000 
1,400,000,000 
1,200,000,000 
1,000,000,000 
800,000,000 
600,000,000 
400,000,000 
200,000,000 
0 
70% 
Urban and Rural Population 
63% 
South Asia Sub- 
Saharan 
Africa 
55% 
East Asia & 
Pacific 
Figure 3 Urban and Rural Population (WDI 2010) 
Urban Population 
Rural Population 
42% 21% 
Middle East 
& North 
Africa 
Latin 
America & 
Caribbean 
population will become more urban than rural, is not expected to occur in SSA until around 2050. 
(IFAD 2010) 
Poverty and Equity 
Sub-Saharan Africa’s population is poorer than other regions and is falling further behind. While 
other regions have managed to reduce the absolute number of poor despite population growth, in SSA 
the number of poor has steadily grown. The proportion of poor in the population has, however, 
decreased slowly since the late 1990s, and is currently about 53%, compared to 27% in APR and 7% 
in LAC. In contrast to LAC, MENA, and East Asia, but consistent with South and Southeast Asia, the 
poor in Africa live mainly in rural areas with the rural communities being home to 75-80% of the 
poor. 
Looking beyond 
poverty rates to 
progress on other 
MDG indicators, the 
SSA region as a 
whole had a more 
challenging starting 
point, and has for 
the most part made 
slower progress than 
other regions. The 
most recent FAO 
calculations show 
that the proportion 
of undernourished3 
in SSA is by far the 
Figure 4 Proportion of undernourished by region (FAO 2010) 
highest, estimated at 30% in 2010, compared to 16% in APR, 8% in LAC, and 7% in MENA. (Figure 
3 Refers to the condition of people whose dietary energy consumption is continuously below a minimum dietary 
energy requirement for maintaining a healthy life and carrying out a light physical activity. The term is a 
measure of a country's ability to gain access to food and the income distribution in that country, and is derived 
from Food Balance Sheets prepared by the FAO.
4). These numbers gloss over a huge amount of variation within the region. The Democratic Republic 
of Congo, for example, is contributing disproportionately to the number of hungry in the region; the 
proportion of hungry there has increased from 26% in 1990/2, to 69% as of 2005/7. On the other 
hand, many countries in SSA are making consistent and often overlooked progress. As of 2007 
Ghana, Mali, Nigeria and the Congo had already achieved the undernourishment target of MDG1, and 
eleven others were close to achieving it. (FAO 2010) 
Improvements in health and education have likewise been slow. Child nutrition remains a challenge - 
with 28% of children under five underweight for their age, 38% suffering from stunting and 9% from 
wasting. The high prevalence of stunting, second only to South Asia, is particularly concerning, as 
this reflects nutritional deficiencies and illnesses that occur during the most critical periods for child 
growth and development and cause irreversible effects on human development and capacity. (Unicef 
2007) 
At current progress SSA is the only region which will not come close to the target of reducing the 
under-five mortality rate by two-thirds, although current rates put it on track to reduce risk by close to 
half. SSA is also furthest from the primary school completion target, with around 65% of boys and 
55% of girls now completing primary school, after consistent progress since 2000. With increasing 
numbers of youth completing primary and secondary school, sub-Saharan Africa is in great need of 
investments in university level education and skilled vocational training. Adult literacy, currently at 
61%, is still far lower than other regions. (World Bank 2009b, World Bank 2010) 
Experience in other regions highlights 
that economic growth is often associated 
with increasing income and gender 
inequality. SSA currently ranks 
reasonably well in this regard when 
compared to other developing regions. 
(Table 3). (IFAD 2010) 
5 
The Economy 
Economic growth in SSA, as a region, has for the 
most part been lower than that in Asia and LAC over 
the last two decades (Table 5). (IMF 2010) However, 
as with other indicators, the regional average does not 
show the particularly low, or high, growth rates in 
some SSA nations. While Asian averages have been 
largely driven by the high growth of China, SSA also 
has some strong performers. In fact, as recently 
published in the Economist, over the last ten years six 
out of the world’s ten fastest growing economies 
were in SSA. (Economist 2011) The region also 
proved surprisingly resilient to the 2009 economic 
crisis and is expected to bounce back strongly (Table 
4) (IMF 2010). 
Table 5 GDP Growth (IMF 2010) 
1990s 2000s 2009 2010* 
SSA 3.0 4.8 2.6 5.0 
PR 7.2 8.3 6.9 9.4 
LAC 3.0 5.7 -1.7 5.7 
Table 4 World’s ten fastest-growing 
economies* (annual average GDP growth 
%) 
2001 - 2010 2011-2015 (IMF 
forecast) 
Angola 11.1 China 9.5 
China 10.5 India 8.2 
Myanmar 10.3 Ethiopia 8.1 
Nigeria 8.9 Mozambique 7.7 
Ethiopia 8.4 Tanzania 7.2 
Kazakhstan 8.2 Vietnam 7.2 
Chad 7.9 Congo 7.0 
Mozambique 7.9 Ghana 7.0 
Cambodia 7.7 Zambia 6.9 
Rwanda 7.6 Nigeria 6.8 
*Excluding countries with less than 10m and 
Iraq and Afghanistan 
Table 3 Equality by region 
(0 = no inequality; 1= complete inequality) 
Gini Index Gender Index 
AEP 0.57 0.23 
SSA 0.42 0.18 
LAC 0.52 0.02 
MENA 0.38 0.27
National economies in sub-Saharan African countries are typically less diverse than in other regions, 
and are, for the most part, dependent on fuel, minerals, or agriculture to generate value-added. Taken 
as a region, the GDP in SSA is split between products classified as services (54%), industry (32%, of 
which about 15% is manufacturing) and agriculture (15%). This hides considerable variation, ranging 
from countries relying heavily on agriculture, such as Ethiopia and Sierra Leone, where 52% of GDP 
comes from the sector, to countries where agriculture contributes around 25%, such as Sudan and 
Mozambique, and then to those for which it makes up 5% or less of the economy such as South 
Africa, Botswana and Gabon. Output classified as industry also includes agro-industry and in 
agriculture-based countries, such as Uganda, agro-industries contribute up to 61% of total 
manufacturing sector output. (Mhlanga 2010) 
Trade 
Africa’s share in world trade is proportionally very small, accounting for only about 3% of world 
exports and imports, shares similar to Latin America, but dwarfed by all other regions. Europe is 
currently Africa’s largest trading partner, however trade with Asia and other developing regions has 
been steadily increasing. (Table 6 and Figure 5) 
Figure 5 Export Destinations (IMF 2010) 
6 
Table 6 Trade Shares (WTO 2010) 
Imports to 
Africa 
Exports from 
Africa 
Europe 42% 40% 
Asia 26% 22% 
North 
7% 17% 
America 
Africa 12% 12% 
Middle East 8% 3% 
Other 5% 6% 
Exports are dominated by fuels (55%), with manufactures (19%), agricultural products (10%) and 
mining products (9%) making up the remainder. (WTO 2010) Agricultural exports are primarily high-value 
cash-crops such as cocoa, sugar, coffee, tea, cotton, and oranges. (Figure 6) Agricultural 
imports are primarily basic food items. Wheat is the largest food import to SSA, at 8.6 million tonnes 
in 2008, owing to the steady increase in demand for bread, particularly in urban areas. Wheat can only 
be grown on about 1% of the land or 24 million ha in SSA, mostly in the highlands in East Africa. 
(FAO 1991, Morris and Byerlee 1993) However, as seen in Figure 6, countries in SSA import large 
quantities of commodities which could be supplied locally, including rice, maize, sugar, palm oil and 
soybeans.
7 
Top exports - SSA 
Quantity 
(tonnes) 
Top imports - SSA* 
Quantity (tonnes) 
Value (1000 $) 
Figure 6 Imports and Exports (FAOStat 2010) 
4,500,000 
4,000,000 
3,500,000 
3,000,000 
2,500,000 
2,000,000 
1,500,000 
1,000,000 
500,000 
0 
2,000,000 
1,800,000 
1,600,000 
1,400,000 
1,200,000 
1,000,000 
800,000 
600,000 
400,000 
200,000 
0 
Value (1000$) 
Tonnes 
3500000 
3000000 
2500000 
2000000 
1500000 
1000000 
500000 
0 
4,500,000 
4,000,000 
3,500,000 
3,000,000 
2,500,000 
2,000,000 
1,500,000 
1,000,000 
500,000 
0 
Value (1000$) 
Tonnes 
*Excluding Wheat 
Intra-regional trade is also very low compared to other regions. Total intra-regional trade is only 12% 
of total trade to and from SSA countries as compared to 52% in Asia and 26% in LAC. The main 
traded commodities between SSA countries are fuel and mining products, with intra-region 
agricultural product export totalling only US$8 billion or 18% of officially recorded agricultural 
exports. (WTO 2010) 
Investment 
Public 
As economies diversify and with increased resource revenues, governments can raise levels of public 
investment. The historically high share of public expenditures on military is gradually decreasing in 
some countries, with resulting increases in infrastructure, health, education and other public services. 
SSA countries, on average, currently devote 5-7% of their public expenditures to agriculture, as 
compared to 8-10% percent in Asia (Resakss 2010). In 2003, the African heads of state committed to 
increase the share of public expenditures going to agriculture to at least 10%, reflecting the 
recognition of agriculture’s potential as both an engine of growth and driver of poverty reduction. 
While only eight countries have been able to confirm having reached or surpassed this goal as of mid-
2010, agriculture’s share of public expenditures has been rising in most countries. (Donor Platform 
2010, Resakss 2010) 
Private 
Private investment has been slowly increasing in the last few decades in all developing regions. 
Investment in sub-Saharan Africa, as a whole, is small compared to other regions, but when viewed in 
relation to GDP, is on par with others. (World Bank, 2009) Most of this investment in SSA is going in 
to the oil and gas, mining and telecommunications industries. However, private investment in 
agriculture, and particularly agri-industry, has been slowly increasing. Total investment (public plus 
private) to SSA was projected to increase by some 7% in 2010 and 6% in 2011. (IMF 2010) 
Continued investment growth – both domestic and foreign – and particularly in the non-minerals 
sectors, will depend on steady improvements in the overall business climate. In terms of macro-economic 
8 
management, sub-Saharan Africa compares favourably with other developing regions with 
relatively stable, if slightly higher inflation, reflecting generally good monetary discipline in the face 
of the impact of sudden increases in investments and receipts associated with oil and mineral 
exploitation. Average inflation from 2007-2010 in SSA was 9.1%, compared to 6.4% in LAC, 5.5% in 
developing Asia and 1.5% in the advanced economies. (IMF 2010) 
In terms of ‘the ease of doing business’, while overall there is improvement, the countries of SSA 
account for 9 of the bottom 20 in the Transparency International corruption perception rankings, and 
15 of the bottom 20 of the IFC Doing Business Rankings. Despite some improvements, starting a 
business still costs 18 times as much (relative to income per capita), on average, in Sub-Saharan 
Africa as in OECD high-income economies. This encourages firms to remain informal, resulting in 
disincentives for growth and job creation, and limits the ability of governments to increase their fiscal 
revenues. At the same time, however, several countries, including Rwanda and Ghana, have improved 
their standing on both indices substantially, and in 2010 Rwanda was highlighted as a global best 
performer in improving its business climate. (Transparency International 2010, IFC 2011) 
Infrastructure, while improving in some areas, remains a major constraint relative to other regions. 
Road condition and density are very low, as we will expand upon in Section Three. Electricity 
generation capacity has remained stagnant since the 1980s, and now averages only 37MW/million 
people, as compared to 326MW across other low income regions. (Foster and Briceño-Garmendia 
2010) Costs in much of SSA are also significantly higher, averaging 14c/kWh, as compared to 
4c/kWh in EAP or to 1c/kWh in South Asia, and access is unreliable, with only South Asia 
experiencing more outages. Many small businesses must rely on small diesel powered generators, 
with which electricity can cost up to 0.40kWh. (Foster and Briceño-Garmendia 2010b) Ten years ago 
telephone access in SSA was much lower than other developing regions, however, exponential 
increases in mobile phone use, from 650,000 in 1995 to over 330 million in 2010, have now put the 
region on par with South Asia, and on a path for continued expansion in communications 
connectivity. (International Telecommunications Union 2010) 
Table 7 Infrastructure 
Region Paved Roads 
(%) 
(WDI 
latest) 
Road Density (km2 
of road/surface 
area) (WDR 2009) 
Access to 
Electricity (%) 
(WDR 2009, 
AICD 2009) 
Telephone, mobile 
and fixed (per 100 
people) (WDI 2009) 
EAP 11 0.72 89* 75 
MENA 76 0.33 78 74 
LAC 22 0.12 90 99 
South Asia 57 0.85 52 36 
SSA 12 0.13 26 35 
*excluding China
Agriculture 
Sub-Saharan Africa’s rural economy remains strongly 
based on agriculture relative to other regions. Agriculture 
in SSA (excluding South Africa) employed 62% of the 
population and generated 27% of the GDP of these 
countries in 2005. (Staatz and Dembele 2007). These 
agricultural production systems are largely based on 
smallholder farms. Smallholder farms, when defined as 
being two ha or less, represent 80% of all farms in SSA, 
and contribute up to 90% of the production in some SSA 
countries. (Wiggins 2009). A large percentage of these 
smallholders are women, responsible for key components 
of household production such as weeding, harvesting and processing. Further, women often 
independently grow non-cereal crops for income and are increasingly heading rural households due to 
male urban migration. (Oxfam 2008) 
As in other regions, SSA agricultural households have varying levels of diversification in income 
sources beyond agriculture - though agriculture remains the dominant source of livelihood in poorer 
countries and poor regions within less poor countries. (IFAD 2010) (Figure 7). 
9 
Figure 7 Rural Household Incomes (IFAD 2010) 
Table 8 Agriculture 
Agriculture 
value added 
(%GDP) 
Agriculture Performance 
The growth in agricultural GDP in SSA has been relatively strong in 
recent decades, and was the highest of the developing regions in 2009 
(Table 9). Overall, increases in agricultural production have kept 
pace with population growth (FAOStat 2010, IFAD 2010). However, 
in contrast to other regions, this has occurred largely through 
expansion of the cultivated area onto the region’s relatively abundant 
land rather than increases in land productivity (Figure 8). 
Agricultural 
Employment (%) 
2008 2007 
SSA 16 (27*) 46 (62*) 
APR 13 44 
LAC 6.5 12 
*Figures excluding South Africa, for 2005 
Table 9 Agriculture GDP 
growth (%) (WDI) 
1990s 2000s 2009 
SSA 2.7 3.0 4.8 
APR 3.6 3.9 3.8 
LAC 2.1 3.3 1.5
10 
Figure 8 Increases in cereal production in South Asia and SSA (Index: 1961=100) (Henao and 
Baanante 2006) 
The pursuit of an extensification strategy by SSA’s farmers reflects the relative availability and lower 
costs of land relative to capital inputs required for intensification, such as credit, fertilizer and 
irrigation. As in LAC, SSA has a further 800 Mha of uncultivated land with rainfed crop production 
potential. In comparison, there is almost no available land in South Asia, East Asia or North Africa 
(Figure 9). 
At the same 
time, while 
overall 
production 
growth has 
been based 
mainly on 
extension of 
cultivated area, 
the picture 
regarding 
intensification 
is a bit more 
nuanced. 
Looking at the 
net production 
value per 
hectare, which 
Figure 9 Potential for cropland expansion (FAO 2009) 
compares the value of production of all agricultural products against a base year (after taking out that 
used for feed or seed), one can see that while SSA overall has made slower progress over the last 50 
years compared to others there is quite a wide degree of variation across the continent, and in fact the 
more densely populated West Africa region has progressed at a rate slightly greater than that of LAC. 
