This document summarizes key findings about public expenditures and agricultural policy bias in Africa based on data from 1980-2005. It finds that while total public spending in Africa has increased, spending on agriculture remains much lower than other regions. Only 8 countries have met the Maputo Declaration target of 10% agricultural spending. Development assistance to African agriculture has declined since 1995. Meeting the first Millennium Development Goal of reducing poverty will require agricultural growth rates of 6-7.5% annually, which will need increased agricultural spending of 20-30% per year in most countries. While policy distortions against African farmers have reduced over time, substantial biases remain.

1. ReSAKSS Regional Analysis on
Agricultural Expenditures and
Agricultural Policy Bias:
Africa Wide
Babatunde Omilola and Melissa Lambert
April, 2009

2. 1. Overview of public expenditures
across the world
How does Africa’s public spending compare to public
spending in other regions?

3. Public expenditures across world regions,
2000 international dollars, billions
5000
2000 international dollars, billions
4500
4000
3500
3000
1980 1990 2000 2005
2500
2000
1500
1000
500
0
SSA (13 countries) N. Africa (3 countries) LAC (16 countries) Asia (11 countries) Total (43 countries)
Spending in SSA and N. Africa
Total spending increased by 6
increased by 3.7 percent from 1980-
percent from 1980-2005, the
2005. In SSA alone, spending
majority of which was from Asia
increased by 4.9 percent
Source: Calculated using data from International Monetary Fund’s (IMF) Government Financial Statistics Yearbook

4. Public expenditures across world regions,
Percentage of GDP (%)
Public expenditures as a percentage of GDP is a more useful measure of the amount a
country spends relative to the size of its economy
45
40
1980 1990 2000 2005
35
Percentage of GDP, %
30
25
20
15
10
5
0
SSA (13 countries) N. Africa (3 countries) LAC (16 countries) Asia (11 countries) Total (43 countries)
Under this measure, Africa has
spent the most, although in SSA
this share has declined since 1980.
Sources: Calculated using data from International Monetary Fund's Government Finance Statistics

5. How have governments allocated their total
spending?
Since 1980, the share of spending on health, education and agriculture
in SSA has increased slightly while spending on defense has declined.
100%
90%
80%
Share of total spending, %
70% Other
60% Defense
50% Social Security
40% T&C
Health
30%
Education
20%
Agriculture
10%
0%
1980 1990 2000 2005 1980 1990 2000 2005 1980 1990 2000 2005
SSA Asia LAC
The share of spending on agriculture in SSA
increased since 2000 but remains at the 1980 level
and below 10%.
Sources: Calculated using data from International Monetary Fund's Government Finance Statistics

6. Agriculture expenditures across regions
Agriculture expenditures by region, Agriculture expenditures by region as
2000 international dollars (billions) share of agriculture GDP
Agriculture expenditure share of agriculture
16
250
2000 international dollars, billions
14
200 12
10
GDP, %
150
8
100 6
4
50
2
0 0
1980 1990 2000 2005 1980 1990 2000 2005
North Africa SSA LAC ASIA TOTAL North Africa SSA LAC ASIA
The level of agricultural spending is Yet as a share of agriculture GDP,
much higher in Asia than in N. Africa, expenditures on agriculture are highest
SSA and LAC in N. Africa – but still lowest in SSA.
Sources: Calculated using data from International Monetary Fund's Government Finance Statistics

7. Drawing conclusions from the figures
• Although SSA has increased total spending
and agricultural spending, the levels are much
lower than other regions of the world
• Therefore, SSA, as a region, will need to
increase its level of public spending on
agriculture in order to experience successful
transformation that Asian countries did
through the green revolution

8. 2. Agriculture spending in Africa
Country Progress towards the Maputo
Declaration target

9. Progress towards the Maputo
Declaration target
• The African continent as a whole has not met the
10% target (current spending at 6-8 percent)
• But, this varies by country Only 8
countries have
Agricultural Expenditures as a share of total (%), 2007 met the 10%
25 target
20
CURRENT, 2007 (Unless otherwise noted)
15
%
10
5
0
Central African…
Madagascar**
Ghana****
Guinea Bissau***
Morocco**
Gabon***
Mali
Nigeria
DRC**
Egypt**
Swaziland**
Benin****
Burundi***
Tunisia**
Chad***
Kenya****
Uganda****
Tanzania**
Malawi
Sudan***
Zambia*
Gambia***
Senegal
Niger*
Cote d'Ivoire
Lesotho**
Togo
Mauritius**
Namibia**
Ethiopia**
Rwanda
Botswana
Mauritania***
Mozambique**
Guinea***
Cameroon**
Zimbabwe**
Burkina Faso*
*=2006; **=2005; ***=2004; ****=2008 estimates
Sources: Various, compiled by ReSAKSS.

10. Have countries increased their spending in
response to the 2003 Maputo Declaration?
• At the continental level, Level of agricultural spending as a share of
total spending, 2002-2005
agricultural spending
nearly doubled between 70.0%
2000 and 2005 60.0%
% of reporting countries
• In 2003, only 3.2% of
countries allocated 10% 50.0%
or more of their budgets 40.0%
to agriculture
– This increased to 33.3% 30.0%
in 2006 before slightly
falling to 25% in 2007 20.0%
• 9 countries increased 10.0%
their allocations from
0.0%
less than 5% spending to
5-10% spending 2002 2003 2004 2005 2006 2007
Less than 5% 5%-10% More than 10%
Sources: Various, compiled by ReSAKSS.

