INNOVATION FOR AGRICULTURAL TRANSFORMATION AND IMPROVED LIVELIHOODS IN AFRICA

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INNOVATION FOR AGRICULTURAL TRANSFORMATION AND
IMPROVED LIVELIHOODS IN AFRICA 

• ADDRESS BYJOSUE DIONE
• Director, Sustainable Development Division
• UN ECONOMIC COMMISSION FOR AFRICA
• Third FARA General Assembly
• Entebe, Uganda
• 6 June 2005

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PRESENTATION OUTLINE

• Importance of agriculture for livelihoods in
  Africa
• Agricultural transformation the big-picture
  perspective of innovation
• Constraints, opportunities and challenges for the
  structural transformation of African agriculture
• Promoting innovation for agricultural
  transformation within a regional integration
  framework

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AGRICULTURE LIVELIHOODS (1)

• 70 of the poor in Africa live in rural areas
• Livelihoods of 90 of rural people depend
  directly or indirectly on agriculture
• 60 of the total African labor force is employed
  in agriculture
• A significant proportion of non-farm urban
  employment is linked to agriculture
• Urban poor spend 60 of their budget on food
  staples
• Despite about U 20 billion of commercial imports
  and U 2 billion of food aid, 26 of the people
  are undernourished

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AGRICULTURE LIVELIHOODS (2)

• Linkages between agriculture and other economic
  sectors are important for economic growth
  inter-sector growth multipliers of 1-5 to 2.7
• Structural transformation of agriculture is key
  for
• Reducing poverty through broad-based economic
  growth
• Enhancing food security
• Creating value-added and employment
• Improving the export performance
• Agriculture features as top-priority productive
  sector in key initiatives for Africas
  development, e.g. AU/NEPAD

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THE BIG PICTURE FOR INNOVATION (1)

• Why industrialized countries (e.g. OECD) care so
  much about agricultural trade negotiations?
• Need to go beyond the narrow perspective of
  equating agriculture to farming
• Need to proceed from the broader perspective of,
  and adopt a comprehensive approach to, the
  agriculture system

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THE BIG PICTURE FOR INNOVATION (2)

• The agriculture system takes roots in farming,
  but also encompasses the agro-industrial and
  agribusiness services sectors
• Research and technology generation and diffusion
  systems
• Input and implement production and delivery
  systems
• Product processing and conditioning
• Product marketing and trade
• Through these stages, the agriculture system is
• A major employer of the poor
• A key supplier of food (wage good), capital and
  inputs
• A major client (demander) for the non-farm sectors

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THE BIG PICTURE FOR INNOVATION (3)

• The full potential of agricultural transformation
  for improved livelihoods depends on increasing
  the productivity of the whole system, not just
  farming
• Innovation should seek to improve productivity
  and efficiency along the physical transformation
  stages and transactions links of the commodity
  chains
• Research and development
• Input markets
• Farm-level production
• Product processing, storage, handling, transport,
  marketing and trade

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CONSTRAINTS, OPPORTUNITIESAND CHALLENGES FOR
INNOVATION (1)

• Lack of consistent priority given to agriculture
• 1960-1970s - Isolated projects for crops, credit,
  irrigation, extension, etc.
• 1970-1980s Integrated rural development
• 1980-1990s Structural adjustment and sector
  reforms
• Internal constraining factors include
• Ineffective or misguided policies
• Weak regional integration of commodity chains
• Poor access to financing and insufficient
  investment
• Poor production and market infrastructure
• Inadequate natural resource development/management
  
• Recurrent natural disasters (climate pests, etc.)
• Poor access to agricultural innovation

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CONSTRAINTS, OPPORTUNITIESAND CHALLENGES FOR
INNOVATION (2)

• African agriculture is seriously
  undercapitalised
• Only 7 of the arable is irrigated, against 40
  in Asia
• Only 22 kg of fertilizer per hectare of arable
  land in Africa (10 kg/ha in SSA), i.e. only 15
  (and 7) of the 144 kg/ha in Asia
• Number of tractors per 1000 ha of arable land 3
  times greater in Asia and 8 times greater in
  Latin America than Africa
• Road density is more than 2.5 times higher in
  Latin America and 6 times higher in Asia than in
  Africa
• Institutions of agricultural higher education,
  research and extension are poorly staffed, under
  equipped and funded

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CONSTRAINTS, OPPORTUNITIESAND CHALLENGES FOR
INNOVATION (3)

• African food and agriculture systems are
  constrained by missing or incomplete stages and
  markets
• Input production and delivery systems
• Agricultural/rural credit systems
• Rural transport systems Consequently,
  food-surplus regions face difficulties in
  supplying food-deficit ones
• Agro-processing and agribusiness Consequently,
  the growing urban demand is mainly met by imports

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CONSTRAINTS, OPPORTUNITIESAND CHALLENGES FOR
INNOVATION (4)