(Figure 10).
11 
800 
700 
600 
500 
400 
300 
200 
100 
0 
World Developing Regions 
1961 
1964 
1967 
1970 
1973 
1976 
1979 
1982 
1985 
1988 
1991 
1994 
1997 
2000 
2003 
2006 
Net Production /Ha ($) 
180 
160 
140 
120 
100 
80 
60 
40 
20 
Figure 10 Net Production in Developing Regions and African Regions 
(Wiggins 2010, FAOStat 2010) 
Breaking this down even further, there is considerable variation from country to country. For 
example, Figure 11 shows production values in more crowded Malawi shooting up starting in the 
early 1990s, as compared to steady and slow progress in less densely populated Burkina Faso and 
Kenya and stagnation until recently in Senegal. 
400 
350 
300 
250 
200 
150 
100 
50 
Figure 11 Production in selected Africa countries (FAOStat 2010) 
Africa 
LAC 
Asia 
0 
1961 
1964 
1967 
1970 
1973 
1976 
1979 
1982 
1985 
1988 
1991 
1994 
1997 
2000 
2003 
2006 
Net Production /Ha ($) 
African Regions 
Africa 
Eastern 
Middle 
Northern 
Southern 
Western 
0 
1961 
1964 
1967 
1970 
1973 
1976 
1979 
1982 
1985 
1988 
1991 
1994 
1997 
2000 
2003 
2006 
2009 
Net Production /Ha ($) 
Select African Countries 
Burkina 
Faso 
Kenya 
Malawi 
Senegal
2) Opportunities for Sub-Saharan Africa’s Smallholders 
The agricultural sector faces growing global and regional demand for agricultural products for food, 
feed, industry and fuel. Continued population and income growth, combined with urbanization, 
particularly in developing countries and, as we have seen, including those in SSA, is placing pressure 
on current food supplies at the same time that global productivity increases are levelling off. At the 
same time, geo political and environmental concerns are placing increased emphasis on the 
replacement of petroleum with renewable sources, such as crops, for production of fuels, lubricants 
and fibres. The consequences of this rapid growth in demand, combined with slowing scope for 
supply response from traditional producing regions has resulted in increased sensitivity of agricultural 
markets to supply variations due to weather. The resulting tendency towards increased price volatility 
was clearly observed in the context of the 2007 and 8 food price crisis. Higher prices and volatility are 
forecast to continue, particularly in the context of expected impacts of climate change (for example, 
Godfray et. al. 2010). 
The world has turned to sub-Saharan Africa, given its relatively abundant, uncultivated land 
resources, and unrealized potential productivity gains as a major source of future supply and stability 
for food and industrial agricultural markets. At the same time, SSA’s governments, recognizing the 
need to feed an increasingly urbanized population, as well as the opportunity to develop agro-processing 
12 
industries, are also focused on rapidly increasing agricultural production. This was 
highlighted at the African Union Congress in 2004 where Heads of State committed to achieving an 
average 6% annual growth rate of agriculture, supported by a minimum of 10% allocation of public 
expenditures to the agricultural sector. 
While expansion of large, plantation-type operations will likely account for some of SSA’s supply 
response, there remains significant scope for smallholders, and smallholder farmer organisations, to 
increase their role as commercial suppliers. The circumstances favouring plantation approaches are 
quite limited due to the economies of scale involved in careful timing and rapid transfer of harvests to 
processing facilities, as well as the need for significant investments in infrastructure in remote, 
sparsely populated areas (Hayami 2004). However, even in the case of these so-called “plantation 
crops” the impact of labour management challenges provide scope for alternative institutional 
approaches which maintain the central role of smallholders, such as nucleus estates. (Deininger and 
Byerlee 2010) 
SSA’s smallholders are positioned to be significant beneficiaries of the improving opportunities in 
agricultural markets. The theoretical efficiency advantages of smallholder production systems - in the 
absence of scale economies for input and output markets - for most crops, particularly in countries 
with relatively high capital costs relative to labour – are well known. (Binswanger and Rosenzweig 
1986, Hazell et. al. 2007) This theoretical advantage of smallholder farming is confirmed empirically 
for SSA in the World Bank’s Awakening Africa’s Sleeping Giant study (World Bank 2009c) which 
concluded that smallholder production costs at the farm gate for several key crops are competitive 
with other regions, despite lower productivity, making them competitive suppliers in local markets. 
For example, Nigerian soybean producers can supply Ibaden markets at 62% of the cost of imports, 
and Zambian sugar farmers can supply Nakambala markets at 55% of the cost of imports. More 
broadly, as shown above, SSA’s farmers, of which 80% are smallholders, have been responding to 
improved production incentives with steady, if relatively slow, growth in production and productivity. 
From Extensification towards Intensification 
The primary challenge now is a move from extensification towards greater intensification in the 
supply response strategies of smallholders. While Africa’s relatively abundant, uncultivated arable 
land suggests significant scope for expansion, this is facing limits which is increasing the ratio of the 
cost of land to capital inputs faced by farmers. In particular, efforts to develop these lands through 
large scale concessions – particularly to foreign investors – has made it clear that “uncultivated” does 
not mean “unused”. Expansion must take into account impacts on existing economic uses – such as 
grazing and woodsheds, as well as social and ecological functions whose importance often becomes
apparent when efforts are made to convert the land. Importantly, and as discussed in more depth in 
Section Three, these areas also often suffer from very limited access to infrastructure or market 
centres. (FAO 2009). 
Continued smallholder production growth will require increased investments in intensification. In 
order for smallholders to increase production with less additional land and without major increases in 
labour inputs, they will need to increase their own productivity through greater capital and technology 
investments. While there is some scope for increasing labour intensity of agriculture, given the 
growing, young population profile, in fact, there is little evidence that this can be realized in the 
context of smallholder agriculture on a broad scale as educated youth are much more inclined to seek 
urban and even rural employment opportunities which offer perceived higher returns for effort than 
extensive agriculture – particularly given traditional difficulties faced by youth in obtaining land. In 
fact, attracting youth to agriculture as a livelihood is likely to coincide with increased intensification 
which improves returns per unit of labour and land and builds on their educational advantages. The 
Sleeping Giant study concludes that “[current farm-level] competitiveness does not represent a 
sustainable path out of poverty, because at current productivity levels and farm size, agriculture is 
economically impoverishing and technically unsustainable. The challenge facing African countries is 
to invest in developing a more sustainable, productivity-driven base for competitive commercial 
agriculture over the long-run.” 
Accordingly, the smallholder supply response will depend on increased on-farm investments, such as 
appropriate seeds and fertilizers, irrigation and mechanization technologies, and reductions in post-harvest 
losses (PHL). Despite recent increases, SSA remains well behind other regions in the use of 
improved seeds and fertilizers. On average, farmers in SSA apply less than 10 kg of nutrients/ha, 
compared to around 140 kg/ha in both Latin America and South Asia. (WDI 2010) Use of high 
quality seed is also much lower than it could be with surveys for staple crops in West Africa 
indicating improved varieties accounting for only 2-33% of seed and renewal of seed stock occurring 
only every 9-13 years. From 1997 to 2007 in West Africa, there was only enough improved maize 
seed to meet one-third of farmer demand (Ndjeunga and Bantilan 2002, AGRA 2011, Adesina 2010). 
Productivity improvements will also 
require greater use of irrigation. While 
there has been a steady increase in the 
amount of agricultural land irrigated 
worldwide in the last 50 years, this has 
mostly occurred in Asia, where 
irrigated land has increased from 27% 
to around 36%. In contrast, only 11% 
of land is irrigated in LAC, and less 
than 3% in SSA. (IFAD 2010) Many 
countries in Asia are now irrigating 
close to their full potential, while in 
Latin American countries the percent of 
potential used is lower (5-35%). (FAOAquastat 2010) While there is considerable potential to expand 
irrigation in SSA, opportunities vary greatly across the region, due to differences in rainfall, 
renewable water resources and land. While some areas have high irrigation potential, they also receive 
abundant rainfall, making irrigation less crucial; others receive less rain, but also have less water to 
draw from. (Table 10) One-third of the potential on the continent is concentrated in two very humid 
countries: the Democratic Republic of the Congo and Angola. (FAO 2005) The crops that are 
irrigated in SSA are mainly cash crops; whereas 40% of cash crop production in SSA comes from 
irrigated systems, only 15% of cereal production does. (Dorosh et. al. 2009) 
The use of mechanization is also substantially lower than in other regions. In SSA only 15 tractors are 
in use per 100km2, in contrast to around 170 in EAC and SAR, and 100 in LAC. 
13 
Table 10 Irrigation Potential (FAO 2005) 
Irrigation Potential (ha) % of irrigated 
potential used 
DR Congo 7,000,000 0 
Liberia 600, 000 3 
Angola 3,700, 000 6 
Burkina Faso 165,000 28 
Kenya 353,060 31 
Senegal 409,000 37 
Zambia 523,000 49 
Botswana 13,000 61 
South Africa 1,500,000 100
Once crops are harvested, many farmers in SSA currently suffer significant post-harvest losses from 
grain shattering, spillage during transport and from bio-deterioration during each step of the chain, 
including storage. Losses in the East and Southern Africa region, for example, have ranged from 
14%-17% each year from 2003-2009 (weighted average of all cereals). (PHL Network, 2010). 
However, relatively low-cost storage and transport facilities and protocol are increasingly available in 
forms and at prices accessible to smallholders based on innovations from Southeast and South Asia. 
(World Bank/FAO 2010) 
The Role of Risk Management in Farming as a Business 
The ability of SSA’s smallholder farmers and farmer organisations to increase on-farm investments in 
land and labour productivity is constrained by their ability to manage the risk-return trade-offs in 
moving toward intensified agriculture. IFAD’s 2011 Rural Poverty Report has highlighted the role of 
risk in inhibiting smallholders from pursuing commercial agriculture opportunities. The RPR clearly 
demonstrates that given the precariousness of their livelihood context, poor, rural families are highly 
risk adverse and therefore are less inclined than non-poor groups to move up the “risk-return” ladder 
towards potential higher incomes, contributing to the growing income disparities we see in developing 
countries, including in those in SSA. These risks cover a broad range from social to political to natural 
resources to business (Figure 12). 
14 
Figure 12 Risks faced by smallholders 
In the context of SSA, these risks vary significantly with the different agro ecological zones. As in 
other regions, it is difficult to generalize risks faced by smallholders given the diversity of farming 
and marketing systems. In order to capture both the risks and their diversity, we have provided an 
initial categorization according to agro-ecological systems whose characteristics, along with the 
marking systems and market access factors discussed below, drive much of the risk profile faced by 
smallholders. Table 11 summarizes the principle production zones and associated risks.
15 
Table 11 Characteristics of agro-ecological zones in SSA (Authors based on Dixon et. al 2001 and Bationo 2006) 
Length of 
growing 
period 
(days) 
Average 
Rainfall 
(mm) 
Farming 
systems 
Land 
area (% 
of SSA) 
Agricultural 
Population 
Main Soil 
Types* 
*simplified 
for chart 
Agricultural 
Products 
Risks 
Arid <90 0-600 Pastoral 14% 27 million 
(7%) 
Lithosols, 
xerosols 
Cattle, camels, sheep, 
goats. 
Health, Social Obligations, Conflict, Crime, 
Corruption, Drought, Animal Semi-arid 90-179 600-1400 Diseases, Prices 
Agro-pastoral 
8% 33 million 
(8%) 
Lixisols, 
arenosols, 
vertisols 
Sorghum, millet: with 
pulses, sesame. Cattle, 
sheep, goats, poultry. 
Health, Social Obligations, Conflict, Crime, 
Corruption, Land Tenure, Climate, Soils, Animal/ 
Plant Diseases & Pests, Prices, PHL, Transport 
Sub-humid 
180-269 1400- 
3000 
Mixed 
cereal/root-crop 
13% 59 million 
(15%) 
Ferralsols, 
lixisols 
Maize, sorghum, 
millet: and cassava, 
yams, legumes, cattle 
Health, Social Obligations, Conflict, Crime, 
Corruption, Land Tenure, Climate, Soils, Animal/ 
Plant Diseases & Pests, Prices, PHL, Transport 
Mixed maize 10% 60 million 
(15%) 
Ferralsols, 
lixisols 
Maize: with tobacco, 
cotton, cattle, goats 
and poultry 
Health, Social Obligations, Conflict, Crime, 
Corruption, Land Tenure, Climate, Animal/Plant 
Diseases & Pests, Soils, Input and Output 
Policies, Prices, PHL, Transport, Contracts 
Root crops 11% 44 million 
(11%) 
Ferralsols, 
lixisols, 
acrisols 
Yams, cassava, 
legumes, cattle 
Health, Social Obligations, Conflict, Crime, 
Corruption, Land Tenure, Climate, Animal/Plant 
>270 3000- 
Humid Diseases & Pests, Prices, PHL, Transport 
4500 Tree crop 3% 25 million 
(7%) 
Ferralsols, 
acrisols 
Cocoa, coffee, oil 
palm, rubber: with 
yams, maize 
Health, Social Obligations, Conflict, Crime, 
Corruption, Climate, Plant Diseases & Pests, 
Input & Output Policies, Prices, PHL, Transport, 
Contracts 
Forest-based 11% 28 million 
(7%) 
Ferralsols, 
acrisols 
Cassava: with maize, 
sorghum, beans and 
cocoyams. 
Health, Social Obligations, Conflict, Crime, 
Corruption, Climate, Plant Diseases & Pests, 
Input Policies, Prices, PHL, Transport 
Highlands 180 - 
>270 
1400- 
4500 
Highland 
Perennial 
1% 30 million 
(8%) 
Vertisols, 
cambisols 
Banana, plantain, 
enset, coffee: with 
cassava, sweet potato, 
beans, cereals. Cattle. 
Health, Social Obligations, Conflict, Crime, 
Corruption, Land Tenure, Climate, Animal/Plant 
Diseases & Pests, Input Policies, Prices, PHL, 
Transport, Contracts 
Highland 
Temperate 
2% 28 million 
(7%) 
Vertisols, 
cambisols 
Wheat and Barley: 
with peas, lentils, 
broad beans, rape, tef 
and potatoes. Cattle. 
Health, Social Obligations, Conflict, Crime, 
Corruption, Climate, Animal/Plant Diseases & 
Pests, Input Policies, Prices, PHL, Transport, 
Contracts
16 
The potential for investments in farming as a business is particularly influenced by supply chain risks. 
While risks associated with health, social obligations and conflict are fairly consistent across agro-ecological 
zones, those associated with marketing and other aspects of farming as a business are often 
supply chain specific. Table 12 attempts to summarize, in broad terms, the different types and 
characteristics of supply chains which smallholders generally work with in SSA, and the implications in 
terms of risks. 
Table 12 Indicative Risks Associated with Smallholder Supply Chains 
Marketing 
System 
Typical Products Characteristics of Supply Chain Risks for 
Smallholder 
Highly- 
Integrated 
Exports of high value 
for processing in 
specialized market 
Ex: (organic and fair 
trade cocoa, coffee, oil 
palm, cotton, honey) and 
in fresh markets 
(flowers, fruits, 
vegetables) 
Marketing margins: Very low (producers receive 
60 to 80% of price of export/processor) 
Structure: Highly structured/integrated: Lead 
firm directly manages chain back to individual 
producer or co-op to ensure quality requirements 
and certification; usually involves contract with 
international trade, value-added and/or quality 
standards specified. High level of interlinking. 
