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Institutional Innovations for Agricultural Transformation in Africa: Issues Challenges, and Policy Options Suresh Chandra Babu Senior Research Fellow,

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Presentation on theme: "Institutional Innovations for Agricultural Transformation in Africa: Issues Challenges, and Policy Options Suresh Chandra Babu Senior Research Fellow,"— Presentation transcript:

1 Institutional Innovations for Agricultural Transformation in Africa: Issues Challenges, and Policy Options Suresh Chandra Babu Senior Research Fellow, Head of Capacity Strengthening Program International Food Policy Research Institute (IFPRI) Washington, DC Prepared for the African Economic Research Consortium (AERC) Senior Policy Seminar XVII March 26-27, 2015, Maputo, Mozambique 1

2 Organization of Presentation Introduction Conceptual Analysis Institutional Innovations Needed in Various Areas of Agriculture Lessons for Implementation Knowledge Gaps and Research Needs 2

3 Achieving African Transformation Speeding up agricultural transformation requires transformation of subsectors This requires better capacitated, well-functioning institutions from farm to national levels Achieving African economic transformation requires: Diversification of agricultural production and exports Increased competitiveness on global market Update of technology use in all sectors Increased labor productivity Leading to increases in human welfare Source: ACET,

4 Africa’s Transformation Powered by Agriculture Agricultural productivity gains are critical for Africa’s economic transformation Agricultural value chains have the potential to reduce food prices, create employment, reduce poverty We know that technological innovations are required to increase agricultural productivity for smallholders In the same light, institutions that support smallholder farmers must be transformed 4

5 Definitions of Innovation The application of new ideas or practices with the purpose of creating a positive change (OECD, 2006) Institutional innovations involve a change in the policies, process, system of organizing, and practices of an institution in an effort to encourage its improvement and increase impact (IICA, 2014) Applying new ideas, knowledge, or practices in order to affect positive change in a particular environment (IICA, 2014) 5

6 Research Questions This paper seeks to answer the following questions: What institutional innovations are needed to support agricultural transformation? What mechanisms of the public sector, private sector, and NGO community need to change to support policy and program design and implementation? What are the capacity needs of the actors and players in the institutional innovation process? What lessons can be drawn from current institutional innovations? What are the knowledge gaps and research priorities for enhance the role of institutional innovations in agricultural transformation? 6

7 The Institutional Innovation Process What does it take to get there? How do we sketch out the pathways from untransformed to transformed institutions? What are the conditions required for African countries to become middle income countries? What public investment choices are needed? What institutional innovations are needed? What export promotion strategies are needed? (e.g. processed food and horticulture) Late transformers will still depend on agriculture, so agricultural innovations are needed for transformation 7

8 Setting the Stage What is the realistic path for agricultural transformation? Labor-intensive manufacturing is needed Foreign direct investment is needed Costly infrastructure investments (e.g. roads, electricity) are needed, countries may not be able to afford this Agricultural sector may have comparative advantage – Export markets for agricultural commodities – Private sector/non-traditional approaches to value chain – Agricultural strategy in the context of holistic development 8

9 Setting the Stage What understanding is needed? Diagnosis and analysis of initial condition of country sector? Application of General Equilibrium models Trade-offs between various strategies Need evidence on what has worked in the past How can countries go from Point A to Point B? 9

10 Institutional Innovation in Agriculture These innovations are needed at all levels. Some examples include: Farm level – better engagement with market systems to improve productivity and income Community level – farmer-based organizations National level – public sector supports research and extension 10

11 Conceptual Analysis To understand institutional innovation in the context of agricultural transformation we must: Fully analyze the historical trends and enabling environment in the policy process Evaluate the outcomes and successes of reformed institutions Identify the challenges and constraints to institutional innovation and implementation Assess the institutional process that facilitates actors and players to translate policies to programs and programs to actions Analyze the factors affecting policy and institutional reform 11

12 Conceptual Analysis We do not yet know what institutions need to be transformed and how To highlight the transformative power of institutional innovations, we compare the characteristics of the following eight types of institutions before and after innovation: Public sector Research Extension Education Markets/Trade Community/Farmer Orgs. Agribusiness Governance 12

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14 Goals of Transformation The goals of Africa’s transformation include goals beyond agriculture including: Dietary transformation Export diversity Convergence of labor and total factor productivity Increased share of processed agricultural commodities in total exports Increased competitiveness of agriculture on world market Modern technology adoption Increase agriculture’s contribution to increased incomes and poverty reduction 14

15 Public Sector Institutions Public sector institutions take center stage in the development and implementation of policies and programs. Institutional innovations are required to: Transform operational processes to translate strategies into policies to meet national goals Improve allocation of resources Implement system to incentivize staff performance and accountability Monitoring and evaluation of programs The next slide illustrates an example of public sector institutional innovation. 15

16 Ethiopian Agricultural Transformation Agency: A Public Sector Institutional Innovation Outcome-oriented approach Accountability at all levels Individuals have responsibility Capacity – broadly defined as institutional capacity Challenge: Ministry of Agriculture sector reform Rwanda – going for whole government system? 16

