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Keynote Address to the 3rd Forum for Agricultural Research in Africa (FARA) General Assembly Innovation to Transform Agriculture for Improved Livelihoods and Development in Africa By Your Excellency the President of the Republic of Uganda, Honorable Ministers and Members of Parliament, Excellencies, Eminent leaders and members of international, regional, sub-regional and national agricultural research organizations, Distinguished representatives of farmer organizations, private business community, non-governmental organizations and the civil society, Distinguished Participants, Ladies and Gentlemen, I feel greatly honored, on behalf of the UN Commission for Africa (ECA) and my own behalf, to be given the distinct opportunity to address this august assembly on the crucial issue of "Innovations to Transform Agriculture for Improved Livelihoods and Development in Africa." It is indeed a great pleasure to share with people of the research world -- many of whom are good friends and acquaintances -- some critical views on the need for and ways to a structural transformation of African agriculture. But to do so before leaders of the political world -- His Excellency the President and the Honorable Ministers present here - is somehow intimidating as it poses the double challenge of being both technically and politically correct. Anyway, I wish to express my sincere thanks to the Forum for Agricultural Research in Africa (FARA), and especially to its distinguished Chairman, Dr. Pape Abdoulaye Seck and its eminent Executive Secretary, Dr. Monty Jones (Dr. NERICA), for trusting me with such a hot potato. I will humbly strive to share with you a few thoughts, which I hope, will make some sense and be of some worth for the discussions of this week's meetings on "Innovations to Transform Agriculture for Improved Livelihoods and Development in Africa." In this regard, I will not abuse your time by talking about detailed technicalities of agricultural innovations, for I am conscious that those would be thoroughly addressed by many more authoritative voices in the different sessions of this assembly. I will rather proceed from a global vision for structural transformation of agriculture in Africa to try and submit to you the need to innovate in three broad ways: (a) the conceptual and analytical framework of agricultural transformation; (b) the spatial/geographic scope for agricultural transformation; and (c) the operational approach to agricultural transformation. Excellencies, Distinguished Guests, Ladies and Gentlemen, Let me start by recalling a few basic facts attesting to the critical importance of agriculture for livelihoods and development in Africa. About three-quarters of Africa's total population and 70 percent of the continent's poor live in rural areas. Despite rapid urbanization, it is estimated that 60% of the poor will still be rural in 2020. And we know that the income and livelihoods of the bulk of the rural population depend primarily on agriculture, which employs 90 percent of the rural labor force and nearly 60 percent of the total labor force of the continent. In addition, a significant proportion of non-farm urban employment is linked to agriculture. This is more so for many enterprises of the informal sector, such as agricultural commodity marketing and processing, as well as food preparation and retailing generally performed by women. Moreover, it is estimated that African urban poor spend 60 to 70 percent of their budget on food. As a result, urban and rural livelihoods are interconnected through linkages between agriculture and the urban economy of goods and services. It is also a common fact that urban poverty generally feeds on rural poverty through rural-urban migration in Africa. Conversely, progress in the structural transformation of agriculture would contribute significantly to advancing that of the whole economy, as increases in rural incomes would serve as a strong engine for overall economic growth. For instance, research has shown that increases in agricultural and rural incomes in many African countries are amplified through growth multipliers of the order of 1.5 to 2.7, similar to estimates of 1.5-2.4 for Asian countries. Hence, each additional dollar of rural income would yield another increment of 0.5 to 1.7 dollar in total income, mainly through expenditure and consumption linkages among agriculture and other sectors of the whole economy. Widespread increase in income through broad-based agricultural growth is crucial for achieving the full potential of these multiplier effects. At this juncture, there is no doubt that increasing the productivity and competitiveness of agriculture holds the key to improving the livelihoods and overall income of the majority of African households. Excellencies, Distinguished Delegates, Ladies and Gentlemen, Devising meaningful innovations to transform agriculture for improved livelihoods and development in Africa would first require innovation in our conceptual and analytical framework of agricultural transformation. A colleague and good friend of mine used to tease me by objecting to my relentless advocacy for agricultural development, as a reliable way out of poverty in Africa, by arguing that what Africa needs nowadays is to diversify out of