Failure to meet 
quality standards 
Input and trade 
policy 
Climate 
Integrated 
with 
intermediary 
High value for 
domestic/regional fresh 
and processed markets 
Ex: (dairy, eggs, fruits, 
vegetables, meat) and 
exports for processing 
(conventional coffee, 
cocoa, oil palm, cotton) 
Marketing margins: Low (producers receive 40 
to 75% of export price) 
Structure: Structured with one or two local 
aggregators who transmit/enforce quality 
standards between producers and lead firm – 
often contract and/or informal credit. Some 
interlinking. Some cases of co-ops integrating 
chain. 
Failure to meet 
quality standards 
Contract 
enforcement 
Price volatility 
Input and trade 
policy 
Climate 
Dispersed Low value 
domestic/regional staple 
crops and biofuel stocks 
Ex: (cassava, rice, corn, 
millet, sorghum) 
Marketing margins: High (producers 15% to 
50% of price to processor or consumer) 
Structure: Absence of lead firm - unstructured, 
spot market transactions with multiple channels 
and numerous intermediary 
transporters/aggregators – limited or no 
transmission of quality standards to participants 
in supply chain. Absence of long-term 
investments or inter-linked market relationships 
(weak access to private input markets) 
Post harvest losses 
Transport delays 
and costs 
Price volatility 
Input and trade 
policy 
Climate 
(Authors based on Pingali and Rosengrant 1995, Swinnen, et al 2007, USAID 2009) 
Generally speaking, smallholders in dispersed supply chains are exposed directly to a larger number of 
business risks, as well as realizing a lower share of returns, while in integrated markets, there is generally 
a greater level of risk sharing amongst supply chain actors, as well as a higher share of benefits to
producers. While there remains a need for more rigorous evaluation of the relative impacts on livelihoods 
of participating farmers, experience under IFAD-financed projects which aim to move farmers towards 
greater market integration, such as for potatoes in Guinea, palm oil in Uganda, cocoa in Sao Tome and 
Sierra Leone and coffee in Rwanda, has generally confirmed significant, positive impacts on both the 
level and stability of incomes of participating smallholders. (Raswant and Khanna 2010) 
While agro-ecological and location constraints will continue to impede a significant share of smallholders 
from participating in more integrated supply chains, the potential benefits for smallholders of 
participation are well recognized. Farmer organisations, such as the Network of Peasant Organizations 
and Producers of West Africa (ROPPA), are now focused on helping members to become competitive 
suppliers of high value products for domestic markets, such as rice, meat, dairy and vegetables. 
Governments have placed increased attention on revitalizing the role of smallholders in production of 
export crops and domestic import substitutes, as reflected in the CAADP investment plans. Support for 
improved supply-chain integration, market-access and commercialisation is prominent in 11 out of the 15 
currently completed CAADP investment plans. (CAADP 2011) 
Donor support is also generally well aligned to these priorities. Donor financing is increasingly focused 
on helping smallholders gain capacity to participate in more integrated supply chains through investments 
in irrigation, roads, rural finance, research, weather insurance, inputs and farmer organization. (OECD 
2011) These investments are intended to reduce both the costs and the risks faced by smallholders in 
associated with intensification of production so as to become more efficient suppliers of markets. 
However, evidence on the ground is highlighting that these investments, of themselves, are not sufficient 
in most cases for farmers to move effectively from a dependence on dispersed staple crop markets 
towards more integrated market opportunities. This is seen in the case of irrigation and roads in SSA, 
where assessments have demonstrated relatively lower returns relative to projects in other regions 
(Inoncencio et. al. 2007, World Bank 2009), and in lower adoption rates for improved seeds and fertilizer 
(Ndejeunga and Bantilan 2002). While there are a myriad of explanations offered, most emphasizing the 
weakness of institutions or governance, we suggest that a more focused and practical element merits 
greater attention: effective coordination in terms of place and timing of development support as discussed 
in the next section. 
17
3) Right Place, Right Time - Lowering Business Risk 
In seeking to lower risks and increase opportunities for smallholder farmers, there seems to be a 
pronounced tendency to search for new technical solutions while often ignoring the potential to strengthen 
the impact of existing investments. There is a predisposition among development practitioners, be they 
academic researchers, officers of international financial institutions or staff from non-governmental 
organizations, to look for new solutions to rural poverty alleviation, food security and income generation. 
Improved seed varieties, micro-dosing of fertilizers, more crop per drop irrigation schemes, sustainable 
agronomic practices, innovative financial instruments and the like all certainly have a role to play in 
improving the lives of the rural poor in Africa. However, there are potentially enormous gains that can be 
achieved through improving the spatial and temporal coordination of existing development interventions 
by simply responding to the two, proverbial “elephants in the room”: 
18 
1. More than one third of all sub-Saharan rural Africans are so geographically and economically 
isolated from market towns that, at present, they are virtually condemned to a life of subsistence 
agriculture, regardless of their access to modern inputs, irrigation infrastructure or financial 
services. 
2. The majority of development programmes and projects do not deliver goods, services and works 
in a timely manner and this has had an extremely negative impact on productivity and increased 
revenues of project beneficiaries. Successful agricultural campaigns are all about planning and 
timing. Without rigorous project management, farmers will not gain the full benefits of new 
technological solutions. 
Right Place 
Increasing access to markets figures prominently in 
Table 13 People Living more than Five Hours 
rural poverty reduction strategies (and is one of 
to a Market Town of 5,000 
IFAD’s six strategic objectives). But the extreme 
degree of geographical isolation of SSA smallholders 
Region Percent Number (millions) 
is not widely apprehended. According to a spatial 
SAR 5% 45 
analysis undertaken in 2007 (Sebastian), 34% of the 
EAP 17% 188 
rural population in sub-Saharan Africa live more than 
LAC 20% 26 
five hours from a market town of 5,000 people. As 
MENA 31% 23 
can be seen from Table 13, SSA has the greatest 
percentage of population and the second greatest 
Central Asia 32% 32 
number of people living five hours or more from a 
SSA 34% 131 
market town. 
The density of SSA’s road network is substantially lower than in other developing regions and is, in fact, 
regressing as there are fewer kilometres of roads today in SSA than there were 30 years ago. There are 
only 204 kilometres of road, only 12% of which is paved, per 1000 square kilometres of land area. This 
density is less than 30% than that of South Asia, the next lowest region. Only 34% of Africans live within 
two kilometres of an all-season road, compared to 65% in other developing regions. (Dorosh 2009, WDI 
2010). 
These sobering sub-Saharan statistics mask significant regional differences. The East Africa region has a 
much lower overall population density, smaller local markets and lower road connectivity than West 
Africa. The average travel time to a major city (of 100,000 people) is 2.2 times greater than in West 
Africa. This large inter regional difference is attributable to a much less dense secondary and tertiary road
network in East Africa, where distances to these smaller roads are 1.8 times farther than in West Africa. 
(Dorosh 2009) 
So what is the impact of remoteness to market on agricultural productivity? 
If a farmer cannot profitably market her surplus, then there is no logical reason to produce more than her 
family can store and/or consume. There is thus no motivation to adopt productivity enhancing 
technologies, particularly those external inputs which are costly and, in any event, are not likely to be 
available. This intuitive conclusion is borne out by the previously referenced AICD report which 
estimates that an average farmer is producing at 45% of the theoretical agronomic potential when located 
four hours from a major city. This percentage drops to 20% when the farmer is six hours away and 12% 
when eight hours away. So, fully one third of the rural population in sub-Saharan Africa is sitting on the 
side lines with no real chance of participating in the market economy nor improving their economic 
condition. 
What about the other two-thirds of rural sub-Saharan 
Africans who theoretically are in sufficient proximity to 
market towns to sell surplus production? The 2007 
spatial analysis categorized access to market as high (< 1 
hour), medium (2 – 4 hours) and low access (> 5 hours). 
There is a significantly lower percent of rural people in 
SSA than other regions with high access to market towns 
as can be seen from the Table 14. 
The number of rural sub-Saharan Africans which enjoy 
medium access to market towns is, at 46%, higher than 
all other regions with the exception of East Asia. 
However, the significance of distance to market is primarily (though not exclusively) one of transport cost 
to receive inputs and evacuate product. And here, the relative benefits of medium access to market 
evaporate in the face of high transport costs. As can be seen in Figure 13, it can cost up to five times as 
much to travel the same distance in parts of Africa as it does in Pakistan. This, in effect, means that from 
a cost perspective, a SSA farmer located one hour away from a market town (high access) pays the same 
for transport as a Pakistani farmer located five hours from a market town (low access). The extremely 
high cost of transport in Africa in effect dramatically increases the impact of distance to market. 
19 
Table 14 People Living less than one hour to 
a Market Town of 5,000 
Region Percent Number (millions) 
SAR 56% 512 
EAP 33% 366 
LAC 46% 61 
MENA 26% 19 
Central Asia 26% 26 
SSA 21% 81
20 
Figure 13 Transport prices (Teravaninthorn and Raballand 2008) 
The importance of widely differing transportation costs comes into clear focus when considering the 
relative cost of agricultural inputs and the opportunities for agricultural import substitution in SSA. 
A concrete example is the 
impact of transport costs 
on fertilizer prices where 
differences in transport 
costs are the most 
important contributor to 
the higher prices in SSA 
countries as compared to 
Thailand. (Figure 14). 
One notes that a ton of 
fertilizer is, on average, 
80% more expensive in 
Mali than in Thailand. 
(Bumb 2009) Landlocked 
countries typically must 
absorb US$50-100 per 
tonne in additional 
transport costs to have 
goods delivered from the 
nearest port to their own 
border. The problem is 
made worse by small 
Figure 14 Fertilizer price formation in Thailand, Tanzania and Mali in 2006 
(Bumb 2009) 
market size and fragmentation and unnecessary product differentiation, making it difficult to achieve the 
necessary economies of scale for more efficient production or import. (World Bank, n.d.) 
As can be seen from Figure 6 in Section One, SSA countries import more than seven million tons of rice 
per year (whole and broken), more than 90% of which is produced in Thailand, China and Pakistan by 
smallholder farmers. Rice imports represent almost 40% of total consumption in SSA. In much of the 
region, locally produced rice cannot compete on a cost basis with product grown in remote rural areas of
Asia and transported several thousand kilometres to market, and this, despite similar or lower 
smallholder farm gate production costs in Africa. (Africa Rice Center 2007) 
The Sleeping Giant study identifies very promising opportunities for smallholder import substitution in 
domestic and regional markets for rice, as well as soybeans, sugar and maize. These opportunities, 
however, can only be realised through dramatic decreases in SSA’s transportation costs to render them 
cost competitive in primary destination markets. (World Bank 2009c) 
Reasons for High Transport Prices 
The high price of road transport in SSA is widely apprehended but the reasons for this are much less 
widely understood. High prices have generally been attributed to the poor state of the transportation 
network, and, secondarily, inefficient logistics and endemic corruption. Several donors, in particular, the 
World Bank, have, since the 1970s, invested heavily in improving SSA’s transportation infrastructure, 
particularly along key trade corridors. These investments have facilitated road transport and have, in fact, 
reduced the costs for trucks carrying cargo. 
According to a July 2008 study, ‘Transport Prices and Costs in Africa: A Review of the Main 
International Corridors’, reduced transport costs have not translated into reduced transport prices for 
farmers and shippers in much of Africa. On the contrary, particularly in West and Central Africa, the 
reduction in transport costs due to improved road conditions have served principally to increase profit 
margins for trucking companies. (Teravaninthorn and Raballand 2008) 
Analyses contained in the report bring into question much conventional wisdom regarding transport in 
Africa and have direct impacts on smallholder competitiveness and the role that donors and governments 
must play to facilitate access to markets. For example: 
21 
 The cost of transport along major corridors is not significantly higher in SSA than in European 
countries. The report estimates that average costs per vehicle kilometre in Central and East Africa 
(USD 1.87 and USD 1.33) were similar to those in France (USD 1.52) and Germany (USD 1.71) 
and were, in fact, lower than in Poland (USD 2.18). Although variable costs, primarily for vehicle 
maintenance and fuel, were significantly higher, fixed costs for truck acquisition and driver’s 
salaries were much lower. 
 The trucking industry in Pakistan shares many similarities with SSA (purchase of old used trucks, 
very poor condition of transport infrastructure, low wage levels for drivers) yet transport prices in 
Pakistan are but a fraction of what they are in most of sub-Saharan Africa. The prevailing low 
prices for truck transport in Pakistan enable Pakistani rice to be competitive on African markets. 
 Estimated profit margins registered by trucking companies are very high, particularly in Central 
and West Africa. Estimates range from 118% on the Ngaoundëré-N’Djamema corridor, 80% on 
the Tema-Bamako corridor, 86% on the Mombassa-Kampala corridor to a low of 18% on the 
Lusaka-Johannesburg corridor. 
 Under present industry conditions, rehabilitation of major road networks, reduction in border 
crossing times, decreases in fuel prices and bribes will have no impact on transport prices for 
smallholder farmers in Central and West Africa. 
The study highlights the very different prevailing conditions in East and Southern Africa, as opposed to 
West and Central Africa. Transport costs and prices are significantly lower in East and Southern Africa. 
The main reason for this is competition within the sector.
In West and Central Africa the trucking industry is highly regulated. Freight allocation is controlled by 
trucking cartels which erect barriers to entry, promulgate and enforce regulations which limit competition, 
and create conditions which favour bribery to increase market share under the “tour de role” freight 
allocation system. The structure of the industry and the policy frameworks do not provide incentives to 
invest in newer rolling stock nor maximize existing trucking capacity through more efficient use of 
vehicles. Not coincidentally, trucking firms in these regions are often owned by the politically well 
connected. 
By contrast, in Eastern and Southern Africa, direct contracting between shipper and transporter is the 
norm rather than the quasi-government freight allocation systems which prevail in the other regions. This 
has fostered a more open, competitive environment which is reflected in more efficient services, newer 
truck fleets, and lower costs and prices in the region. 
The study examined the impact of the 1994 deregulation of the trucking industry in Rwanda (the only 
such case of deregulation in Africa, according to the study) following the genocide. Deregulation of the 
parastatal trucking industry resulted in a decline in prices by more than 30% in nominal terms and almost 
75% in real terms. Moreover, lower prices also led to an increase in the size of the Rwandan fleet. 
While not identified as a 
main contributor to 
transport costs on the 
principal international 
corridors analysed in the 
AICD study previously 
referenced, illicit payments 
to government agents, 
associated delays and 
subsequent spoilage weigh 
heavily on the cost of local 
transport of agricultural 
products in Africa. These 
additional transport costs 
are distributed to producers 
in the form of lower farm 
gate prices and to 
consumers through higher 
retail prices. Producers of 
perishable goods, who are 
predominantly women 
smallholders, are 
disproportionately affected 
by these issues because of 
significant losses incurred during transport. The World Bank’s 2009 World Development Report argued 
that illicit payments act as a major barrier to agricultural growth. Figure 15, for example, shows the 
number of checkpoints, time of delay, and the average amount of bribes for a section of the roads in West 
Africa - an illustration which makes starkly clear the level of challenge faced by local producers and 
traders. 
So, for much of Africa, revising the policy environment for the trucking industry to make it more 
competitive would effectively shorten the “economic distance” from farm to market, decrease the cost of 
purchased inputs, improve profit margins for smallholder marketable surpluses and level the playing field 
22 
Figure 15 Checkpoints, bribes and delays on corridors in West Africa 
(West African Trade Hub 2007)
for millions of SSA smallholders so that they may better seize opportunities for import substitution. 
Farmers organisations have been working in concert with regional economic communities to draw 
attention to these issues through collective action. 