17 Research Institutions Agricultural research systems support the development and dissemination of technologies that increase productivity and efficiency Currently, African research systems largely demand driven and remain focused on staple crop production Poorly capacitated, poorly integrated, unfocused priorities (You and Johnson, 2008) 17

18 What institutional innovations are needed in research? Innovations of individual and organizational capacity, as well as system as a whole Reform research priority setting Innovations in the budgeting process to reform how spending is allocated so it can be more effectively used To ensure that research is relevant Innovations that emphasize and enable multidisciplinary, cross-institutional research and collaboration 18

19 Extension Institutions In the context of agricultural transformation, extension institutions play a key role in the dissemination of advanced technologies to smallholders. Innovations needed include: Demand driven or participator approaches to meet farmer information needs Increased connectivity to sub-systems to increase availability and flow of knowledge Broaden the functions of extension to include post- harvest storage and marketing, building the capacity of farmers’ organizations, support rural development Innovations in financing of extension services including fee-for-service and cost-sharing models 19

20 Education Institutions Transforming traditional agricultural sector requires adequate human capacity at all levels, therefore institutional innovations are needed to: Locally designed innovations to reduce the brain drain and address current research challenges Regional innovations mobilize local talent and strengthen local faculties Institutional innovations to retain staff through on-the-job training and mentoring 20

21 Examples of Institutional Innovations in the Education Sector (1) 1. African Center for Crop Improvement (ACCI) 1.Designed to address the high demand for high quality plant breeders in agricultural research 2.Participants were from their respective country’s research institute 3.Housed at University of Kwazulu-Natal 4.Combination of rigorous training and mentorship from faculty 5.Locally designed innovation 21

22 Examples of Institutional Innovations in the Education Sector (2) 2.Collaborative Master’s Program in Agricultural and Applied Economics (CMAAE) 1.Offered through 16 collaborating universities across Africa 2.Regional innovation created to address the need to increase the quality of faculty 3.Joint program to work towards shared goal of filling gaps in teaching 4.Shared facility approach brought in students from various countries for specific learning goals 22

23 Examples of Institutional Innovations in the Education Sector (3) 3.Strengthening the Capacity of Agricultural Research and Development in Africa (SCARDA) 1.Approach to strengthening institutional capacity with emphasis on filling gaps in individual capacity 2.Meant to directly improve the organization and management of national research institutions 3.Strengthened existing capacity within the institutions 4.Provides adequate opportunities for mutual learning 23

24 Market and Trade Institutions There is a need for institutions that support the integration and participation of smallholders in markets Value chains are important mechanism to drive agricultural transformation – Example, Nigeria’s Agricultural Transformation Agenda specifically supports commodity value chain development, such as rice and cocoa Market institution such as Ethiopia Commodity Exchange – Formed to generate market information – Increase transparency of prices, grades, and qualities – Promote self-regulation of the system 24

25 Community Institutions and Farmers Organizations Farmers organizations play a critical role in agricultural transformation through their ability to empower smallholders by: – Increasing access to production information and knowledge – Increasing access to extension services, inputs, and markets – Highlighting local problems and helping identify solutions Ostrom (1994) found that resources are used more effectively when managed at the community level 25

26 Agribusiness Institutions The development of agribusinesses and value chains for high value commodities can drive transformation and take advantage of growing demand for processing and exporting these goods Institutional innovations in agribusiness could lead to direct transformation benefits in terms of growth and poverty Innovations are needed in input supply, advisory services, processing, quality control, distribution, and marketing Need to build innovation capacity at all levels, so that farmers have higher entrepreneurial and managerial skills 26

27 Examples of Institutional Innovations in Agribusiness 1.Horticulture in Kenya 1.Took advantage of available natural resources, low cost of skilled labor, and existing infrastructure needed for export of commodity 2.Additional institutional innovations are needed to overcome food safety regulation, increasing wages, changing consumer preferences 2.Poultry in Mozambique 1.Currently, most countries are unable to respond to import substitution opportunities 2.Innovations are needed to support smallholders, who make up majority of poultry producers to capture local demand 3.Horticulture in Ghana 1.A majority of fruits and vegetables are still imported in Ghana 2.Although foreign investments in pineapple industry have been very active, this has not been effectively translated to other commodities 3.Institutional innovations needed to balance opportunity to export with growing domestic needs 27

28 Institutional Governance Issues of good governance can be applied to all of the types of institutions mentioned above Characteristics of reformed governance within institutions includes: – Leadership and commitment to short-term and long- term goals – Improved coordination of all actors and players – Openness in policy dialogue to ensure policies and programs are evidence-based and informed – Effective monitoring and evaluation systems 28

29 Challenges to Implementation of Institutional Innovations Several institutional innovations have been attempted, including CAADP at the regional level. The success of CAADP is driven by: – Leadership at AU and country levels – Ability of national government to mobilize resources – Capacity of national government to provide strategic direction to programs to reach CAADP targets Successful experiments have yet to be scaled up in country or across countries due to differences Currently, limited cross-country knowledge sharing and availability of funding also inhibit scaling up Capacity constraints at all levels constrain the implementation of institutional innovations – Need to strengthen the capacity of policy makers to anticipate, recognize, and respond to institutional challenges 29

