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Africa: Neglecting Agriculture, 1

AfricaFocus Bulletin
Oct 24, 2007 (071024)
(Reposted from sources cited below)

Editor's Note

"The central finding of the study is that the agriculture sector has been neglected by both governments and the donor community, including the World Bank. ..The Bank's limited and, until recently, declining support for addressing the constraints on agriculture has not been used strategically to meet the diverse needs of a sector that requires coordinated intervention across a range of activities." - World Bank Independent Evaluation Group

In its World Development Report for 2008, released on October 19 and entitled "Agriculture for Development," the World Bank stressed the importance of a renewed emphasis on agriculture. The report argues that "for the poorest people, GDP growth originating in agriculture is about four time more effective in reducing poverty than GDP growth originating outside the sector.

The report, which was covered extensively in the international press, is available, along with much related material, on the World Bank website at http://go.worldbank.org/ZJIAOSUFU0

In this and another Bulletin sent out today, AfricaFocus presents excerpts from two related reports that have received much less press attention. The first, the executive summary of which is below, is a highly critical report of the World Bank's record on agriculture from its own Independent Evaluation Group. The second, a report from the EcoFair Trade Dialogue on "What the World Bank Missed," is excerpted in another AfricaFocus Bulletin

The U.S. Farm Bill, which the Senate is due to discuss this week, is likely to be renewed with little or no reforms demanded by critics. For background on the bill and its implications for international agriculture, see the resource page from the Wilson Center at http://tinyurl.com/39x6vo

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

World Bank Assistance to Agriculture in Sub-Saharan Africa
An IEG Review

2007

World Bank Independent Evaluation Group

The Independent Evaluation Group (IEG) is an independent unit within the World Bank Group. The goals of evaluation are to learn from experience, to provide an objective basis for assessing the results of the Bank Group's work, and to provide accountability in the achievement of its objectives.

http://www.worldbank.org/ieg

Observations

• Agricultural development in Africa is a complex technical, economic, social, and political challenge that has to be overcome if the Region is to reduce extreme poverty and hunger to meet the first Millennium Development Goal.
• Given the diverse constraints to agricultural development in Africa, the strategy for the development of the sector needs to be multifaceted, with coordinated interventions across a range of activities.
• The Bank has had limited success in helping address the challenges of agricultural development in Africa.
• The Bank now has an opportunity, drawing on its comparative advantage as a multisector lending institution and as the single largest donor to African agriculture (during 1990 2005), to help ensure a coordinated and multifaceted approach to agriculture development in Africa.

Executive Summary

[Excerpts only. For full executive summary and full report see http://go.worldbank.org/PPY96H0ES0]

Sub-Saharan Africa is a highly complex Region of 47 countries with 7 distinctly different colonial histories. It is also highly diverse, with more than 700 million people and at least 1,000 different ethnic groups. The Region is a critical development priority. It includes some of the world's poorest countries, and during the past two decades the number of poor in the Region has doubled to 300 million more than 40 percent of the Region's population. Africa remains behind on most of the Millennium Development Goals (MDGs) and is unlikely to reach them by 2015.

A major drag on Africa's development is the underperformance of the agriculture sector. This is a critical sector in the Region, because it accounts for a large share of gross domestic product (GDP) and employment. The weak performance of the sector stems from a variety of constraints that are particular to agriculture in Africa and make its development a complex challenge. Poor governance and conflict in several of the countries further complicate matters. IEG has assessed the development effectiveness of World Bank assistance in addressing constraints to agricultural development in Africa over the period of fiscal years 1991 2006 in a pilot for a wider assessment of the Bank's assistance to agriculture worldwide.

The central finding of the study is that the agriculture sector has been neglected by both governments and the donor community, including the World Bank. The Bank's strategy for agriculture has been increasingly subsumed within a broader rural focus, which has diminished its importance. Both arising from and contributing to this, the technical skills needed to support agricultural development adequately have also declined over time.

The Bank's limited and, until recently, declining support for addressing the constraints on agriculture has not been used strategically to meet the diverse needs of a sector that requires coordinated intervention across a range of activities. The lending support from the Bank has been "sprinkled" across various agricultural activities such as research, extension, credit, seeds, and policy reforms in rural space, but with little recognition of the potential synergy among them to effectively contribute to agricultural development. As a result, though there have been areas of comparatively greater success research, for example results have been limited because of weak linkage with extension and limited availability of such complementary and critical inputs as fertilizers and water. Hence the Bank has had limited success in contributing to the development of African agriculture.

The Challenges of African Agriculture

Agricultural output has grown in Africa, but it is difficult to calculate a reliable growth rate for the Region over the study period because of wide variations across countries and over time. Some countries, such as Gabon, moved from poor performance in 1990 2000 to better performance in 2000 04; others, such as Malawi, moved in the opposite direction. The change has often been dramatic, which makes aggregate growth rates misleading. For example, agriculture in Angola grew at 13.7 percent a year during 2000 04, although growth had retreated by 1.4 percent yearly during 1990 2000. Only about a quarter of the countries in the Region, among them Benin, Burkina Faso, Ghana, Nigeria, and Tanzania, show consistent agricultural growth of over 3 percent in the 1990 2004 period.