Right Time 
Observe due measure, for right timing is in all things the most important factor.(Heriod, Greek Poet, 
circa 800 b.c.) 
Development stakeholders pay insufficient attention to the critical importance of project planning and 
management as a factor in rural poverty reduction. Discussions concerning improved productivity, greater 
food security and increased revenues centre on the new silver bullet, the breakthrough technology, the 
new “it”. Talking about the impact of improved planning, prompt disbursements and timely delivery of 
goods, works and services on poverty reduction and economic growth is not very exciting. It does not 
generate research grants or fellowships nor provide the raw material for refereed papers in prestigious 
journals. Perhaps this is why there is so little data on the impact of poor management and late delivery of 
inputs on economic growth. 
But anyone with even a passing knowledge of hands-on development practice knows that SSA 
agriculture, as the engine of economic growth, is running on perhaps four of its six cylinders and this is 
because inputs, be they financial, agronomic or technical, are, all too often, not being delivered in a timely 
manner, be it at a donor institution, ministry of agriculture, the project implementation unit, the bank or 
MFI or the agricultural cooperative. Of course, no one knows the exact impact of untimely delivery of 
goods, services, and funding but there is widespread recognition that the problem is pervasive. It is also 
correctable. 
Agricultural development projects mostly provide the same services: financing, technical expertise, and 
physical inputs, but they achieve varying levels of success. And the difference, more often than not, 
comes down to the delivery of the required goods and services in a timely manner. 
The history of fertilizer subsidy programmes in SSA is an eloquent case in point. Late fertilizer deliveries 
to farmer’s fields have been a salient characteristic of fertilizer subsidy programmes. Dorward (2009) 
examined ten fertilizer subsidy programmes and found that in nine of the ten cases, fertilizer was 
delivered late to substantial portions of the beneficiaries. In Ghana, Yawson (2010) reported that 82% of 
respondents indicated that subsidized fertilizer was not available at planting time. A similar situation was 
described by Xu et al. (2006). 
It is commonly recognized that late application of fertilizers have a negative effect on yield response 
(Minde et al. 2008, Xu et al. 2006) and the lowered yield response can often be the difference between 
adoption and non-adoption of farmers of improved input packages. In Zambia, Xu found that late 
application of fertilizer on maize in several provinces had a significant negative impact on yield, 
compared to those farmers who applied the recommended doses at planting time. Of the 21 sample groups 
examined, yields were significantly higher in all cases among those farmers who had access to fertilizer in 
a timely manner. On time fertilizer applications registered value/cost ratios of >2 in eight of the 21 cases, 
compared to none among those who received fertilizer late. It is generally admitted that value/cost ratios 
of greater than two are a condition for farmers to adopt fertilizer into their production systems. 
To our knowledge, there is not a multi-country study which examines the larger impact of late fertilizer 
delivery on profitability and fertilizer adoption but the empirical evidence seems quite clear: subsidized 
fertilizers are frequently delivered late; late delivery and application decrease yields compared to “right 
time” application and do not provide incentives for farmer adoption of a technology which could improve 
23
food security and livelihoods. The increased use of inorganic fertilizers is not, of course, a panacea. Their 
use, even when the appropriate blend is employed in a timely fashion, may not always be financially 
justifiable. Moreover, inorganic fertilizers need to be associated with better agronomic practices. But in 
cases where marginal returns are positive, improved management of fertilizer procurement could have a 
significant impact on food security, smallholder revenues and adoption rates. 
Another glaring case where delayed delivery of inputs has a pronounced negative impact on smallholders 
is the tardy delivery of marketing loans to cooperatives for raw material acquisition. Over the past decade, 
Rwanda has invested tens of millions of dollars in the construction of coffee wet mills, new coffee trees 
and training to improve coffee quality and capitalize on the increased world-wide demand for premium 
coffees. A significant portion of this development has been through cooperatively owned processing 
facilities. Cooperatives depend on marketing loans to finance coffee cherry4 purchases from cooperative 
members and non-members. Generally commercial bank loans are provided in tranches during the 
marketing season against warehoused inventories of parchment coffee. The history of coffee cooperatives 
in Rwanda is characterized by late positioning of marketing loans which in turn interrupts cherry 
purchases as farmers will not sell their cherries on credit to the cooperative and instead sell to 
neighbouring privately owned processing facilities or other coffee cooperatives. Interrupted cherry 
deliveries means that cooperatives cannot process adequate amounts of coffee to pay off long term capital 
loans for processing facility construction. The result is frequent cooperative insolvability, cessation of 
activity and outstanding bad loans which weaken bank financial positions and discourage further 
investment in the coffee sector. (Reimen 2010) 
The reasons for delayed positioning of marketing loans are varied. It may be due to late or incomplete 
submission of loan applications by cooperatives, or tardiness on the part of bank loan officers, but the 
upshot is still the same: the lack of “right time” management is a serious impediment to fully capitalizing 
on existing investments and is a significant brake on increasing small holder food security and incomes 
using existing resources and technologies. 
Multilateral and bilateral donors share a significant part of the responsibility for this pervasive lack of 
urgency in the implementation of development initiatives. Lag times between donor project approval and 
start of programme implementation commonly exceed 12 months. Processing of requests for 
disbursement of loan and grant funds from borrowing governments are nowhere near as expedient as they 
should be. By way of example, average processing times for these requests at IFAD have substantially 
decreased during 2010 to 28 days, from 35 days in 2008, but still pale in comparison to six day averages 
reported by the World Bank. Donor programme evaluations are often published so long after field work 
that their recommendations are out dated. Delays between the publication of vacancy announcements and 
the recruitment of staff are frequently so lengthy that selected candidates get discouraged and take other 
positions. 
The impact of frequent (some would say systematic) slow response time on the part of donors is far 
reaching. Not only does it retard programme implementation but, perhaps more importantly, sends the 
exact wrong message to client governments, agricultural cooperatives, private sector partners and 
smallholders that timing is not important. It also undermines donor credibility. How can donors credibly 
advocate for more expedient government procurement processes when their own administrative processes 
exhibit the same weaknesses? 
IFAD, like other multilateral and bilateral donors, recognizes the contribution which public-private 
partnerships (PPPs) can play in improving food security and income generation for small holders. To be a 
viable partner to the private sector, however, requires “right time” responses. For example, in Sierra 
24 
4 Coffee cherries are the fruit of the coffee tree. The fruit is harvested and the beans are extracted in processing.
Leone a very successful PPP has been developed with smallholder cocoa growers and high quality 
exporters, facilitated by an IFAD funded project. However, an otherwise positive relationship amongst 
farmers, marketers and the government project is strained by consistent delays in transferring 
reimbursable funds to the companies and cooperatives who either have to delay disbursement to their 
members for work accomplished or have to pre-finance from their own resources - calling into question 
the advantages of a PPP. In this case, the project is addressing the issue, but it highlights how getting the 
timing right is critical to the ability of organizations like IFAD to be attractive partners in the expanding 
context of PPPs. 
So why have development stakeholders not done a better job of getting the timing right? The reasons are 
multiple. Some involve complex issues such as bureaucratic accountability, and competing stakeholder 
political agendas while others are simpler. First, in a non-profit environment, there are few penalties for 
not delivering on time, in contrast to the private sector which must rely on customer satisfaction for profit 
and success. Second, improved operational planning, as mentioned in the introduction to this section, is 
not a very glamorous subject and has not received the importance which it is due; realistic, detailed 
chronological planning and expedient turnaround times are at the heart of successful agricultural 
development programmes. Because they have not received their due, insufficient attention has been paid 
to management training of project coordinators, transparent monitoring of metrics which gauge response 
time and the establishment of lapse of time contracting mechanisms. These would serve to heighten the 
sense of accountability and promote the timely provision of goods, works and services. 
25
4) Conclusions and Recommendations 
Sub-Saharan Africa’s unique resource endowment and political geography provide a challenging context 
which has traditionally translated into relatively weak social and economic progress compared to other 
regions. However, while tremendous challenges, particularly in infrastructure and governance remain, the 
benefits of a growing, better educated and healthier population and improving economic management are 
gradually translating into stronger economic and agricultural sector growth. In fact, several SSA 
countries are emerging as the continent’s “lions” with globally leading growth rates realized and 
anticipated over the coming years. 
Sub-Saharan Africa’s women and men smallholder farmers are poised to be a key driver of future 
economic growth and poverty reduction if the challenges faced which translate into high levels of risk can 
be overcome. Growing global demand for agricultural products is translating into improved production 
incentives for SSA’s farmers. Given the high proportion of smallholders and the potential and realized 
productivity advantages, even in the context of current constraints, SSA’s smallholders should be major 
beneficiaries of these opportunities if they can increase their productivity through increased on-farm 
investments to increasingly orientate their production towards farming as a business, and when 
appropriate to form collective farmer organisations to facilitate this. As highlighted in IFAD’s Rural 
Poverty Report, their willingness to undertake these investments is dependent on reducing the actual and 
perceived risks which trap many rural households in a subsistence equilibrium around the poverty line. 
Governments, donors, NGOs and others are investing increasingly in technology, infrastructure and other 
efforts to reduce risks and increase returns to facilitate smallholders participation into more integrated 
supply chains with generally higher returns at lower risk levels. However, the effectiveness of these 
efforts in terms of adoption and sustainability by farmers, and their impact in terms of economic returns. 
Efforts to boost the impact of investments in smallholder agriculture have not paid sufficient attention to 
issues of spatial and temporal coordination. The tendency is often to address under performance with the 
search for new technologies or paradigms when the very practical constraints of spatial and economic 
isolation and lack of timeliness in delivery of development assistance are staring stakeholders in the face. 
The impact of geographic isolation, high transport costs, time lost to road blocks, as well as failure to 
deliver credit or fertilizer on-time to producers, or for producers to deliver product into the market when 
prices are more favourable, can completely undermine the returns to investments in irrigation, inputs, 
credit, insurance, post-harvest storage, training, etc. The result is a likely abandonment of these efforts by 
producers who are understandably cautious in investing their own time and scarce cash in the necessary 
sustaining activities. This can disproportionately impact women who generally devote a greater share of 
their agricultural effort on perishable market production relative to staple crops. Hence there is a need for 
much more focus on both “right place” and “right time”. 
How do we transform right place, right time from a slogan or analytical framework into an operational 
approach? 
Operationalizing “right place” essentially means making more informed choices regarding project 
implementation zones, distinguishing clearly between objectives of enhanced commercial access and food 
security. This entails assessing not only the quality of roads, but also the costs of transport in terms of 
freight charges and official and unofficial controls and tariffs. In principle, this should be a standard 
element of value chain analysis, however at least in IFAD’s projects, this is rarely carried out. While 
changing some of the contributing cost factors confronts very powerful interest groups in a country, 
failure to highlight the issue can result in encouraging smallholders to undertake investments and incur 
risks whose returns are much lower than expected. Documenting the inherent contradictions in investing 
millions of budgetary and borrowed funds into agricultural development while simultaneously allowing 
the sector to be unofficially taxed out of competitiveness will, as the experience of official taxation in the 
26
27 
1970s and 1980s highlighted – result in depressed prices for farmers and declining production and 
productivity as farmers disinvest – exactly the opposite result being pursued through CAADP. 
The increasing prevalence of harmonized donor/government sectoral strategies and integrated medium-term 
investment plans under the CAADP umbrella presents a new opportunity to provide more holistic 
responses to the interlinking challenges of increased agricultural productivity, improved transport 
infrastructure, greater access to markets and increased returns for SSA smallholders. 
Translating this opportunity into improved programme performance will require a more realistic 
assessment of marketing opportunities during project design through the implementation of more detailed 
value chain assessments. In very geographically isolated project areas, opportunities for farming as a 
business may be minimal and this needs to be reflected in programme strategy. 
Focus must shift from the provision of inputs to the achievement of outcomes. Co-financing schemes 
involving transport and agricultural development, so frequently characterized by piecemeal approaches, 
need to give way to real joint planning and implementation if the essential synergies are to be realized. It 
is commonly recognized that the challenges to rural poverty alleviation are interlinked and so too must be 
the solutions. 
But the right place approach can only be effective if combined with a timely provision of goods, works 
and services by co-financiers and this has rarely been the case. Greater donor attention to the temporal 
dimensions of development programmes and more rapid institutional responsiveness is a sine qua non to 
liberate the synergies required to address the interlocking challenges of rural poverty alleviation. 
Operationalizing “right time” requires much more attention to valuing the timing as well as the act of 
delivery of goods and services to farmers and to markets. Again, in the first instance this requires 
analysis of the timing requirements for production and marketing, as well as assessment of the roles of 
actors to achieve this. In terms of implementation, the issue of timing needs to be at the forefront of 
planning of activities and needs to be a key driver of management oversight. For example, in the context 
of IFAD-financed projects, annual work plans and budgets (AWPBs) are prepared and discussed between 
the projects management units, governments, IFAD and other partners. While the timing of activities is 
presented, these are rarely, if ever highlighted relative to the timing needs of farmer production cycles, or 
marketing windows. 
In summary, following are our key recommendations: 
 Policy/Strategy 
o Draw attention to a holistic assessment of isolation in terms of time and cost of 
connecting with input and output markets 
o Build awareness of critical temporal coordination requirements in terms of timing of 
inputs and marketing as a key element of agricultural support 
o Utilize value chain analysis to highlight and benchmark cost and time implications in 
terms of both inputs and outputs for smallholder farmers in isolated areas 
o Encourage management studies training as part of curriculum of agricultural ministry and 
farmer organization staff. 
 Operational Design 
o Use value chain assessments to identify isolation constraints across the range of factors – 
poor infrastructure, official and unofficial road taxes, monopsonies in transport services, 
etc. to ensure realistic assessment of probable returns to smallholder farm level and 
producer group investments.
28 
o Promote greater synergies among co-financiers by adopting joint design and 
implementation support missions. 
o Ensure that critical timing aspects are identified and agreed with and understood by 
project stakeholders. 
o Include specific indicators for transport costs and critical timing aspects into monitoring 
framework. 
 Implementation 
o Ensure that annual work plans and budgets define and respects spatial and temporal 
coordination requirements. 
o Provide systematic and robust orientation and training to project coordinators in results-based 
management. 
o Monitor spatial and temporal coordination by donor, government and project 
management unit as part of project performance assessment. 
We are sure that there are many more opportunities to improve the spatial and temporal coordination in 
our support to Africa’s smallholders, and hope that this discussion will stimulate attention to this issue in 
the thematic sessions looking at marketing, inputs and credit.
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32

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Livingston

  • 1. Sub-Saharan Africa: The state of smallholders in agriculture Geoffrey Livingston, Steven Schonberger and Sara Delaney
  • 2. Session 3 Breakout Session 1 Sub-Saharan Africa: The state of smallholders in agriculture1 Geoffrey Livingston, Steven Schonberger and Sara Delaney2 Paper presented at the IFAD Conference on New Directions for Smallholder Agriculture 24-25 January, 2011 International Fund for Agricultural Development Via Paolo Di Dono, 44, Rome 00142, Italy 1 Copyright of the paper is reserved by IFAD. The paper may not be reproduced in part or in full and in any form without written permission of the Conference Organisers at IFAD (e-mail: at.rahman@ifad.org) 2 The authors Respectively are Regional Economist at East and Southern Africa Division, Regional Economist and Consultant at Western and Central Africa Division, IFAD.
  • 3.