agriculture. In response, I used to challenge him to explain why the OECD countries, which have reached the highest level of industrialization, are yet the toughest in multilateral trade negotiations on agriculture. A simple answer, I believe, would be that they clearly understand that it is not in the interest of any region of the world to diversify out of agriculture. A wise strategy, especially for Africa, would rather call for diversifying within and alongside agriculture. But to appreciate the wisdom of such a strategy and what it implies for innovation, it is important to reach an understanding of agriculture that goes beyond the narrow confines of farming. No doubt, agriculture takes roots in and is primarily articulated around farming as a primary sector. But this is just one vital part of a comprehensive and far-reaching economic system we need to consider: the food and agriculture system. Put in a simple way, this system comprises a set of physical production and transformation stages, which are inter-linked by transactions. Chief among these are: research, technology generation and diffusion; input production and delivery; farm-level production; commodity processing, conditioning, and handling (including storage); and product transport, marketing and trade. Within the context of an increasingly global economy, innovations for agricultural transformation should aim at maximizing productivity and efficiency at the level of each of the stages of physical production/transformation of the commodity chain, and at minimizing the costs of transactions between these stages. Structural transformation of agriculture in Africa thus calls for broadening the conceptual and analytical framework of innovations to encompass the farming sector as well as the agro-industrial and the agribusiness services sectors. In other words, innovations to transform agriculture should be conceived from the explicit perspective that agro-industrial and agribusiness development and green revolution must go hand in hand. Through this comprehensive perspective, the transformation of the agricultural system would yield its fullest impact on improving livelihoods by reducing poverty through broad-based economic growth, enhancing food security, creating employment and generating value-added and wealth across the farming and non-farming sectors of the economy. Excellencies, Distinguished Ladies and Gentlemen, Within this systemic framework, let us recall some of the major constraints and challenges that innovations should address with a view to transforming African agriculture. First of all, agriculture in Africa has, for more than two decades, suffered from a lack of consistency in the degree and the course of priority given to the development of the sector. In the 1960s and 1970s, emphasis was placed on single-purpose projects aiming at developing, in a piecemeal fashion, selected crops, agricultural credit, irrigation, agricultural extension, etc. Although those efforts contributed to increasing the production of some commodities, they failed to yield a structural and sustainable transformation of agriculture and to address rural poverty in all its dimensions, especially the social and environmental aspects of sustainable development. Likewise, comprehensive approaches to integrated rural development in the 1970s and 1980s did not meet expectations, as efforts in this regard were frustrated by several factors, including the lack of appropriate pro-poor technology and genuine participation and empowerment of rural communities, and weaknesses in institutional capacity to coordinate and implement the complex components (infrastructure, credit, extension, input supply, output marketing, health, etc.) of such projects. But frustrations also stemmed from attempts to implement these past initiatives within appropriate and deteriorating structural and macro-economic environments. Policies fueled by strong urban bias and marked propensity for hasty industrialization continued to exert excessive extraction from a weak base of agricultural and the rural economy through implicit and explicit taxes, overvalued exchange rates, and direct public-sector control of agricultural input delivery and product marketing. Major efforts at structural adjustment and policy reforms during the last two decades have contributed to correcting some of these drawbacks and to improve the policy environment and incentive sets for agriculture and the rural economies. Many countries have embarked on programs aiming at liberalizing input and produce markets, devaluing or liberalizing real exchange rates, and reducing fiscal pressure on agriculture. Yet, these improvements are taking place in a context of acute scarcity of financial resources, human and institutional capacity that are required to enable rural communities and other private-sector participants to seize the opportunities offered by the new and evolving environment. With the dwindling of development aid and the overstretching of governments' budgets by unsustainable debt burdens, public-sector investment in agricultural development has been considerably neglected and reduced over the last two decades. Because of this lack of consistency in degree and direction of priority, African agriculture is today one of the most undercapitalized in the world. Only seven percent of