Total agricultural output in Africa consists primarily of food crops. Agricultural export crops account for less than 10 percent of total production. While some export crops, including cotton, have contributed to poverty alleviation in countries such as Burkina Faso, food crops have performed poorly in most countries. Cereal yields in Africa, even in 2003 05, were less than half those in South Asia and one-third those in Latin America. Africa also lags behind other Regions in the percentage of cropland irrigated, fertilizer use, and labor and land productivity per worker. While the great strides in South Asia's agricultural production from 1961 to 2001 were mainly the result of increased yields, gains in food production in Africa were produced primarily through the expansion of cultivated land. Meanwhile, crop yields stagnated.

Beginning in 1973, Africa became a net food importer. Since that time, food production has not kept pace with the rapidly growing population, and food imports have grown rapidly. Meanwhile, Africa's exports, which are primarily agriculture-based, declined; for several commodities, including coffee, the Region's share of the world market evaporated. Agricultural subsidies in Organisation for Economic Co-operation and Development (OECD) countries have played a major role in keeping world prices low for several of these crops. This, among other factors, has impacted the adequacy of returns to farmers.

Agriculture in Africa is primarily a family activity, and the majority of farmers are smallholders who own between 0.5 and 2.0 hectares of land, as determined by socio-cultural factors. Women provide about half of the labor force and produce most of the food crops consumed by the family.

Agricultural land in Africa falls into several agroecological zones that run across countries. It is largely characterized by poor soils, highly variable rainfall, and frequent droughts. Transport infrastructure is poor, access to irrigation is limited, and under rain-fed conditions, chronic food insecurity is a reality for millions of small farmers. To survive in this harsh environment, most farmers rely on diversified coping strategies. To ensure at least some produce from their land, African farmers normally plant several varieties of crops (typically 10 or more) with different maturation periods, together with trees. Livestock is also an important source of security for farmers in Africa, particularly in lean years. The average smallholder's access to credit is also extremely limited. Hardy crops such as millet, sorghum, cassava, and other root crops are more important than cereals such as rice and wheat, which were the mainstay of the Asian Green Revolution.

In this environment, for farmers to have an incentive to practice intensive agriculture and take risks with new crop varieties, a number of factors need to come together at the same time, or at least appear in an optimal sequence, including improved seeds, water, credit, and access to markets; good extension advice; and adequate returns through undistorted prices for inputs and outputs. A strategy for development of agriculture in Africa must consider each of these factors in the context of Africa's unique characteristics and specific local conditions.

Past Approaches to African Agriculture

Until very recently, agricultural development in Africa was neglected by both governments and donors. During the 1960s, immediately following independence, governments in several African countries considered agriculture primarily a source of resources for industrialization. Then, in the 1970s, the World Bank led the shift toward a broader development model in Africa that was consistent with a more general shift in the understanding of development. This committed the institution to integrated rural development to directly attack Africa's rural poverty and underdevelopment. In the mid-1980s, when African countries faced severe fiscal crises, donors prioritized improvements in the efficiency of resource allocation and pressed agriculture marketing reforms. But structural reforms also fell short of producing the desired growth effects.

The Role of Aid

Bilateral and multilateral donor aid for development of African agriculture declined from $1,921 million in 1981 to $997 million in 2001 (in 2001 dollars). Lending from both sources has since rebounded with the increasing focus on African development. OECD data show that although bilateral donors as a group have played a comparatively larger role, the World Bank was the single largest donor to African agriculture between 1990 and 2005. The largest bilateral donors were the United States and Japan.

Foreign private sector flows into Africa are modest in comparison with bilateral and multilateral aid (Hazell and von Braun 2006). Private commercial investment in African agriculture has been largely limited to export crops and higherpotential zones. A number of international seed companies have invested in maize seed multiplication, and in September 2006 the Rockefeller and Bill and Melinda Gates Foundations together launched a new partnership to help Africa develop its agriculture.

Agriculture's Potential and the Bank's Strategy

For Africa to meet the MDGs, it will be necessary to realize the potential of the agriculture sector, to provide the support needed for it to contribute to growth and poverty reduction. Research by Dorosh and Haggblade (2003) and IFPRI (2006a) found that investments in agriculture generally favor Africa's poor more than similar investments in manufacturing.

The World Bank has not had a separate strategy for agriculture in Africa except as part of its wider rural development strategies, and over time the agriculture strategy was subsumed in a broader rural focus. More recently, however, the Africa Action Plan has recognized the agriculture sector as a potential driver of growth.

The Bank's Overall Assistance and Its Assessment

Over fiscal years 1991 2006, the Bank provided the countries of the Africa Region with $2.8 billion in investment lending (as distinct from adjustment lending) in agriculture, constituting 8 percent of total Bank investment lending to the Region. A large part of this lending has been in the form of agriculture components in rural projects. In addition, there have been 77 Development Policy Loans with agriculture components, and in 18 of these, agriculture was a significant dimension.