  • 4. Sub-Saharan Africa: The state of smallholders in agriculture SUMMARY This paper provides an overview of agricultural and economic characteristics of sub-Saharan Africa (SSA), in comparison with other developing regions and the opportunities which the medium-term outlook holds for SSA’s small holder farmers. Seizing these opportunities will depend on shifting from extensive to intensive production systems. The paper reiterates a key conclusion of IFAD’s 2011 Rural Poverty Report: the ability of SSA’s smallholder farmers to increase on-farm investments in productivity is constrained by their capacity to manage the risk-return trade-offs in moving towards intensified agriculture. Risks are often specific to different types of supply chains. Generally speaking, smallholders in disbursed supply chains (cereals, rice) are exposed to a larger number of business risks and lower returns than those operating in integrated markets (fair trade cocoa, specialty coffee) where risks are more widely shared among supply chain actors. While there remains a need for more rigorous evaluation of the relative impacts on livelihoods of participating farmers, experience under IFAD-financed projects which aim to move farmers towards greater market integration has generally confirmed significant, positive impacts on both the level and stability of incomes of participating smallholders. However, evidence on the ground is highlighting that these investments, of themselves, are not sufficient in most cases for farmers to move effectively from a dependence on dispersed staple crop markets towards more integrated market opportunities. While there are a myriad of explanations offered, most emphasizing the weakness of institutions or governance, we suggest that a more focused and practical element merits greater attention: effective coordination of project interventions in terms of place and timing of development support.
  • 5. Introduction The purpose of this paper is to provide a regional canvas for the broader discussion of the future directions on smallholders in agriculture. We do not attempt to provide a comprehensive overview of sub-Saharan Africa (SSA), its agricultural sector or even all of the challenges and opportunities associated with smallholder farming. Rather, the intention is to communicate our appreciation of the richness and complexity of the continent in comparison with other developing regions, and through discussion of the role of smallholder farmers in agricultural growth, focus the broader discussions of the conference on some of the key issues which, from our experience and that of IFAD projects working in SSA, are particularly relevant in our efforts to assist smallholder families definitively escape poverty through the transition towards ‘farming as a business’. We begin in Section One with a brief overview of the land, geography, people, economy and of course, smallholder agriculture in SSA. Following this, in Section Two, we look more closely at the opportunities for SSA’s smallholders, adapting the perspective of IFAD’s recently released Rural Poverty Report to our regional context, and use a risk management lens to connect overall ecological and market contexts to the specific endeavours of smallholder farmers. In Section Three, we move rapidly from the general to a specific focus on an issue which we feel merits much greater consideration – the importance of spatial and temporal coordination in reducing risk, increasing returns and allowing for project success. Finally, we conclude with some key recommendations on how these ideas can be transformed into an operational approach.
  • 6. Table 1 Surface area of developing regions (km2) Sub-Saharan Africa (SSA) 24,241,910 Latin America & Caribbean (LAC) 20,421,620 East Asia & Pacific (EAP) 16,298,850 Middle East & North Africa (MENA) 8,777,910 South Asia (SAR) 5,131,070 2 1) Overview – Sub-Saharan Africa in Perspective Sub-Saharan Africa is a region of superlatives and contrasts. It has the largest land area of any developing region and the smallest countries. It has the oldest geology and the youngest population. It has the greatest concentration of high value minerals and the highest concentration of degraded soils. It has the fastest growth in agriculture and the greatest level of agricultural imports. It has the highest proportion of rural poor and the greatest potential for smallholder agriculture led poverty reduction. The Land Sub-Saharan Africa is big – with a surface area of 24 million km2 it is larger than all other developing regions (Table 1). (WDI 2010) This area is home to a large diversity of agro-ecological climates, ranging from the arid drylands of northern Mali, to the humid tropics of the Congo. Figure 1 shows SSA divided into six agro-ecological zones, differentiated by the length of the potential growing period for rain-fed agriculture. Rainfall ranges dramatically, from over 2,000 mm/year in central Africa to less than 400mm/year in arid areas (Bationo et al. 2006). Sub-Saharan Africa is rich in minerals. The region’s geology has been the most stable of all continents with the result that it contains concentrations of many rare minerals, including diamonds, of which is produces 55% of world supply, cobalt (52%), chromite (37%), and gold (22%).(USGS 2008) This geological stability has also resulted in a high proportion of low-fertility soils. In the absence of volcanic rejuvenation, cycles of weathering, erosion and Figure 1 Agro-Ecological zones (FAO 2002) leaching on the continent over the years have left soils inherently low in nutrients. It has also resulted in wide diversity of soil types, differing dramatically in their ability to retain and supply nutrients to plants, to hold or drain water, to withstand erosion or compaction and to allow for root penetration. About 55% of the continent is considered unsuitable for cultivated agriculture. Of the remaining land, 16% is considered high quality, 13% medium, and 16% of low potential (Figure 2). (Bationo et. al. 2006)
  • 7. Many of these already low-fertility soils have suffered further losses in nutrients, biodiversity and structure over the years due to management practices. This impacts greatly on the productive capacity of the soils and therefore farmer incomes. IFDC has estimated that SSA loses around eight million tonnes of soil nutrients per year, and that over 95 million ha of land on the continent had been degraded to the point of greatly reduced productivity. During the 2002-2004 cropping season over 80% of countries in Africa1 were estimated to be losing more than 30 kg/nutrients per year, and 40% of countries an astounding 60 kg or more per year. (Henao & Baanante 2006) Table 2 Political Geography (World Bank 2009, WDI 2010) 2 3 Figure 2 Land Classification (Bationo et al. 2006) Political Geography SSA has the largest number of countries per surface area, and one of the smallest populations per Ratio of Population per Population in country out of the developing countries to country (million landlocked regions (Table 2). area inhabitants) countries (%) EAP 1.44 125 0.4 Further, sub-Saharan Africa has the LAC 1.52 24 2.8 highest number of landlocked MENA 1.60 19 0 countries, 15 out of the total 43 in SAR 1.67 196 3.8 the world, and the greatest SSA 2.00 20 40.2 proportion of population living in landlocked countries. (World Bank 2009) Instability, state fragility and conflict have, tragically, been much more frequent in SSA than other regions. Sub-Saharan Africa scored the lowest on the Center for Global Policy’s State Fragility Index of all regions, with seven countries experiencing major conflicts in 2009, four countries with recently ended conflicts and almost all countries in the region falling into the serious, high or extreme fragility categories. Some countries have made improvements, including Equatorial Guinea, Togo, Liberia and Angola. (Marshall and Cole 2009) The People Sub-Saharan Africa’s current population of 800 million makes it one of the most sparsely populated regions, but also the fastest growing. As in other regions, population has steadily increased over the last 50 years and is projected to reach around 1.7 billion by 2050. Population growth between 1988 and 2008 was 66%, similar to that in MENA, but much higher than APR and LAC which both had growth rates around 30%. Birth rates in SSA, while currently the highest of the developing regions, declined at a similar pace to others during the period above. SSA’s rapid population growth has 1 In this paper we focus on sub-Saharan Africa. When the term ‘Africa’ or ‘the continent’ is used it is because the statement refers to the continent as a whole, rather than SSA. 2 Small-island nations taken out of calculations
  • 8. 4 resulted in a young population. Youth under fourteen now make up 42% of the inhabitants of the region, with the next youngest region being South Asia (32%). (IFAD 2010, WDI 2010) Of the total 800 million, around 500 million (63%) currently live in rural areas. Only South Asia has a higher proportion of rural inhabitants (70%) (Figure 3) The trend towards urbanization, which is occurring in all developing regions, is happening slower and later in SSA, and the tipping point, at which the 2,000,000,000 1,800,000,000 1,600,000,000 1,400,000,000 1,200,000,000 1,000,000,000 800,000,000 600,000,000 400,000,000 200,000,000 0 70% Urban and Rural Population 63% South Asia Sub- Saharan Africa 55% East Asia & Pacific Figure 3 Urban and Rural Population (WDI 2010) Urban Population Rural Population 42% 21% Middle East & North Africa Latin America & Caribbean population will become more urban than rural, is not expected to occur in SSA until around 2050. (IFAD 2010) Poverty and Equity Sub-Saharan Africa’s population is poorer than other regions and is falling further behind. While other regions have managed to reduce the absolute number of poor despite population growth, in SSA the number of poor has steadily grown. The proportion of poor in the population has, however, decreased slowly since the late 1990s, and is currently about 53%, compared to 27% in APR and 7% in LAC. In contrast to LAC, MENA, and East Asia, but consistent with South and Southeast Asia, the poor in Africa live mainly in rural areas with the rural communities being home to 75-80% of the poor. Looking beyond poverty rates to progress on other MDG indicators, the SSA region as a whole had a more challenging starting point, and has for the most part made slower progress than other regions. The most recent FAO calculations show that the proportion of undernourished3 in SSA is by far the Figure 4 Proportion of undernourished by region (FAO 2010) highest, estimated at 30% in 2010, compared to 16% in APR, 8% in LAC, and 7% in MENA. (Figure 3 Refers to the condition of people whose dietary energy consumption is continuously below a minimum dietary energy requirement for maintaining a healthy life and carrying out a light physical activity. The term is a measure of a country's ability to gain access to food and the income distribution in that country, and is derived from Food Balance Sheets prepared by the FAO.
  • 9. 4). These numbers gloss over a huge amount of variation within the region. The Democratic Republic of Congo, for example, is contributing disproportionately to the number of hungry in the region; the proportion of hungry there has increased from 26% in 1990/2, to 69% as of 2005/7. On the other hand, many countries in SSA are making consistent and often overlooked progress. As of 2007 Ghana, Mali, Nigeria and the Congo had already achieved the undernourishment target of MDG1, and eleven others were close to achieving it. (FAO 2010) Improvements in health and education have likewise been slow. Child nutrition remains a challenge - with 28% of children under five underweight for their age, 38% suffering from stunting and 9% from wasting. The high prevalence of stunting, second only to South Asia, is particularly concerning, as this reflects nutritional deficiencies and illnesses that occur during the most critical periods for child growth and development and cause irreversible effects on human development and capacity. (Unicef 2007) At current progress SSA is the only region which will not come close to the target of reducing the under-five mortality rate by two-thirds, although current rates put it on track to reduce risk by close to half. SSA is also furthest from the primary school completion target, with around 65% of boys and 55% of girls now completing primary school, after consistent progress since 2000. With increasing numbers of youth completing primary and secondary school, sub-Saharan Africa is in great need of investments in university level education and skilled vocational training. Adult literacy, currently at 61%, is still far lower than other regions. (World Bank 2009b, World Bank 2010) Experience in other regions highlights that economic growth is often associated with increasing income and gender inequality. SSA currently ranks reasonably well in this regard when compared to other developing regions. (Table 3). (IFAD 2010) 5 The Economy Economic growth in SSA, as a region, has for the most part been lower than that in Asia and LAC over the last two decades (Table 5). (IMF 2010) However, as with other indicators, the regional average does not show the particularly low, or high, growth rates in some SSA nations. While Asian averages have been largely driven by the high growth of China, SSA also has some strong performers. In fact, as recently published in the Economist, over the last ten years six out of the world’s ten fastest growing economies were in SSA. (Economist 2011) The region also proved surprisingly resilient to the 2009 economic crisis and is expected to bounce back strongly (Table 4) (IMF 2010). Table 5 GDP Growth (IMF 2010) 1990s 2000s 2009 2010* SSA 3.0 4.8 2.6 5.0 PR 7.2 8.3 6.9 9.4 LAC 3.0 5.7 -1.7 5.7 Table 4 World’s ten fastest-growing economies* (annual average GDP growth %) 2001 - 2010 2011-2015 (IMF forecast) Angola 11.1 China 9.5 China 10.5 India 8.2 Myanmar 10.3 Ethiopia 8.1 Nigeria 8.9 Mozambique 7.7 Ethiopia 8.4 Tanzania 7.2 Kazakhstan 8.2 Vietnam 7.2 Chad 7.9 Congo 7.0 Mozambique 7.9 Ghana 7.0 Cambodia 7.7 Zambia 6.9 Rwanda 7.6 Nigeria 6.8 *Excluding countries with less than 10m and Iraq and Afghanistan Table 3 Equality by region (0 = no inequality; 1= complete inequality) Gini Index Gender Index AEP 0.57 0.23 SSA 0.42 0.18 LAC 0.52 0.02 MENA 0.38 0.27
  • 10. National economies in sub-Saharan African countries are typically less diverse than in other regions, and are, for the most part, dependent on fuel, minerals, or agriculture to generate value-added. Taken as a region, the GDP in SSA is split between products classified as services (54%), industry (32%, of which about 15% is manufacturing) and agriculture (15%). This hides considerable variation, ranging from countries relying heavily on agriculture, such as Ethiopia and Sierra Leone, where 52% of GDP comes from the sector, to countries where agriculture contributes around 25%, such as Sudan and Mozambique, and then to those for which it makes up 5% or less of the economy such as South Africa, Botswana and Gabon. Output classified as industry also includes agro-industry and in agriculture-based countries, such as Uganda, agro-industries contribute up to 61% of total manufacturing sector output. (Mhlanga 2010) Trade Africa’s share in world trade is proportionally very small, accounting for only about 3% of world exports and imports, shares similar to Latin America, but dwarfed by all other regions. Europe is currently Africa’s largest trading partner, however trade with Asia and other developing regions has been steadily increasing. (Table 6 and Figure 5) Figure 5 Export Destinations (IMF 2010) 6 Table 6 Trade Shares (WTO 2010) Imports to Africa Exports from Africa Europe 42% 40% Asia 26% 22% North 7% 17% America Africa 12% 12% Middle East 8% 3% Other 5% 6% Exports are dominated by fuels (55%), with manufactures (19%), agricultural products (10%) and mining products (9%) making up the remainder. (WTO 2010) Agricultural exports are primarily high-value cash-crops such as cocoa, sugar, coffee, tea, cotton, and oranges. (Figure 6) Agricultural imports are primarily basic food items. Wheat is the largest food import to SSA, at 8.6 million tonnes in 2008, owing to the steady increase in demand for bread, particularly in urban areas. Wheat can only be grown on about 1% of the land or 24 million ha in SSA, mostly in the highlands in East Africa. (FAO 1991, Morris and Byerlee 1993) However, as seen in Figure 6, countries in SSA import large quantities of commodities which could be supplied locally, including rice, maize, sugar, palm oil and soybeans.