11. Agriculture expenditures as a share of
agricultural GDP
• Measures government spending on agriculture relative to the size of that
country's agriculture sector
• Under this measure, more countries fall into the category of low budget
support to agriculture
Agricultural expenditures as a share of agricultural GDP, 2007
80
60 The range is
CURRENT, 2007 (Unless otherwise noted)
considerable
%
40
(1 to 60%)
20
0
*=2006; **=2005; ***=2008 estimates
On aggregate , Africa spends between 5-7%
Sources: Various, compiled by ReSAKSS.
of agricultural GDP on agriculture,
compared to 15% in Asia during its Green
Revolution

12. 3. Development Assistance to
Agriculture in Africa

13. Development Assistance for African
agriculture
Since 1995, official development assistance (ODA) to
agriculture in Africa has fallen and has been less than
ODA to emergency relief and food aid
Sources: OECD statistical portal, accessed November, 2008.

14. Agricultural aid to Africa, by country
10 All countries spent
Agricultural aid as a share of total aid, %
9 less than 10% of aid
8 budgets on
7 agriculture
6
5
4
3
2
1
0
2002 2003 2004 2005 2006
• Agriculture has not been prominent on the donor agenda, perhaps not because
of any conscious decisions but due to pressure to broaden the aid agenda
• It is crucial for development agencies to also commit to the 10% budgetary
allocation to agriculture Source: OECD statistical portal, accessed November, 2008.

15. 4. Reaching the first Millennium
Development Goal in Africa
Is it possible at the continental-level and
country-level?

16. MDG1 in Africa
• African agriculture will need to grow at a rapid rate of 7.5 percent
annually in order for the continent to meet the MDG1
• At the country level:
– Mali, Nigeria, Burkina Faso, Tanzania, Mauritania, Ethiopia, Cameroon,
Uganda, Mozambique, and Ghana, require a growth rate of 6 percent or
less
• To achieve the desired growth rates, overall, African countries will
need to boost their agricultural spending to $33 to $39 billion
annually (in 2000 international dollars) from 2005-2015
– This translates into an increase of agricultural spending by 20 to 24
percent annually
• At the country level:
– Ethiopia, Ghana, Mozambique, and Uganda can potentially reach MDG1
by increasing agricultural expenditures by up to 10 percent annually
– The majority of countries, however, will need to scale up spending by 20
to 30 percent per year
Source: Fan, et al. 2008. ReSAKSS Working Paper No. 25

17. 5. Agricultural Bias in Africa
Policy bias against agriculture – what remains?

18. Policy bias against agriculture in Africa
• Distortionary policies have been reduced in Africa
over time, yet substantial distortions remain and
still impose a large tax burden on Africa’s poor
• Distortionary polices worsened following
independence, but after the 1970s, various
reforms successfully reduced them and now
average rates of agricultural taxation are at their
pre-1960 levels
• African farmers have become less taxed in part
because of the changing trade orientation of
African agriculture
Source: Anderson and Masters, 2009.

19. Nominal Rate of Assistance
• NRA = the percentage by which government
policies have raised gross returns to farmers
above what they would have been without
the government’s intervention
• If NRA is positive, then farmer support is high
• If NRA is negative, farmers are being taxed
Source: Anderson and Masters, 2009.

20. Nominal Rate of Assistance
• In Africa, NRA were less than 10% in early 1960s, rose sharply in
1960-70, and has since fallen to below the early 1960s level
• At the country level, from 1960 to present:
– There were major reductions in farmer taxation in Ghana, Uganda,
Tanzania, Cameroon, Senegal and Madagascar from reforms that
occurred between 1975-79 and 2000-04
– There was a shift from taxation of farmers to support of farmers in
Mozambique and Kenya
– There was a shift from slight support of farmers to slight taxation in
Nigeria
– Continued heavy taxation of farmers in Cote d’Ivoire, Zambia and
Zimbabwe
– NRAs favored sugar, rice and milk the most and taxed coffee, cotton,
tobacco and cocoa the most
– NRAs favored import-competing products while taxing exportables
• In other words, NRAs were in favor of self-sufficiency
Source: Anderson and Masters, 2009.

21. Consumer tax equivalents
• CTE = the percentage by which policies have
raised prices paid by consumers of agricultural
outputs
• If CTE is positive, consumers are essentially
paying a tax on agricultural goods
• If CTE is negative, consumers are essentially
receiving a subsidy for agricultural goods
Source: Anderson and Masters, 2009.

22. Consumer tax equivalents
• In Africa, CTE reached -10% immediately
following independence, fell to -17% by the
early 1970s, and then gradually progressed to
zero today
• Historically, (in dollar terms),
– subsidies to consumers were the largest in
Ethiopia and Sudan
– tax on consumers has been the largest in Nigeria
and South Africa
Source: Anderson and Masters, 2009.