the arable land in Africa is irrigated, compared to 40 percent in Asia. On average, African farmers use only 22 kg of fertilizer per hectare of arable land (10 kg/ha in Sub-Sahara Africa), that is, only 15 percent (and 7 percent) of the 144 kg/ha used in Asia. The number of tractors per 1000 ha of arable land is three times greater in Asia and eight times greater in Latin America than in Africa. Similarly, road densities are more than 2.5 times higher in Latin America and 6 times higher in Asia than in Africa. With regard to innovations, African institutions of agricultural higher education, research and extension are poorly staffed, ill equipped and under-funded. As a result of this severe under-capitalization, the rural landscape in Africa is still marked by smallholder subsistence farms, low technology and weak knowledge-based agricultural production systems, owing to the lack of development and widespread use of appropriate technologies and to extreme paucity in basic support infrastructure. Input and product markets are incomplete, endowed with insufficient quality infrastructure and support services such as information and communication, and poorly integrated at the national, sub-regional and regional levels. Private investment in farming systems as well as market chains is inhibited by the lack of sustainable financial structures that are apt to respond to the needs and demands of rural economic agents. The emergence and development of a vibrant private agro-industrial sector that is capable of adding maximum value to, and raising the competitiveness of agricultural commodities is lagging because of delays in establishing enabling policy and institutional environments. As a result, food-surplus areas face difficulties in supplying food-deficit ones regionally, and the growing urban demand for food and agricultural products tends to be mostly met by imports from outside of the continent. The combined effects of these features include stagnating or declining agricultural productivity, weak backward and forward linkages between agriculture and other sectors, loss of competitiveness in world markets, increased food insecurity and natural resource and environmental degradation. Average productivity of agricultural land in Africa stands at only 42 percent of that in Asia and 50 percent of that in Latin America. Similarly, the productivity of labor in agriculture in Africa barely reaches 60 percent of that in Asia and Latin America. To make things worse, despite the predominantly agrarian nature of African economies, plus commercial food imports of the tune of US$ 10-20 billion and nearly US$ 2 billion in food aid annually, 26 percent of the African population (more than 200 million people) is undernourished. The structural transformation of agriculture in Africa would therefore require bold efforts at innovation in addressing key internal constraints underlying the under-capitalization of the whole agriculture system, including:
Excellencies, Distinguished Delegates, Ladies and Gentlemen, Let me now turn to the second way in which we need to innovate, that is, the spatial/geographic scope for agricultural transformation in Africa. In this regard, let us proceed from critical features of the internal and global markets affecting the fate of the agriculture system of the continent. At the global level, African agriculture is faced with the following four major challenges:
Multilateral trade reforms under the WTO Doha Development Agenda and the challenge of seizing the resulting opportunities while addressing the related risks for the continent's agriculture. Yet, those global-level challenges are compounded by the very nature and features of the African agricultural market. The African food and agricultural market is characterized by extreme fragmentation along sub-regional, national and even sub-national borders, resulting in segmented markets of sub-optimal size to ensure profitability of optimal-scale private investment in the different stages of commodity chains as described above. Paradoxically, while being largely closed to each other, these fragmented national and sub-regional markets are increasingly open to trade (imports and exports) with the world outside of the continent. As a result, the gap between national/sub-regional domestic production and increasing regional demand tends to be filled by imports from non-African sources. Conversely, the fragmented national food and agriculture systems of African countries strive to produce for exports aimed primarily at international markets outside the Region. To make things worse, agricultural subsidies and support measures of key trading partners of Africa typically encourage the continent's imports and hinder its exports. Here, one may logically argue that charity must begin at home: With an annual food and agricultural import bill of US$ 10-20 billion, the biggest challenge that Africa probably faces in the area of market access is granting its own (domestic) food and agricultural systems full access to the regional (intra-African) market. Indeed, the debate on the needs and sources of resources for financing the transformation of agriculture in Africa is, at times, quite puzzling. A simple reference to the AU/NEPAD Comprehensive Africa Agricultural Development Program (CAADP) would help shed some light on