  • 11. 7 Top exports - SSA Quantity (tonnes) Top imports - SSA* Quantity (tonnes) Value (1000 $) Figure 6 Imports and Exports (FAOStat 2010) 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 Value (1000$) Tonnes 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 Value (1000$) Tonnes *Excluding Wheat Intra-regional trade is also very low compared to other regions. Total intra-regional trade is only 12% of total trade to and from SSA countries as compared to 52% in Asia and 26% in LAC. The main traded commodities between SSA countries are fuel and mining products, with intra-region agricultural product export totalling only US$8 billion or 18% of officially recorded agricultural exports. (WTO 2010) Investment Public As economies diversify and with increased resource revenues, governments can raise levels of public investment. The historically high share of public expenditures on military is gradually decreasing in some countries, with resulting increases in infrastructure, health, education and other public services. SSA countries, on average, currently devote 5-7% of their public expenditures to agriculture, as compared to 8-10% percent in Asia (Resakss 2010). In 2003, the African heads of state committed to increase the share of public expenditures going to agriculture to at least 10%, reflecting the recognition of agriculture’s potential as both an engine of growth and driver of poverty reduction. While only eight countries have been able to confirm having reached or surpassed this goal as of mid-
  • 12. 2010, agriculture’s share of public expenditures has been rising in most countries. (Donor Platform 2010, Resakss 2010) Private Private investment has been slowly increasing in the last few decades in all developing regions. Investment in sub-Saharan Africa, as a whole, is small compared to other regions, but when viewed in relation to GDP, is on par with others. (World Bank, 2009) Most of this investment in SSA is going in to the oil and gas, mining and telecommunications industries. However, private investment in agriculture, and particularly agri-industry, has been slowly increasing. Total investment (public plus private) to SSA was projected to increase by some 7% in 2010 and 6% in 2011. (IMF 2010) Continued investment growth – both domestic and foreign – and particularly in the non-minerals sectors, will depend on steady improvements in the overall business climate. In terms of macro-economic 8 management, sub-Saharan Africa compares favourably with other developing regions with relatively stable, if slightly higher inflation, reflecting generally good monetary discipline in the face of the impact of sudden increases in investments and receipts associated with oil and mineral exploitation. Average inflation from 2007-2010 in SSA was 9.1%, compared to 6.4% in LAC, 5.5% in developing Asia and 1.5% in the advanced economies. (IMF 2010) In terms of ‘the ease of doing business’, while overall there is improvement, the countries of SSA account for 9 of the bottom 20 in the Transparency International corruption perception rankings, and 15 of the bottom 20 of the IFC Doing Business Rankings. Despite some improvements, starting a business still costs 18 times as much (relative to income per capita), on average, in Sub-Saharan Africa as in OECD high-income economies. This encourages firms to remain informal, resulting in disincentives for growth and job creation, and limits the ability of governments to increase their fiscal revenues. At the same time, however, several countries, including Rwanda and Ghana, have improved their standing on both indices substantially, and in 2010 Rwanda was highlighted as a global best performer in improving its business climate. (Transparency International 2010, IFC 2011) Infrastructure, while improving in some areas, remains a major constraint relative to other regions. Road condition and density are very low, as we will expand upon in Section Three. Electricity generation capacity has remained stagnant since the 1980s, and now averages only 37MW/million people, as compared to 326MW across other low income regions. (Foster and Briceño-Garmendia 2010) Costs in much of SSA are also significantly higher, averaging 14c/kWh, as compared to 4c/kWh in EAP or to 1c/kWh in South Asia, and access is unreliable, with only South Asia experiencing more outages. Many small businesses must rely on small diesel powered generators, with which electricity can cost up to 0.40kWh. (Foster and Briceño-Garmendia 2010b) Ten years ago telephone access in SSA was much lower than other developing regions, however, exponential increases in mobile phone use, from 650,000 in 1995 to over 330 million in 2010, have now put the region on par with South Asia, and on a path for continued expansion in communications connectivity. (International Telecommunications Union 2010) Table 7 Infrastructure Region Paved Roads (%) (WDI latest) Road Density (km2 of road/surface area) (WDR 2009) Access to Electricity (%) (WDR 2009, AICD 2009) Telephone, mobile and fixed (per 100 people) (WDI 2009) EAP 11 0.72 89* 75 MENA 76 0.33 78 74 LAC 22 0.12 90 99 South Asia 57 0.85 52 36 SSA 12 0.13 26 35 *excluding China
  • 13. Agriculture Sub-Saharan Africa’s rural economy remains strongly based on agriculture relative to other regions. Agriculture in SSA (excluding South Africa) employed 62% of the population and generated 27% of the GDP of these countries in 2005. (Staatz and Dembele 2007). These agricultural production systems are largely based on smallholder farms. Smallholder farms, when defined as being two ha or less, represent 80% of all farms in SSA, and contribute up to 90% of the production in some SSA countries. (Wiggins 2009). A large percentage of these smallholders are women, responsible for key components of household production such as weeding, harvesting and processing. Further, women often independently grow non-cereal crops for income and are increasingly heading rural households due to male urban migration. (Oxfam 2008) As in other regions, SSA agricultural households have varying levels of diversification in income sources beyond agriculture - though agriculture remains the dominant source of livelihood in poorer countries and poor regions within less poor countries. (IFAD 2010) (Figure 7). 9 Figure 7 Rural Household Incomes (IFAD 2010) Table 8 Agriculture Agriculture value added (%GDP) Agriculture Performance The growth in agricultural GDP in SSA has been relatively strong in recent decades, and was the highest of the developing regions in 2009 (Table 9). Overall, increases in agricultural production have kept pace with population growth (FAOStat 2010, IFAD 2010). However, in contrast to other regions, this has occurred largely through expansion of the cultivated area onto the region’s relatively abundant land rather than increases in land productivity (Figure 8). Agricultural Employment (%) 2008 2007 SSA 16 (27*) 46 (62*) APR 13 44 LAC 6.5 12 *Figures excluding South Africa, for 2005 Table 9 Agriculture GDP growth (%) (WDI) 1990s 2000s 2009 SSA 2.7 3.0 4.8 APR 3.6 3.9 3.8 LAC 2.1 3.3 1.5
  • 14. 10 Figure 8 Increases in cereal production in South Asia and SSA (Index: 1961=100) (Henao and Baanante 2006) The pursuit of an extensification strategy by SSA’s farmers reflects the relative availability and lower costs of land relative to capital inputs required for intensification, such as credit, fertilizer and irrigation. As in LAC, SSA has a further 800 Mha of uncultivated land with rainfed crop production potential. In comparison, there is almost no available land in South Asia, East Asia or North Africa (Figure 9). At the same time, while overall production growth has been based mainly on extension of cultivated area, the picture regarding intensification is a bit more nuanced. Looking at the net production value per hectare, which Figure 9 Potential for cropland expansion (FAO 2009) compares the value of production of all agricultural products against a base year (after taking out that used for feed or seed), one can see that while SSA overall has made slower progress over the last 50 years compared to others there is quite a wide degree of variation across the continent, and in fact the more densely populated West Africa region has progressed at a rate slightly greater than that of LAC. (Figure 10).
  • 15. 11 800 700 600 500 400 300 200 100 0 World Developing Regions 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 Net Production /Ha ($) 180 160 140 120 100 80 60 40 20 Figure 10 Net Production in Developing Regions and African Regions (Wiggins 2010, FAOStat 2010) Breaking this down even further, there is considerable variation from country to country. For example, Figure 11 shows production values in more crowded Malawi shooting up starting in the early 1990s, as compared to steady and slow progress in less densely populated Burkina Faso and Kenya and stagnation until recently in Senegal. 400 350 300 250 200 150 100 50 Figure 11 Production in selected Africa countries (FAOStat 2010) Africa LAC Asia 0 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 Net Production /Ha ($) African Regions Africa Eastern Middle Northern Southern Western 0 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 Net Production /Ha ($) Select African Countries Burkina Faso Kenya Malawi Senegal
  • 16. 2) Opportunities for Sub-Saharan Africa’s Smallholders The agricultural sector faces growing global and regional demand for agricultural products for food, feed, industry and fuel. Continued population and income growth, combined with urbanization, particularly in developing countries and, as we have seen, including those in SSA, is placing pressure on current food supplies at the same time that global productivity increases are levelling off. At the same time, geo political and environmental concerns are placing increased emphasis on the replacement of petroleum with renewable sources, such as crops, for production of fuels, lubricants and fibres. The consequences of this rapid growth in demand, combined with slowing scope for supply response from traditional producing regions has resulted in increased sensitivity of agricultural markets to supply variations due to weather. The resulting tendency towards increased price volatility was clearly observed in the context of the 2007 and 8 food price crisis. Higher prices and volatility are forecast to continue, particularly in the context of expected impacts of climate change (for example, Godfray et. al. 2010). The world has turned to sub-Saharan Africa, given its relatively abundant, uncultivated land resources, and unrealized potential productivity gains as a major source of future supply and stability for food and industrial agricultural markets. At the same time, SSA’s governments, recognizing the need to feed an increasingly urbanized population, as well as the opportunity to develop agro-processing 12 industries, are also focused on rapidly increasing agricultural production. This was highlighted at the African Union Congress in 2004 where Heads of State committed to achieving an average 6% annual growth rate of agriculture, supported by a minimum of 10% allocation of public expenditures to the agricultural sector. While expansion of large, plantation-type operations will likely account for some of SSA’s supply response, there remains significant scope for smallholders, and smallholder farmer organisations, to increase their role as commercial suppliers. The circumstances favouring plantation approaches are quite limited due to the economies of scale involved in careful timing and rapid transfer of harvests to processing facilities, as well as the need for significant investments in infrastructure in remote, sparsely populated areas (Hayami 2004). However, even in the case of these so-called “plantation crops” the impact of labour management challenges provide scope for alternative institutional approaches which maintain the central role of smallholders, such as nucleus estates. (Deininger and Byerlee 2010) SSA’s smallholders are positioned to be significant beneficiaries of the improving opportunities in agricultural markets. The theoretical efficiency advantages of smallholder production systems - in the absence of scale economies for input and output markets - for most crops, particularly in countries with relatively high capital costs relative to labour – are well known. (Binswanger and Rosenzweig 1986, Hazell et. al. 2007) This theoretical advantage of smallholder farming is confirmed empirically for SSA in the World Bank’s Awakening Africa’s Sleeping Giant study (World Bank 2009c) which concluded that smallholder production costs at the farm gate for several key crops are competitive with other regions, despite lower productivity, making them competitive suppliers in local markets. For example, Nigerian soybean producers can supply Ibaden markets at 62% of the cost of imports, and Zambian sugar farmers can supply Nakambala markets at 55% of the cost of imports. More broadly, as shown above, SSA’s farmers, of which 80% are smallholders, have been responding to improved production incentives with steady, if relatively slow, growth in production and productivity. From Extensification towards Intensification The primary challenge now is a move from extensification towards greater intensification in the supply response strategies of smallholders. While Africa’s relatively abundant, uncultivated arable land suggests significant scope for expansion, this is facing limits which is increasing the ratio of the cost of land to capital inputs faced by farmers. In particular, efforts to develop these lands through large scale concessions – particularly to foreign investors – has made it clear that “uncultivated” does not mean “unused”. Expansion must take into account impacts on existing economic uses – such as grazing and woodsheds, as well as social and ecological functions whose importance often becomes
  • 17. apparent when efforts are made to convert the land. Importantly, and as discussed in more depth in Section Three, these areas also often suffer from very limited access to infrastructure or market centres. (FAO 2009). Continued smallholder production growth will require increased investments in intensification. In order for smallholders to increase production with less additional land and without major increases in labour inputs, they will need to increase their own productivity through greater capital and technology investments. While there is some scope for increasing labour intensity of agriculture, given the growing, young population profile, in fact, there is little evidence that this can be realized in the context of smallholder agriculture on a broad scale as educated youth are much more inclined to seek urban and even rural employment opportunities which offer perceived higher returns for effort than extensive agriculture – particularly given traditional difficulties faced by youth in obtaining land. In fact, attracting youth to agriculture as a livelihood is likely to coincide with increased intensification which improves returns per unit of labour and land and builds on their educational advantages. The Sleeping Giant study concludes that “[current farm-level] competitiveness does not represent a sustainable path out of poverty, because at current productivity levels and farm size, agriculture is economically impoverishing and technically unsustainable. The challenge facing African countries is to invest in developing a more sustainable, productivity-driven base for competitive commercial agriculture over the long-run.” Accordingly, the smallholder supply response will depend on increased on-farm investments, such as appropriate seeds and fertilizers, irrigation and mechanization technologies, and reductions in post-harvest losses (PHL). Despite recent increases, SSA remains well behind other regions in the use of improved seeds and fertilizers. On average, farmers in SSA apply less than 10 kg of nutrients/ha, compared to around 140 kg/ha in both Latin America and South Asia. (WDI 2010) Use of high quality seed is also much lower than it could be with surveys for staple crops in West Africa indicating improved varieties accounting for only 2-33% of seed and renewal of seed stock occurring only every 9-13 years. From 1997 to 2007 in West Africa, there was only enough improved maize seed to meet one-third of farmer demand (Ndjeunga and Bantilan 2002, AGRA 2011, Adesina 2010). Productivity improvements will also require greater use of irrigation. While there has been a steady increase in the amount of agricultural land irrigated worldwide in the last 50 years, this has mostly occurred in Asia, where irrigated land has increased from 27% to around 36%. In contrast, only 11% of land is irrigated in LAC, and less than 3% in SSA. (IFAD 2010) Many countries in Asia are now irrigating close to their full potential, while in Latin American countries the percent of potential used is lower (5-35%). (FAOAquastat 2010) While there is considerable potential to expand irrigation in SSA, opportunities vary greatly across the region, due to differences in rainfall, renewable water resources and land. While some areas have high irrigation potential, they also receive abundant rainfall, making irrigation less crucial; others receive less rain, but also have less water to draw from. (Table 10) One-third of the potential on the continent is concentrated in two very humid countries: the Democratic Republic of the Congo and Angola. (FAO 2005) The crops that are irrigated in SSA are mainly cash crops; whereas 40% of cash crop production in SSA comes from irrigated systems, only 15% of cereal production does. (Dorosh et. al. 2009) The use of mechanization is also substantially lower than in other regions. In SSA only 15 tractors are in use per 100km2, in contrast to around 170 in EAC and SAR, and 100 in LAC. 13 Table 10 Irrigation Potential (FAO 2005) Irrigation Potential (ha) % of irrigated potential used DR Congo 7,000,000 0 Liberia 600, 000 3 Angola 3,700, 000 6 Burkina Faso 165,000 28 Kenya 353,060 31 Senegal 409,000 37 Zambia 523,000 49 Botswana 13,000 61 South Africa 1,500,000 100
  • 18. Once crops are harvested, many farmers in SSA currently suffer significant post-harvest losses from grain shattering, spillage during transport and from bio-deterioration during each step of the chain, including storage. Losses in the East and Southern Africa region, for example, have ranged from 14%-17% each year from 2003-2009 (weighted average of all cereals). (PHL Network, 2010). However, relatively low-cost storage and transport facilities and protocol are increasingly available in forms and at prices accessible to smallholders based on innovations from Southeast and South Asia. (World Bank/FAO 2010) The Role of Risk Management in Farming as a Business The ability of SSA’s smallholder farmers and farmer organisations to increase on-farm investments in land and labour productivity is constrained by their ability to manage the risk-return trade-offs in moving toward intensified agriculture. IFAD’s 2011 Rural Poverty Report has highlighted the role of risk in inhibiting smallholders from pursuing commercial agriculture opportunities. The RPR clearly demonstrates that given the precariousness of their livelihood context, poor, rural families are highly risk adverse and therefore are less inclined than non-poor groups to move up the “risk-return” ladder towards potential higher incomes, contributing to the growing income disparities we see in developing countries, including in those in SSA. These risks cover a broad range from social to political to natural resources to business (Figure 12). 14 Figure 12 Risks faced by smallholders In the context of SSA, these risks vary significantly with the different agro ecological zones. As in other regions, it is difficult to generalize risks faced by smallholders given the diversity of farming and marketing systems. In order to capture both the risks and their diversity, we have provided an initial categorization according to agro-ecological systems whose characteristics, along with the marking systems and market access factors discussed below, drive much of the risk profile faced by smallholders. Table 11 summarizes the principle production zones and associated risks.