• Regionally
• African agricultural markets are fragmented in
  national or sub-regional segments of sub-optimal
  scale to ensure profitability of modern private
  business investment
• These fragmented market segments are relatively
  closed to each other, but increasingly open to
  trade (imports and exports) with the world
  outside Africa
• Consequence the gap between national/sub-regional
  domestic production and increasing regional
  demand is filled by imports from non-African
  sources - encouraged by subsidies from trading
  partners

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CONSTRAINTS, OPPORTUNITIESAND CHALLENGES FOR
INNOVATION (5)

• Globally
• Commodity price volatility poses a challenge of
  finding affordable price stabilization and
  insurance mechanisms
• Declining commodity prices poses the challenge of
  diversification, productivity and value-addition
  in agriculture
• Protectionist (tariff and non-tariff) policies,
  domestic agricultural support, export subsidies
  by OECD countries compound the challenge for
  competitiveness
• Multilateral trade reforms under the Doha
  Development Agenda present both opportunities and
  risks for African agriculture

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CONSTRAINTS, OPPORTUNITIESAND CHALLENGES FOR
INNOVATION (6)

• However, there are encouraging initiatives and
  success stories to build on, e.g.
• Decline of malnutrition rates in West Africa due
  to significant increase in food and export crop
  production
• Nigeria, world is No. 1 cassava producer
• Horticultural exports in countries such as Kenya
• NERICA
• AU/NEPAD CAADP

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REGIONAL APPROACH TO INNOVATION FOR AGRICULTURAL
TRANSFORMATION (1)

• Need to sustain momentum for agricultural
  transformation
• NEPAD CAADP offers a framework for consensual
  policies and priorities for all stakeholders
  (governments, regional organizations, farmers,
  agribusiness, development partners
• Endorsed by African Heads of State and
  Government, and supported by the Maputo
  Declaration on agriculture, and the Sirte
  Declaration on Agriculture and Water
• Defined sub-regional/regional Priority Action
  Plans and Early Actions for the implementation of
  the CAADP pillars
• Land and water resources development
• Rural infrastructure and trade capacities for
  market access
• Food supply chains and responses to emergency
  food crises
• Agricultural research, technology dissemination
  and adoption

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REGIONAL APPROACH TO INNOVATION FOR AGRICULTURAL
TRANSFORMATION (2)

• Innovation for agricultural transformation, in an
  integrated approach, should aim at
• increasing productivity and efficiency at all the
  stages of the commodity chains, for greater
  value-added and employment
• Reducing transactions costs between the different
  stages
• Agricultural transformation requires a regional
  approach to innovation because of
• Economies of complementarities -- exploitation of
  the diversity in resource endowments based on
  Comparative and Competitive advantage beyond
  national boundaries
• Economies of scale at all stages of the commodity
  chains
• Economies of vertical coordination (transactions)
  among the productive and services sectors involved

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REGIONAL APPROACH TO INNOVATION FOR AGRICULTURAL
TRANSFORMATION (3)

• Proposal for doing the innovation business
  differently
• On market access, think first about recapturing
  the US 20 billion regional market supplied by
  commercial imports from outside of Africa
• Work at the sub-regional/regional level around a
  limited number of strategic food and agricultural
  commodity chains, e.g. commodities
• Of important weight in the African food basket
• Of important weight in Africas trade balance
  through their contribution to export earnings or
  the import bill
• For which Africa has considerable unexploited
  production potential, due to internal or external
  impediments

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REGIONAL APPROACH TO INNOVATION FOR AGRICULTURAL
TRANSFORMATION (4)

• Proposal for doing the innovation business
  differently
• Accelerate and deepen regional integration of
  strategic agricultural commodity chains
  commodities without borders
• Move market integration beyond national and
  sub-regional levels to encompass the global
  regional market (a common African market)
• Open an appropriate economic space to allow
  private investments at the level of regional
  economies of scale

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REGIONAL APPROACH TO INNOVATION FOR AGRICULTURAL
TRANSFORMATION (5)

• Proposal for doing the innovation business
  differently
• Build public private partnerships to create an
  environment that ensures profitability and
  security of private investment in coordinated
  regional commodity chains
• E.g. open Free Sub-Regional/Regional Investment
  Zones in areas with the greatest unexploited
  production potential
• Promote mobilization of private investment
  through joint regional (trans-national) ventures
  of Strategic commodity chains without borders

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REGIONAL APPROACH TO INNOVATION FOR AGRICULTURAL
TRANSFORMATION (6)

• Proposal for doing the innovation business
  differently
• Finally, but not least
• Create/strengthen sub-regional/regional ST
  centres of excellence to harness the best
  technologies and sustain innovation in strategic
  commodity chains
• Promote networking in agricultural education and
  research among centers of excellence, national
  and international research systems (including the
  diaspora)
• Establish appropriate mechanisms (e.g., trust
  funds, public-private partnerships) to ensure
  sustainable financing of agricultural innovation
  systems

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CONCLUSION

• Key to success in innovation for agricultural
  transformation and improved livelihoods in
  Africa getting the TIIP right
• Appropriate Technologies
• Adequate supportive Infrastructure
• Effective Institutions
• Appropriate Policies
• I trust these issues will be thoroughly discussed
  this week
• Thank you.