30 Challenges to Implementation of Institutional Innovations Institutional innovations often do not get implemented due to a lack of good governance – Institutional innovators must be recognized to play a legitimate role in agricultural transformation – Leadership needed to provide strategic direction – Coordination and cohesive alignment to broader sector goals Political economy often constrain the implementation of agricultural reforms Conflicts erodes the capacity to innovate at all levels Regulatory system innovation are needed to make African agriculture competitive on the world market (e.g. food safety, animal and plant health, environmental, input use regulations) Regional harmonization of policies and programs (e.g. SACD, ECOWAS, COMESA) On the next slide, Table 2 presents a typology for the institutional innovations that are needed at different levels at different times 30

31 31 System ComponentsNeeded Institutional InnovationAgricultural Transformation Indicators Public Sector Institutions  Ministry of Agriculture  Ministries of allied sectors  Mulistakeholder platforms  Transformation of operational processes  Innovations in process of allocation of resources  Innovations of staff evaluation and incentives to increase performance  Innovations in monitoring and evaluation of programs  Innovations in regulatory systems for land, inputs, etc.  Streamlined, more effective and efficient processes  Effective allocation of resources for impact  Greater staff performance and accountability  Decentralized activities  Informed monitoring and evaluation for program feedback  Effective regulatory systems Research Institutions Public research systems Private research systems Research by NGOs /FBOs Participatory research by farmers (Lynam, 2012)  Innovations to match the national strategies  Innovations in management and delivery of research outputs  Innovations in funding mechanisms  Coordination and harmonizing the research efforts  Innovation in funding mechanisms  Effective coordination of demand for and supply of research  Increased participation of farmers and other clients  Sustainable funding  Research effectively used by farmers  Effective coordination at the global, regional and national levels Extension and Advisory Services Public Extension system Private extension NGOs based extension Farmers field schools ICT based extension services (Davies and Heemskerk, 2012)  Increased pluralistic activities  Improved public-private partnerships  Demand driven- farmer participatory programs  Financial sustainability  Innovations in advisory approaches  Decentralized activities  Farmer monitoring and accountability  Multiple actors competing  Knowledge accessibility through ICTs Education  Formal university education  Vocational and skill development program  On-line education of farmers (Maguire, 2012)  Working towards relevant, well managed institutions  Vocational training highly connected to the employers needs  Innovations in curriculum and methods of teaching  Increase the quality of teachers through innovation capacity development programs  Increased collaboration with public sector, research and extension  Dynamic curriculum to meet the changing needs  Sustainable funding  No political interference  Improved interaction with stakeholders  Gender sensitive and gender-balanced education Markets and Trade Institutions  Markets for inputs  Markets for outputs  Value chains  Innovations to ensure that the value chains remains inclusive, particularly to smallholders  Strengthen individual farmer capacity to abide by value chain standards  Innovations for connecting value chain to larger food system  Innovations to organize farmers  Increased participation in value chain, especially by smallholders  Improved connectivity within and beyond value chain  Effective farmers organizations for a specific value chain Community and Farmers’ Organizations:  Commodity based farmer organizations (traditional)  Market – oriented farmers organizations  Innovation oriented farmers organizations  Service oriented producer foundations (Ekboir, 2012) Developing organizational capabilities for innovation Increase innovative linkages with governments, donors, research, extension, and education Brokering innovations, promoting coordination with members and the markets Improved management of the farmer organizations  Increased coordinating leadership  Capacity development- life-long learning of members  Better environment for organizational innovation  Improved financing of the farmer organizations  Improved structures to serve farmers / members Agribusiness Institutions Post-harvest/processing agribusinesses Marketing agribusinesses Specialized agribusiness value chains Input supply Advisory services Help organize smallholders into formal value chains for high value crops Build innovation capacity at all levels to scale up isolated efforts Lack of agribusiness curriculum in agricultural universities  Increased innovative, managerial, and entrepreneurial capacity at all levels  Increased individual and organizational capacity for agribusiness development and management  Governance Institutions *Applies to all individual organizations listed above  Innovations to increase accountability and commitment of key players  Lack of transparency  Closed off policy dialogue  Innovations for evidence-based programming and decisionmaking  Systematic pursuance of long term vision and goals  High level commitment of leaders  Better inter-sectoral – macro coordination  Effective coordination and mobilization of key players and entities  Openness for debate and dialogue  Policy and program continuity  Monitoring, evaluation, and learning

32 Knowledge and Research Gaps Key policy issues for agricultural transformation still remain to be researched further in the context of institutional innovation Further research is needed to understand how to take advantage of current trends in Africa, such as yield increases, land expansion, growth in agribusiness, youth employment, etc. Future programming should balance demands for increased agricultural production with effective allocation of natural resources Future climate changes will require a realignment of production mix and increasing adoption of climate resilient food production Increased knowledge sharing should be utilized to share evidence on what works and why in different contexts The role of local think tanks for evidence-based knowledge sharing cannot be overemphasized 32


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