  • 19. 15 Table 11 Characteristics of agro-ecological zones in SSA (Authors based on Dixon et. al 2001 and Bationo 2006) Length of growing period (days) Average Rainfall (mm) Farming systems Land area (% of SSA) Agricultural Population Main Soil Types* *simplified for chart Agricultural Products Risks Arid <90 0-600 Pastoral 14% 27 million (7%) Lithosols, xerosols Cattle, camels, sheep, goats. Health, Social Obligations, Conflict, Crime, Corruption, Drought, Animal Semi-arid 90-179 600-1400 Diseases, Prices Agro-pastoral 8% 33 million (8%) Lixisols, arenosols, vertisols Sorghum, millet: with pulses, sesame. Cattle, sheep, goats, poultry. Health, Social Obligations, Conflict, Crime, Corruption, Land Tenure, Climate, Soils, Animal/ Plant Diseases & Pests, Prices, PHL, Transport Sub-humid 180-269 1400- 3000 Mixed cereal/root-crop 13% 59 million (15%) Ferralsols, lixisols Maize, sorghum, millet: and cassava, yams, legumes, cattle Health, Social Obligations, Conflict, Crime, Corruption, Land Tenure, Climate, Soils, Animal/ Plant Diseases & Pests, Prices, PHL, Transport Mixed maize 10% 60 million (15%) Ferralsols, lixisols Maize: with tobacco, cotton, cattle, goats and poultry Health, Social Obligations, Conflict, Crime, Corruption, Land Tenure, Climate, Animal/Plant Diseases & Pests, Soils, Input and Output Policies, Prices, PHL, Transport, Contracts Root crops 11% 44 million (11%) Ferralsols, lixisols, acrisols Yams, cassava, legumes, cattle Health, Social Obligations, Conflict, Crime, Corruption, Land Tenure, Climate, Animal/Plant >270 3000- Humid Diseases & Pests, Prices, PHL, Transport 4500 Tree crop 3% 25 million (7%) Ferralsols, acrisols Cocoa, coffee, oil palm, rubber: with yams, maize Health, Social Obligations, Conflict, Crime, Corruption, Climate, Plant Diseases & Pests, Input & Output Policies, Prices, PHL, Transport, Contracts Forest-based 11% 28 million (7%) Ferralsols, acrisols Cassava: with maize, sorghum, beans and cocoyams. Health, Social Obligations, Conflict, Crime, Corruption, Climate, Plant Diseases & Pests, Input Policies, Prices, PHL, Transport Highlands 180 - >270 1400- 4500 Highland Perennial 1% 30 million (8%) Vertisols, cambisols Banana, plantain, enset, coffee: with cassava, sweet potato, beans, cereals. Cattle. Health, Social Obligations, Conflict, Crime, Corruption, Land Tenure, Climate, Animal/Plant Diseases & Pests, Input Policies, Prices, PHL, Transport, Contracts Highland Temperate 2% 28 million (7%) Vertisols, cambisols Wheat and Barley: with peas, lentils, broad beans, rape, tef and potatoes. Cattle. Health, Social Obligations, Conflict, Crime, Corruption, Climate, Animal/Plant Diseases & Pests, Input Policies, Prices, PHL, Transport, Contracts
  • 20. 16 The potential for investments in farming as a business is particularly influenced by supply chain risks. While risks associated with health, social obligations and conflict are fairly consistent across agro-ecological zones, those associated with marketing and other aspects of farming as a business are often supply chain specific. Table 12 attempts to summarize, in broad terms, the different types and characteristics of supply chains which smallholders generally work with in SSA, and the implications in terms of risks. Table 12 Indicative Risks Associated with Smallholder Supply Chains Marketing System Typical Products Characteristics of Supply Chain Risks for Smallholder Highly- Integrated Exports of high value for processing in specialized market Ex: (organic and fair trade cocoa, coffee, oil palm, cotton, honey) and in fresh markets (flowers, fruits, vegetables) Marketing margins: Very low (producers receive 60 to 80% of price of export/processor) Structure: Highly structured/integrated: Lead firm directly manages chain back to individual producer or co-op to ensure quality requirements and certification; usually involves contract with international trade, value-added and/or quality standards specified. High level of interlinking. Failure to meet quality standards Input and trade policy Climate Integrated with intermediary High value for domestic/regional fresh and processed markets Ex: (dairy, eggs, fruits, vegetables, meat) and exports for processing (conventional coffee, cocoa, oil palm, cotton) Marketing margins: Low (producers receive 40 to 75% of export price) Structure: Structured with one or two local aggregators who transmit/enforce quality standards between producers and lead firm – often contract and/or informal credit. Some interlinking. Some cases of co-ops integrating chain. Failure to meet quality standards Contract enforcement Price volatility Input and trade policy Climate Dispersed Low value domestic/regional staple crops and biofuel stocks Ex: (cassava, rice, corn, millet, sorghum) Marketing margins: High (producers 15% to 50% of price to processor or consumer) Structure: Absence of lead firm - unstructured, spot market transactions with multiple channels and numerous intermediary transporters/aggregators – limited or no transmission of quality standards to participants in supply chain. Absence of long-term investments or inter-linked market relationships (weak access to private input markets) Post harvest losses Transport delays and costs Price volatility Input and trade policy Climate (Authors based on Pingali and Rosengrant 1995, Swinnen, et al 2007, USAID 2009) Generally speaking, smallholders in dispersed supply chains are exposed directly to a larger number of business risks, as well as realizing a lower share of returns, while in integrated markets, there is generally a greater level of risk sharing amongst supply chain actors, as well as a higher share of benefits to
  • 21. producers. While there remains a need for more rigorous evaluation of the relative impacts on livelihoods of participating farmers, experience under IFAD-financed projects which aim to move farmers towards greater market integration, such as for potatoes in Guinea, palm oil in Uganda, cocoa in Sao Tome and Sierra Leone and coffee in Rwanda, has generally confirmed significant, positive impacts on both the level and stability of incomes of participating smallholders. (Raswant and Khanna 2010) While agro-ecological and location constraints will continue to impede a significant share of smallholders from participating in more integrated supply chains, the potential benefits for smallholders of participation are well recognized. Farmer organisations, such as the Network of Peasant Organizations and Producers of West Africa (ROPPA), are now focused on helping members to become competitive suppliers of high value products for domestic markets, such as rice, meat, dairy and vegetables. Governments have placed increased attention on revitalizing the role of smallholders in production of export crops and domestic import substitutes, as reflected in the CAADP investment plans. Support for improved supply-chain integration, market-access and commercialisation is prominent in 11 out of the 15 currently completed CAADP investment plans. (CAADP 2011) Donor support is also generally well aligned to these priorities. Donor financing is increasingly focused on helping smallholders gain capacity to participate in more integrated supply chains through investments in irrigation, roads, rural finance, research, weather insurance, inputs and farmer organization. (OECD 2011) These investments are intended to reduce both the costs and the risks faced by smallholders in associated with intensification of production so as to become more efficient suppliers of markets. However, evidence on the ground is highlighting that these investments, of themselves, are not sufficient in most cases for farmers to move effectively from a dependence on dispersed staple crop markets towards more integrated market opportunities. This is seen in the case of irrigation and roads in SSA, where assessments have demonstrated relatively lower returns relative to projects in other regions (Inoncencio et. al. 2007, World Bank 2009), and in lower adoption rates for improved seeds and fertilizer (Ndejeunga and Bantilan 2002). While there are a myriad of explanations offered, most emphasizing the weakness of institutions or governance, we suggest that a more focused and practical element merits greater attention: effective coordination in terms of place and timing of development support as discussed in the next section. 17
  • 22. 3) Right Place, Right Time - Lowering Business Risk In seeking to lower risks and increase opportunities for smallholder farmers, there seems to be a pronounced tendency to search for new technical solutions while often ignoring the potential to strengthen the impact of existing investments. There is a predisposition among development practitioners, be they academic researchers, officers of international financial institutions or staff from non-governmental organizations, to look for new solutions to rural poverty alleviation, food security and income generation. Improved seed varieties, micro-dosing of fertilizers, more crop per drop irrigation schemes, sustainable agronomic practices, innovative financial instruments and the like all certainly have a role to play in improving the lives of the rural poor in Africa. However, there are potentially enormous gains that can be achieved through improving the spatial and temporal coordination of existing development interventions by simply responding to the two, proverbial “elephants in the room”: 18 1. More than one third of all sub-Saharan rural Africans are so geographically and economically isolated from market towns that, at present, they are virtually condemned to a life of subsistence agriculture, regardless of their access to modern inputs, irrigation infrastructure or financial services. 2. The majority of development programmes and projects do not deliver goods, services and works in a timely manner and this has had an extremely negative impact on productivity and increased revenues of project beneficiaries. Successful agricultural campaigns are all about planning and timing. Without rigorous project management, farmers will not gain the full benefits of new technological solutions. Right Place Increasing access to markets figures prominently in Table 13 People Living more than Five Hours rural poverty reduction strategies (and is one of to a Market Town of 5,000 IFAD’s six strategic objectives). But the extreme degree of geographical isolation of SSA smallholders Region Percent Number (millions) is not widely apprehended. According to a spatial SAR 5% 45 analysis undertaken in 2007 (Sebastian), 34% of the EAP 17% 188 rural population in sub-Saharan Africa live more than LAC 20% 26 five hours from a market town of 5,000 people. As MENA 31% 23 can be seen from Table 13, SSA has the greatest percentage of population and the second greatest Central Asia 32% 32 number of people living five hours or more from a SSA 34% 131 market town. The density of SSA’s road network is substantially lower than in other developing regions and is, in fact, regressing as there are fewer kilometres of roads today in SSA than there were 30 years ago. There are only 204 kilometres of road, only 12% of which is paved, per 1000 square kilometres of land area. This density is less than 30% than that of South Asia, the next lowest region. Only 34% of Africans live within two kilometres of an all-season road, compared to 65% in other developing regions. (Dorosh 2009, WDI 2010). These sobering sub-Saharan statistics mask significant regional differences. The East Africa region has a much lower overall population density, smaller local markets and lower road connectivity than West Africa. The average travel time to a major city (of 100,000 people) is 2.2 times greater than in West Africa. This large inter regional difference is attributable to a much less dense secondary and tertiary road
  • 23. network in East Africa, where distances to these smaller roads are 1.8 times farther than in West Africa. (Dorosh 2009) So what is the impact of remoteness to market on agricultural productivity? If a farmer cannot profitably market her surplus, then there is no logical reason to produce more than her family can store and/or consume. There is thus no motivation to adopt productivity enhancing technologies, particularly those external inputs which are costly and, in any event, are not likely to be available. This intuitive conclusion is borne out by the previously referenced AICD report which estimates that an average farmer is producing at 45% of the theoretical agronomic potential when located four hours from a major city. This percentage drops to 20% when the farmer is six hours away and 12% when eight hours away. So, fully one third of the rural population in sub-Saharan Africa is sitting on the side lines with no real chance of participating in the market economy nor improving their economic condition. What about the other two-thirds of rural sub-Saharan Africans who theoretically are in sufficient proximity to market towns to sell surplus production? The 2007 spatial analysis categorized access to market as high (< 1 hour), medium (2 – 4 hours) and low access (> 5 hours). There is a significantly lower percent of rural people in SSA than other regions with high access to market towns as can be seen from the Table 14. The number of rural sub-Saharan Africans which enjoy medium access to market towns is, at 46%, higher than all other regions with the exception of East Asia. However, the significance of distance to market is primarily (though not exclusively) one of transport cost to receive inputs and evacuate product. And here, the relative benefits of medium access to market evaporate in the face of high transport costs. As can be seen in Figure 13, it can cost up to five times as much to travel the same distance in parts of Africa as it does in Pakistan. This, in effect, means that from a cost perspective, a SSA farmer located one hour away from a market town (high access) pays the same for transport as a Pakistani farmer located five hours from a market town (low access). The extremely high cost of transport in Africa in effect dramatically increases the impact of distance to market. 19 Table 14 People Living less than one hour to a Market Town of 5,000 Region Percent Number (millions) SAR 56% 512 EAP 33% 366 LAC 46% 61 MENA 26% 19 Central Asia 26% 26 SSA 21% 81
  • 24. 20 Figure 13 Transport prices (Teravaninthorn and Raballand 2008) The importance of widely differing transportation costs comes into clear focus when considering the relative cost of agricultural inputs and the opportunities for agricultural import substitution in SSA. A concrete example is the impact of transport costs on fertilizer prices where differences in transport costs are the most important contributor to the higher prices in SSA countries as compared to Thailand. (Figure 14). One notes that a ton of fertilizer is, on average, 80% more expensive in Mali than in Thailand. (Bumb 2009) Landlocked countries typically must absorb US$50-100 per tonne in additional transport costs to have goods delivered from the nearest port to their own border. The problem is made worse by small Figure 14 Fertilizer price formation in Thailand, Tanzania and Mali in 2006 (Bumb 2009) market size and fragmentation and unnecessary product differentiation, making it difficult to achieve the necessary economies of scale for more efficient production or import. (World Bank, n.d.) As can be seen from Figure 6 in Section One, SSA countries import more than seven million tons of rice per year (whole and broken), more than 90% of which is produced in Thailand, China and Pakistan by smallholder farmers. Rice imports represent almost 40% of total consumption in SSA. In much of the region, locally produced rice cannot compete on a cost basis with product grown in remote rural areas of
  • 25. Asia and transported several thousand kilometres to market, and this, despite similar or lower smallholder farm gate production costs in Africa. (Africa Rice Center 2007) The Sleeping Giant study identifies very promising opportunities for smallholder import substitution in domestic and regional markets for rice, as well as soybeans, sugar and maize. These opportunities, however, can only be realised through dramatic decreases in SSA’s transportation costs to render them cost competitive in primary destination markets. (World Bank 2009c) Reasons for High Transport Prices The high price of road transport in SSA is widely apprehended but the reasons for this are much less widely understood. High prices have generally been attributed to the poor state of the transportation network, and, secondarily, inefficient logistics and endemic corruption. Several donors, in particular, the World Bank, have, since the 1970s, invested heavily in improving SSA’s transportation infrastructure, particularly along key trade corridors. These investments have facilitated road transport and have, in fact, reduced the costs for trucks carrying cargo. According to a July 2008 study, ‘Transport Prices and Costs in Africa: A Review of the Main International Corridors’, reduced transport costs have not translated into reduced transport prices for farmers and shippers in much of Africa. On the contrary, particularly in West and Central Africa, the reduction in transport costs due to improved road conditions have served principally to increase profit margins for trucking companies. (Teravaninthorn and Raballand 2008) Analyses contained in the report bring into question much conventional wisdom regarding transport in Africa and have direct impacts on smallholder competitiveness and the role that donors and governments must play to facilitate access to markets. For example: 21  The cost of transport along major corridors is not significantly higher in SSA than in European countries. The report estimates that average costs per vehicle kilometre in Central and East Africa (USD 1.87 and USD 1.33) were similar to those in France (USD 1.52) and Germany (USD 1.71) and were, in fact, lower than in Poland (USD 2.18). Although variable costs, primarily for vehicle maintenance and fuel, were significantly higher, fixed costs for truck acquisition and driver’s salaries were much lower.  The trucking industry in Pakistan shares many similarities with SSA (purchase of old used trucks, very poor condition of transport infrastructure, low wage levels for drivers) yet transport prices in Pakistan are but a fraction of what they are in most of sub-Saharan Africa. The prevailing low prices for truck transport in Pakistan enable Pakistani rice to be competitive on African markets.  Estimated profit margins registered by trucking companies are very high, particularly in Central and West Africa. Estimates range from 118% on the Ngaoundëré-N’Djamema corridor, 80% on the Tema-Bamako corridor, 86% on the Mombassa-Kampala corridor to a low of 18% on the Lusaka-Johannesburg corridor.  Under present industry conditions, rehabilitation of major road networks, reduction in border crossing times, decreases in fuel prices and bribes will have no impact on transport prices for smallholder farmers in Central and West Africa. The study highlights the very different prevailing conditions in East and Southern Africa, as opposed to West and Central Africa. Transport costs and prices are significantly lower in East and Southern Africa. The main reason for this is competition within the sector.
