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AGRICULTURE FOR SUSTAINABLE DEVELOPMENT IN AFRICA FOR CHINA AGRICULTURAL UNIVERSITY Guo Li The World Bank June 16, 2011 1.

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Presentation on theme: "AGRICULTURE FOR SUSTAINABLE DEVELOPMENT IN AFRICA FOR CHINA AGRICULTURAL UNIVERSITY Guo Li The World Bank June 16, 2011 1."— Presentation transcript:

1 AGRICULTURE FOR SUSTAINABLE DEVELOPMENT IN AFRICA FOR CHINA AGRICULTURAL UNIVERSITY Guo Li The World Bank June 16,

2 O UTLINE A brief introduction of the World Bank. Challenges and opportunities for Africa’s Agriculture. What can agriculture do for Africa’s development? Options for moving forward. Can Africa do it? Concluding remarks. 2

3 C HALLENGES AND O PPORTUNITIES FOR A FRICA ’ S A GRICULTURE 3 Daunting Challenges ( data): 1. Poverty incidence 41% (US$1 per day, EAP: 9%; LAC 9%; SAP: 31%;) 2. 32% population undernourished (EAP: 12%; LAC: 10%; SAP: 21%); 3. 70% of poverty in agriculture; 4. Projected food deficit (e.g., food aid per capita 4 times as other regions); 5. Only region with projected increased numbers of malnutrition children (under 5 years old) in coming two decades. Obviously, agriculture sector performs poorly. Projected cereal deficit Sub Saharan Africa

4 C HALLENGES AND O PPORTUNITIES FOR A FRICA ’ S A GRICULTURE 4 Opportunities: 1. Remarkable progress in recent years (macroeconomic growth, policy reforms, higher level of social and political stability, etc.) 2. Abundant natural resources (12 times the land area of India with only 2/3 as many people to feed); 3. Growing domestic and regional food markets (due to urbanization, population growth, etc.); 4. Equitable land distribution by international standards (with a few exceptions);

5 C HALLENGES AND O PPORTUNITIES F ACING A FRICA 5 Opportunities: 5. Stronger political commitment to agriculture (e.g., 2003’s Comprehensive African Agricultural Development Program, CAADP); 6. Technological advances and improved incentives for agricultural investment; 7. New market opportunities for farmers due to food price increase and biofuels demand.

6 W HAT C AN A GRICULTURE D O FOR A FRICA ’ S D EVELOPMENT ? 6 Three Worlds of Agriculture

7 W HAT C AN A GRICULTURE D O FOR A FRICA ’ S D EVELOPMENT ? 7 Characteristics of three country types, 2005

8 W HAT C AN A GRICULTURE DO FOR A FRICA ’ S D EVELOPMENT ? 8 In Sub-Saharan Africa, agriculture is essential to: 1. Overall economic growth; 2. Reducing mass poverty; 3. Food insecurity; and 4. Providing environmental services. Therefore, promoting agriculture development should be a center piece of the continent’s development agenda.

9 W HAT C AN A GRICULTURE DO FOR A FRICA ’ S D EVELOPMENT ? 9 1.As to overall economic growth, in Agriculture- based countries, which are mainly SSA countries, agriculture Generates about 29% of GDP; Creates 65% employment; Accounts for 32% of GDP growth. Productivity determines the price of food, then determines wage costs, and then the competitiveness of the tradable sectors; and SSA’s comparative advantages for many years to come.

10 W HAT C AN A GRICULTURE DO FOR A FRICA ’ S D EVELOPMENT ? 10 2.Effective mass poverty reduction tool Global poverty rate declining from 1993 (28%) to 2002 (22%) was mainly the result of falling rural poverty; International experiences show that GDP growth originating in agriculture is at least twice as effective in reducing poverty as GDP growth originating outside agriculture (China, 3.5 times; LAC, 2.7 times, similar pattern found in Ghana). GDP growth originating in agriculture benefits the poorest half of the population sustainably more

11 W HAT C AN A GRICULTURE DO FOR A FRICA ’ S D EVELOPMENT ? 11 3.Improving food insecurity: Agriculture production is important for food security. Increasing and stabilizing domestic food production is the best way to deal with external risks and market uncertainties. 4.Environmental services: Current issues: agriculture is the largest user of water, contributing to water scarcity, it is a major player in underground water depletion, agrochemcial pollution, accounting for 30% of greenhouse gas emissions.

12 O PTIONS FOR M OVING F ORWARD Political commitment should be strong; 2. Significantly increase investment in agriculture related R&D; 3. Accelerate the rural infrastructure construction (e.g, road, water, etc); and 4. Make smallholders more productive and sustainable through developing markets of credit, inputs, and promoting regional integration.