This limited investment lending has performed below par. IEG data show that the percentage of satisfactory outcome ratings for largely agricultural investment projects during 1991 2006 is lower than that for non-agriculture investments in the Region (60 against 65 percent satisfactory). It is also lower than the percentage for similar investment projects in other Bank Regions (73 percent satisfactory). Sustainability ratings are also below average. Although further analysis is needed, the study found that largely agricultural projects in countries with less favorable agricultural conditions have done better than similar projects in countries with more favorable conditions.

The Bank's activities in support of agricultural development in Africa have comprised lending, analytical work, and policy advice. Until very recently the analytical work necessary for the diagnosis of issues and actions and to help shape the policy advice and lending has been limited, scattered, of variable quality, and not easily available. In addition, IEG found that there are no specific procedures in place to ensure that the findings of analytical work are systematically reflected in lending and policy dialogue.

IEG found that the lending support provided by the Bank has not reflected the interconnected nature of agriculture activities. Rather, the lending has been "sprinkled" across an array of activities in rural space, including research, extension, marketing reform, drought relief, seed development, and transport, but with little recognition of the relationships among them and the need for all of these areas to be developed at the same time, or at least in an optimal sequence, to effectively contribute to agricultural development. While the Bank's broader rural focus from the mid-1980s was justified, an unintended result was that it led to less focused attention on the need for various activities that are critical for agricultural development in rural space to come together at the same time or to take place in some optimal sequence.

This review found that none of the top 10 borrowers, among them Cote d'Ivoire, Ethiopia, Tanzania, and Uganda, had received consistent and simultaneous support across all critical subsectors. That is not to suggest that the Bank should do this alone it might well be done better in partnership but the Bank could reasonably be expected to take the lead in fostering such a multifaceted approach, based on its comparative advantage as a multisector lending institution.

Thematic Performance

[see full executive summary for this section on specific topics]

Key Findings on Bank and Country Factors of Performance

Bank factors

• The institution's strategy for the development of the agriculture sector has been part of its rural strategy, and over time the importance of agriculture in the Bank's rural strategy has declined. Both arising from and contributing to this, technical skills to support agricultural development adequately have also declined over time. Data from the Human Resources Department of the World Bank show that there were 17 technical experts mapped to the Agriculture and Rural Development Department in Sub-Saharan Africa in 2006, compared with 40 in 1997.
• The Bank's diagnosis of a country's development status and priorities in the agriculture sector is carried out primarily through analytical work. Until very recently this work has been limited and not readily available. Nor have the findings from analytical work strategically informed Bank client policy dialogue and lending program design.
• Bank policy advice appears to have had farreaching implications for the direction of agricultural development in African countries, in particular its policy advice associated with the adjustment agenda. However, results have fallen short of expectations because of weak political support and insufficient appreciation of reality on the ground, among other things.
• The Bank's data systems and support for M&E have been insufficient to adequately inform the institution's effort to develop agriculture in Africa across a broad front. Current data systems do not allow the institution to track in enough detail how much is being provided for development of specific activities such as seed development and credit. M&E at the project level has been of limited value in answering fundamental questions about outcome, impact, and efficiency, such as who benefited, which crops received support and how, what has been the comparative cost effectiveness, and to what can one attribute gains.

Country factors

• Although the governance environment in several African countries continues to be weak, political commitment for the development of agriculture in client countries appears stronger than in the past. African governments, many of which were allocating less than 1 percent of their budget to agriculture, agreed in July 2003 at the African Union Summit to allocate at least 10 percent of national budgetary resources for programs to support agricultural growth in the next five years.
• Considerable agricultural research capacity exists, although the sustainability of the activities supported remains uncertain. Overall, government capacity in several countries remains weak, and local agriculture ministries are still relatively ineffective partners in promoting development of the agriculture sector. Though further analysis is needed, the study finding that largely agricultural projects in countries with less favorable agricultural conditions have done better than similar projects in countries with more favorable conditions suggests that other factors such as political economy and country capacity are also a challenge for agricultural development in Africa.

Recommendations

To effectively support the implementation of the Africa Action Plan and its appropriate focus on agricultural development as a key priority, IEG recommends that the Bank:

1. Focus attention to achieve improvements in agricultural productivity:
   • Establish realistic goals for expansion of irrigation and recognize the need to increase productivity of rain-fed agriculture through improvements in land quality, as well as water and drought management.
   • Help design efficient mechanisms, including public-private partnerships, to provide farmers with critical inputs, including fertilizers, water, credit, and seeds.
   • Support the development of marketing and transport infrastructure.
2. Improve its work on agriculture:
   • Increase the quantity and quality of analytical work on agriculture and ensure that policy advice and lending are grounded in its findings.
   • Support public expenditure analyses to assess resource availability for agriculture and to help set Bank priorities.
   • Rebuild its technical skills, based on a comprehensive assessment of current gaps.
3. Establish benchmarks for measuring progress:
   • Improve data systems to better track activities supported by the Bank.
   • Strengthen M&E to report on project activities in various agro-ecological zones and for different crops and farmer categories, including women.
   • Develop a system to coordinate agricultural activities in a country with road access, market proximity, and soil conditions.

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