  • 26. In West and Central Africa the trucking industry is highly regulated. Freight allocation is controlled by trucking cartels which erect barriers to entry, promulgate and enforce regulations which limit competition, and create conditions which favour bribery to increase market share under the “tour de role” freight allocation system. The structure of the industry and the policy frameworks do not provide incentives to invest in newer rolling stock nor maximize existing trucking capacity through more efficient use of vehicles. Not coincidentally, trucking firms in these regions are often owned by the politically well connected. By contrast, in Eastern and Southern Africa, direct contracting between shipper and transporter is the norm rather than the quasi-government freight allocation systems which prevail in the other regions. This has fostered a more open, competitive environment which is reflected in more efficient services, newer truck fleets, and lower costs and prices in the region. The study examined the impact of the 1994 deregulation of the trucking industry in Rwanda (the only such case of deregulation in Africa, according to the study) following the genocide. Deregulation of the parastatal trucking industry resulted in a decline in prices by more than 30% in nominal terms and almost 75% in real terms. Moreover, lower prices also led to an increase in the size of the Rwandan fleet. While not identified as a main contributor to transport costs on the principal international corridors analysed in the AICD study previously referenced, illicit payments to government agents, associated delays and subsequent spoilage weigh heavily on the cost of local transport of agricultural products in Africa. These additional transport costs are distributed to producers in the form of lower farm gate prices and to consumers through higher retail prices. Producers of perishable goods, who are predominantly women smallholders, are disproportionately affected by these issues because of significant losses incurred during transport. The World Bank’s 2009 World Development Report argued that illicit payments act as a major barrier to agricultural growth. Figure 15, for example, shows the number of checkpoints, time of delay, and the average amount of bribes for a section of the roads in West Africa - an illustration which makes starkly clear the level of challenge faced by local producers and traders. So, for much of Africa, revising the policy environment for the trucking industry to make it more competitive would effectively shorten the “economic distance” from farm to market, decrease the cost of purchased inputs, improve profit margins for smallholder marketable surpluses and level the playing field 22 Figure 15 Checkpoints, bribes and delays on corridors in West Africa (West African Trade Hub 2007)
  • 27. for millions of SSA smallholders so that they may better seize opportunities for import substitution. Farmers organisations have been working in concert with regional economic communities to draw attention to these issues through collective action. Right Time Observe due measure, for right timing is in all things the most important factor.(Heriod, Greek Poet, circa 800 b.c.) Development stakeholders pay insufficient attention to the critical importance of project planning and management as a factor in rural poverty reduction. Discussions concerning improved productivity, greater food security and increased revenues centre on the new silver bullet, the breakthrough technology, the new “it”. Talking about the impact of improved planning, prompt disbursements and timely delivery of goods, works and services on poverty reduction and economic growth is not very exciting. It does not generate research grants or fellowships nor provide the raw material for refereed papers in prestigious journals. Perhaps this is why there is so little data on the impact of poor management and late delivery of inputs on economic growth. But anyone with even a passing knowledge of hands-on development practice knows that SSA agriculture, as the engine of economic growth, is running on perhaps four of its six cylinders and this is because inputs, be they financial, agronomic or technical, are, all too often, not being delivered in a timely manner, be it at a donor institution, ministry of agriculture, the project implementation unit, the bank or MFI or the agricultural cooperative. Of course, no one knows the exact impact of untimely delivery of goods, services, and funding but there is widespread recognition that the problem is pervasive. It is also correctable. Agricultural development projects mostly provide the same services: financing, technical expertise, and physical inputs, but they achieve varying levels of success. And the difference, more often than not, comes down to the delivery of the required goods and services in a timely manner. The history of fertilizer subsidy programmes in SSA is an eloquent case in point. Late fertilizer deliveries to farmer’s fields have been a salient characteristic of fertilizer subsidy programmes. Dorward (2009) examined ten fertilizer subsidy programmes and found that in nine of the ten cases, fertilizer was delivered late to substantial portions of the beneficiaries. In Ghana, Yawson (2010) reported that 82% of respondents indicated that subsidized fertilizer was not available at planting time. A similar situation was described by Xu et al. (2006). It is commonly recognized that late application of fertilizers have a negative effect on yield response (Minde et al. 2008, Xu et al. 2006) and the lowered yield response can often be the difference between adoption and non-adoption of farmers of improved input packages. In Zambia, Xu found that late application of fertilizer on maize in several provinces had a significant negative impact on yield, compared to those farmers who applied the recommended doses at planting time. Of the 21 sample groups examined, yields were significantly higher in all cases among those farmers who had access to fertilizer in a timely manner. On time fertilizer applications registered value/cost ratios of >2 in eight of the 21 cases, compared to none among those who received fertilizer late. It is generally admitted that value/cost ratios of greater than two are a condition for farmers to adopt fertilizer into their production systems. To our knowledge, there is not a multi-country study which examines the larger impact of late fertilizer delivery on profitability and fertilizer adoption but the empirical evidence seems quite clear: subsidized fertilizers are frequently delivered late; late delivery and application decrease yields compared to “right time” application and do not provide incentives for farmer adoption of a technology which could improve 23
  • 28. food security and livelihoods. The increased use of inorganic fertilizers is not, of course, a panacea. Their use, even when the appropriate blend is employed in a timely fashion, may not always be financially justifiable. Moreover, inorganic fertilizers need to be associated with better agronomic practices. But in cases where marginal returns are positive, improved management of fertilizer procurement could have a significant impact on food security, smallholder revenues and adoption rates. Another glaring case where delayed delivery of inputs has a pronounced negative impact on smallholders is the tardy delivery of marketing loans to cooperatives for raw material acquisition. Over the past decade, Rwanda has invested tens of millions of dollars in the construction of coffee wet mills, new coffee trees and training to improve coffee quality and capitalize on the increased world-wide demand for premium coffees. A significant portion of this development has been through cooperatively owned processing facilities. Cooperatives depend on marketing loans to finance coffee cherry4 purchases from cooperative members and non-members. Generally commercial bank loans are provided in tranches during the marketing season against warehoused inventories of parchment coffee. The history of coffee cooperatives in Rwanda is characterized by late positioning of marketing loans which in turn interrupts cherry purchases as farmers will not sell their cherries on credit to the cooperative and instead sell to neighbouring privately owned processing facilities or other coffee cooperatives. Interrupted cherry deliveries means that cooperatives cannot process adequate amounts of coffee to pay off long term capital loans for processing facility construction. The result is frequent cooperative insolvability, cessation of activity and outstanding bad loans which weaken bank financial positions and discourage further investment in the coffee sector. (Reimen 2010) The reasons for delayed positioning of marketing loans are varied. It may be due to late or incomplete submission of loan applications by cooperatives, or tardiness on the part of bank loan officers, but the upshot is still the same: the lack of “right time” management is a serious impediment to fully capitalizing on existing investments and is a significant brake on increasing small holder food security and incomes using existing resources and technologies. Multilateral and bilateral donors share a significant part of the responsibility for this pervasive lack of urgency in the implementation of development initiatives. Lag times between donor project approval and start of programme implementation commonly exceed 12 months. Processing of requests for disbursement of loan and grant funds from borrowing governments are nowhere near as expedient as they should be. By way of example, average processing times for these requests at IFAD have substantially decreased during 2010 to 28 days, from 35 days in 2008, but still pale in comparison to six day averages reported by the World Bank. Donor programme evaluations are often published so long after field work that their recommendations are out dated. Delays between the publication of vacancy announcements and the recruitment of staff are frequently so lengthy that selected candidates get discouraged and take other positions. The impact of frequent (some would say systematic) slow response time on the part of donors is far reaching. Not only does it retard programme implementation but, perhaps more importantly, sends the exact wrong message to client governments, agricultural cooperatives, private sector partners and smallholders that timing is not important. It also undermines donor credibility. How can donors credibly advocate for more expedient government procurement processes when their own administrative processes exhibit the same weaknesses? IFAD, like other multilateral and bilateral donors, recognizes the contribution which public-private partnerships (PPPs) can play in improving food security and income generation for small holders. To be a viable partner to the private sector, however, requires “right time” responses. For example, in Sierra 24 4 Coffee cherries are the fruit of the coffee tree. The fruit is harvested and the beans are extracted in processing.
  • 29. Leone a very successful PPP has been developed with smallholder cocoa growers and high quality exporters, facilitated by an IFAD funded project. However, an otherwise positive relationship amongst farmers, marketers and the government project is strained by consistent delays in transferring reimbursable funds to the companies and cooperatives who either have to delay disbursement to their members for work accomplished or have to pre-finance from their own resources - calling into question the advantages of a PPP. In this case, the project is addressing the issue, but it highlights how getting the timing right is critical to the ability of organizations like IFAD to be attractive partners in the expanding context of PPPs. So why have development stakeholders not done a better job of getting the timing right? The reasons are multiple. Some involve complex issues such as bureaucratic accountability, and competing stakeholder political agendas while others are simpler. First, in a non-profit environment, there are few penalties for not delivering on time, in contrast to the private sector which must rely on customer satisfaction for profit and success. Second, improved operational planning, as mentioned in the introduction to this section, is not a very glamorous subject and has not received the importance which it is due; realistic, detailed chronological planning and expedient turnaround times are at the heart of successful agricultural development programmes. Because they have not received their due, insufficient attention has been paid to management training of project coordinators, transparent monitoring of metrics which gauge response time and the establishment of lapse of time contracting mechanisms. These would serve to heighten the sense of accountability and promote the timely provision of goods, works and services. 25
  • 30. 4) Conclusions and Recommendations Sub-Saharan Africa’s unique resource endowment and political geography provide a challenging context which has traditionally translated into relatively weak social and economic progress compared to other regions. However, while tremendous challenges, particularly in infrastructure and governance remain, the benefits of a growing, better educated and healthier population and improving economic management are gradually translating into stronger economic and agricultural sector growth. In fact, several SSA countries are emerging as the continent’s “lions” with globally leading growth rates realized and anticipated over the coming years. Sub-Saharan Africa’s women and men smallholder farmers are poised to be a key driver of future economic growth and poverty reduction if the challenges faced which translate into high levels of risk can be overcome. Growing global demand for agricultural products is translating into improved production incentives for SSA’s farmers. Given the high proportion of smallholders and the potential and realized productivity advantages, even in the context of current constraints, SSA’s smallholders should be major beneficiaries of these opportunities if they can increase their productivity through increased on-farm investments to increasingly orientate their production towards farming as a business, and when appropriate to form collective farmer organisations to facilitate this. As highlighted in IFAD’s Rural Poverty Report, their willingness to undertake these investments is dependent on reducing the actual and perceived risks which trap many rural households in a subsistence equilibrium around the poverty line. Governments, donors, NGOs and others are investing increasingly in technology, infrastructure and other efforts to reduce risks and increase returns to facilitate smallholders participation into more integrated supply chains with generally higher returns at lower risk levels. However, the effectiveness of these efforts in terms of adoption and sustainability by farmers, and their impact in terms of economic returns. Efforts to boost the impact of investments in smallholder agriculture have not paid sufficient attention to issues of spatial and temporal coordination. The tendency is often to address under performance with the search for new technologies or paradigms when the very practical constraints of spatial and economic isolation and lack of timeliness in delivery of development assistance are staring stakeholders in the face. The impact of geographic isolation, high transport costs, time lost to road blocks, as well as failure to deliver credit or fertilizer on-time to producers, or for producers to deliver product into the market when prices are more favourable, can completely undermine the returns to investments in irrigation, inputs, credit, insurance, post-harvest storage, training, etc. The result is a likely abandonment of these efforts by producers who are understandably cautious in investing their own time and scarce cash in the necessary sustaining activities. This can disproportionately impact women who generally devote a greater share of their agricultural effort on perishable market production relative to staple crops. Hence there is a need for much more focus on both “right place” and “right time”. How do we transform right place, right time from a slogan or analytical framework into an operational approach? Operationalizing “right place” essentially means making more informed choices regarding project implementation zones, distinguishing clearly between objectives of enhanced commercial access and food security. This entails assessing not only the quality of roads, but also the costs of transport in terms of freight charges and official and unofficial controls and tariffs. In principle, this should be a standard element of value chain analysis, however at least in IFAD’s projects, this is rarely carried out. While changing some of the contributing cost factors confronts very powerful interest groups in a country, failure to highlight the issue can result in encouraging smallholders to undertake investments and incur risks whose returns are much lower than expected. Documenting the inherent contradictions in investing millions of budgetary and borrowed funds into agricultural development while simultaneously allowing the sector to be unofficially taxed out of competitiveness will, as the experience of official taxation in the 26
  • 31. 27 1970s and 1980s highlighted – result in depressed prices for farmers and declining production and productivity as farmers disinvest – exactly the opposite result being pursued through CAADP. The increasing prevalence of harmonized donor/government sectoral strategies and integrated medium-term investment plans under the CAADP umbrella presents a new opportunity to provide more holistic responses to the interlinking challenges of increased agricultural productivity, improved transport infrastructure, greater access to markets and increased returns for SSA smallholders. Translating this opportunity into improved programme performance will require a more realistic assessment of marketing opportunities during project design through the implementation of more detailed value chain assessments. In very geographically isolated project areas, opportunities for farming as a business may be minimal and this needs to be reflected in programme strategy. Focus must shift from the provision of inputs to the achievement of outcomes. Co-financing schemes involving transport and agricultural development, so frequently characterized by piecemeal approaches, need to give way to real joint planning and implementation if the essential synergies are to be realized. It is commonly recognized that the challenges to rural poverty alleviation are interlinked and so too must be the solutions. But the right place approach can only be effective if combined with a timely provision of goods, works and services by co-financiers and this has rarely been the case. Greater donor attention to the temporal dimensions of development programmes and more rapid institutional responsiveness is a sine qua non to liberate the synergies required to address the interlocking challenges of rural poverty alleviation. Operationalizing “right time” requires much more attention to valuing the timing as well as the act of delivery of goods and services to farmers and to markets. Again, in the first instance this requires analysis of the timing requirements for production and marketing, as well as assessment of the roles of actors to achieve this. In terms of implementation, the issue of timing needs to be at the forefront of planning of activities and needs to be a key driver of management oversight. For example, in the context of IFAD-financed projects, annual work plans and budgets (AWPBs) are prepared and discussed between the projects management units, governments, IFAD and other partners. While the timing of activities is presented, these are rarely, if ever highlighted relative to the timing needs of farmer production cycles, or marketing windows. In summary, following are our key recommendations:  Policy/Strategy o Draw attention to a holistic assessment of isolation in terms of time and cost of connecting with input and output markets o Build awareness of critical temporal coordination requirements in terms of timing of inputs and marketing as a key element of agricultural support o Utilize value chain analysis to highlight and benchmark cost and time implications in terms of both inputs and outputs for smallholder farmers in isolated areas o Encourage management studies training as part of curriculum of agricultural ministry and farmer organization staff.  Operational Design o Use value chain assessments to identify isolation constraints across the range of factors – poor infrastructure, official and unofficial road taxes, monopsonies in transport services, etc. to ensure realistic assessment of probable returns to smallholder farm level and producer group investments.
  • 32. 28 o Promote greater synergies among co-financiers by adopting joint design and implementation support missions. o Ensure that critical timing aspects are identified and agreed with and understood by project stakeholders. o Include specific indicators for transport costs and critical timing aspects into monitoring framework.  Implementation o Ensure that annual work plans and budgets define and respects spatial and temporal coordination requirements. o Provide systematic and robust orientation and training to project coordinators in results-based management. o Monitor spatial and temporal coordination by donor, government and project management unit as part of project performance assessment. We are sure that there are many more opportunities to improve the spatial and temporal coordination in our support to Africa’s smallholders, and hope that this discussion will stimulate attention to this issue in the thematic sessions looking at marketing, inputs and credit.
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