13 O PTIONS FOR M OVING F ORWARD Political commitment to agriculture sector should be strong In early 2000s, after a long period negligence, key African leaders began to shift attention to the agriculture sector. However, AU leaders had committed to agriculture before (1980). Observed excessively tax agriculture and underinvestment in agriculture reflecting a political economy in which urban interests have the upper hand.

14 O PTIONS FOR M OVING F ORWARD Significantly increase investment in agriculture related R&D Although with a high IRR (43%), both global and national failures of markets and governance lead to serious underinvestment in agriculture R&D; While China and India tripled their R&D over the past 20 years, SSA only increased by barely 20% (declining in about half of the countries). Together with other factors, we observed a widening yield gap for cereals with the rest of the World.

15 O PTIONS FOR M OVING F ORWARD Significantly increase investment in agriculture related R&D

16 O PTIONS FOR M OVING F ORWARD Accelerate the rural infrastructure construction Rural infrastructure in today’s Africa is only a fraction of that Asia had available (today’s road density: 3-4km/1000 Km 2 in Ethiopia, Mali; in Namibia; but 388 in India in early 1990s); In Africa, only 4% of the area in production is under irrigation, compared with 39% in South Asia and 29% in East Asia.

17 O PTIONS FOR M OVING F ORWARD Make smallholders more productive and sustainable through developing markets of inputs and credit, promoting producers’ organizations, and accelerating regional integration. In the case of seed and fertilizer, market failures continue to be pervasive in Africa, due to high transaction cost, risks, and economies of scale; Market-smart approaches to jump-starting agricultural input markets include targeted vouchers to enable farmers to purchase inputs and stimulate demand in private markets;

18 O PTIONS FOR M OVING F ORWARD Make smallholders more productive and sustainable Improve access to financial services and reduce exposures to uninsured risks; Collective action by producer organizations can reduce transaction costs in market, achieve some market power, and increase representation in national and international policy forums. For smallholders, producer organizations are essential to achieve competitiveness. More open intraregional trade among African countries offers important opportunities for exploiting different comparative advantages, achieving greater scale economies, stabilizing food supplies facing weather shocks, as global warming continues.

19 O PTIONS FOR M OVING F ORWARD 19 Of course, there are other important options, such as Education: reality-- average 4 years for rural adult male; 3 years for rural adult females in SSA, SA, and MENA; Health: e.g., HIV/AIDS, greatly reduces agricultural productivity (in rural Zambia, population declines have been especially severe for young rural adjusts: 19 % of people years old in 1990, the most productive age, are estimated to have died by 2000).

20 C AN A FRICA D O IT ? 20 If other regions can, why NOT Africa? 1. China’s rural development in past 30 years years average annual growth rate (%) GDP (billion yuan, CP) Agriculture output (billion yuan, CP) Farmers’ per capita income (yuan, CP) Grain production (million tons) Rural migrant labors in off-farm jobs (million) n.a. Number of poor (million and %) 250 (31%) 65 (7%) 21 (3%) n.a. CP: current price.

21 C AN A FRICA D O IT ? Decline of poverty in China

22 C AN A FRICA D O IT ? Decline of poverty in India

23 C AN A FRICA D O IT ? Brazilian Cerrado: Pre-1970: Remote region, poor soils, low population, stagnant agriculture 1970s, 80s: Transformation led by public investments in R&D, infrastructure, credit; emphasis on large-scale systems Post-1990: Private sector-led boom built on exports (soybeans, maize, cotton, cattle); reduced poverty

24 C AN A FRICA D O IT ? Africa’s own success stories, in addition to the opportunities identified before….

25 C AN A FRICA D O IT ? Africa’s own success stories Cassava transformation in West and Southern Africa; Hybrid maize in Eastern and Southern Africa; Smallholder cotton in Mali, 1960 to 2006; Success of horticultural exports in Kenya and Cote d’Ivire; Smallholder dairying in Eastern Africa; Sustainable soil fertility management in Zambia, Burkina Faso, and Kenya; Ghana’s poverty decline….

26 C AN A FRICA D O IT ? Africa’s own success stories All these success stories demonstrate that, to different extents, the soundness of the policy options listed above, such as political commitment, increased investment in agriculture related R&D, fostering an enabling environment (credit, inputs, and regional integration).

27 27 THANK YOU Downloads 1. World Development Report 2008: Agriculture for Development EARCH/EXTWDRS/EXTWDR2008/0,,menuPK: ~pagePK: ~piPK: ~theSitePK: ,00.html EARCH/EXTWDRS/EXTWDR2008/0,,menuPK: ~pagePK: ~piPK: ~theSitePK: ,00.html 2. Awakening Africa’s Sleeping Giants sleeping_giant.pdf; 3. Successes in African Agriculture: Lessons for the Future


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