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Tasting the Sweet Fruit of Profit from Farming

By Boaz Blackie Keizire
Posted on Thursday, 9 March 2017 13:39

Across the African continent today, governments are finding that investments in the agricultural sector are uniquely effective at energizing the economy. The welfare benefits of agriculture spurred the African Union in 2003 to develop the Comprehensive African Agriculture Development Programme (CAADP)—a commitment by African governments to allocate 10 percent of national budgets to agriculture and to aim for six percent annual growth in the sector. A recent report found that in the 13 countries that signed on to the agreement, agricultural production and gross domestic product (GDP) per capita rose twice as fast as elsewhere in Africa, while rates of malnutrition fell twice as far.

Rwanda provides an excellent example of how agriculture can be an economic elixir. Rwanda was the first country to endorse the CAADP, and it has gradually increased its spending on agriculture from 1.8% of its total budget in 2002 to 9.1% in 2014. In the last five years alone, yields have grown steadily for key crops—by 115% for wheat, 180% for maize, and 200% for Irish potatoes. Because agriculture powers Rwanda’s rural areas, this increase in productivity was the key force driving a 14% reduction in poverty. Better farm production led to higher incomes as farmers were able to sell surplus produce at market.

Despite this success, many discussions of the CAADP process often dwell on the fact that the majority of CAADP signatories have not met the 10% budget allocation target. But rather than pushing countries to meet what is a somewhat arbitrary number, we should instead focus on encouraging public spending that can attract private sector commitments to agriculture, which are ultimately the key to breaking the cycle of food shortages and rural poverty in Africa.

That work starts with encouraging governments to develop quality national agriculture and multi-year investment plans—known as National Agriculture Investment Plans (NAIPs). The best ones now emerging in Africa typically set a time-table for action, promise specific deliverables, and send a clear signal to the private sector: the government will be a partner in creating an enabling environment where farming can function as a business.

In the southern highlands of Tanzania, for example, the government released a specific investment plan with a budget and timeline for building a road, installing electricity, and providing water for irrigation. Farmers and other agriculture businesses alike immediately responded with their own investments. For example, rice companies participating in the Competitive Africa Rice Initiative (CARI) partnered with small, family farmers, giving them access to high quality seeds and fertilizers. Farmers were willing to buy these inputs because the companies guaranteed them a market and a price.

As a result, since 2012, rice yields in the region have increased from four metric tonnes per hectare to six to seven metric tonnes. This bounty brings increased income that provides a better life for local farming families—they are sending kids to school, and the added income helps them afford basic needs like heath care.

Nigeria is another country experiencing the benefits of carefully thinking through its agriculture investments. In 2011, the Central Bank of Nigeria launched the Nigeria Incentive-Based Risk Sharing system for Agricultural Lending (NIRSAL) to increase financing available to agricultural business. In only four years, the program has delivered US$273m in loans to 454 projects, including an ambitious effort to establish a rail shipping service that connects farmers in northern Nigeria to market opportunities in the south. The program also has trained 27,000 farmers in how to obtain financing.

These are just a few of the ways government investments are tapping the potential of agriculture to be an engine of economic growth for Africa. The common thread in all of these efforts is that the public spending was directed at a specific problem or opportunity, and it was intended to promote economic activity that will more than payback the government’s outlay.

By encouraging African governments to develop detailed, predictable investment plans, and to support agriculture as business, we can pull Africans out of poverty in far greater numbers than any social program ever could achieve. That’s what Kenya did in directing resources to defeating Black Sigatoka. It freed up farmers to do what they do best, which is to grow and sell bananas, and hopefully get a taste of the sweet fruit of economic success.

Boaz Blackie Keizire is the Head of Policy and Advocacy at the Alliance for a Green Revolution in Africa (AGRA) and a 2017 Aspen Institute New Voices Fellow.

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