this puzzle. The CAADP provides a framework for consensual policies and priorities for African governments, regional organizations, farmers, private agribusiness, and development partners. It has been endorsed by African Heads of State and Government in 2003, and supported by the commitment of the African Union Maputo Declaration for increased public budget allocation (at least 10%) for agricultural and rural development, and Sirte Declaration on Agriculture and Water. Moreover, the AU/NEPAD has just completed a planning exercise aiming at preparing sub-regional/regional Priority Action Plans and agreeing on early actions and institutional arrangements for the implementation of the key CAADP pillars concerning: land and water resources development; rural infrastructure and trade capacities for market access; food supply chains and responses to emergency food crises; and agricultural research, technology dissemination and adoption. Now comes the time for the acid test of implementation and the mobilization of the resources required to do so. And the usual propensity to call first on the donor/lending community to help takes over. To say the least, this trend of affairs does not match well with the NEPAD guiding principle of doing the African development business differently, by proceeding first from Africa's own resources and resourcefulness. In this regard, the investment/financing puzzle goes like this. Early estimates from NEPAD indicate that it would take an average of US$ 17 billion of annual investment to adequately implement the CAADP. Against this figure, Africa's annual food and agricultural product import bill amounts to US$ 10-20 billion. Obviously, the arithmetic of these figures would strongly suggest that what is missing is not so much available domestic resources to finance agricultural transformation; it is rather the appropriate policies and strategies to mobilize those resources for investment in Africa's agricultural systems. In other words, the challenge is to innovate in the policy and institutional spheres so as to transform Africa's food and agricultural import bill into an endowment for investment to develop the continent's agriculture. Excellencies, Ladies and Gentlemen, As mentioned earlier, a major impediment to such a strategy is the high degree of fragmentation of the African agricultural systems among the 53 countries and more than a dozen sub-regional groupings shaping the political and economic landscape of the continent. From an economic standpoint and within the framework of an increasingly global economy, this landscape is simply not optimal enough to provide for the levels of economies of scale (at all stages of commodity chains), economies of vertical coordination (among the different stages of commodity chains) and economies of complementary diversification and specialization (among countries and sub-regional groupings) that would allow the realization of full competitiveness gains and intra-regional trade potential for Africa's agricultural systems. To address this problem, allow me to briefly highlight the building blocks of a possible strategy and way forward out of what we may call the African agricultural market/investment-resource puzzle. This strategy proceeds essentially from revisiting Africa's commitments to and efforts at broadening and deepening regional integration. Indeed, realizing the full promise of agricultural transformation for improved livelihoods and development in Africa requires a broader regional approach to diversification and specialization in agriculture. There is need to exploit the special diversity in resource endowments on the basis of the principles of "Comparative" and "Competitive" advantage at the global level of the continent. Regional economic integration and cooperation should be guided primarily by efficiency and comparative advantage rules. This could be facilitated by using agro-ecological zoning as a framework for identifying agricultural production potential and planning infrastructure development across zones and beyond national boundaries. As it is often impossible to agree on, and start up a cohesive and comprehensive regional construct around too many commodities at once, a pragmatic way to achieve significant economies of scale and vertical coordination African agriculture would be to work at the regional level around a limited number of strategic food and agricultural commodity chains. The strategic qualification of such commodities would relate not only to their relative importance in the African food basket and internal economies, but also to their worth in the interface (trade relations) between African economies and the global economy. By way of implication, of strategic importance would be such commodities:
Commodities such as rice, maize, wheat, sugar, meat and dairy products, cotton, coffee, cocoa, etc. would meet these criteria of unexploited production potential to respond to increasing regional demand. For such selected strategic commodities, a common African market that transcends national and sub-regional borders would offer an appropriate economic space to allow for private investments at the level of regional economies of scale that would ensure profitability. Hence, for those strategic food/agricultural commodity chains, market integration needs to be moved beyond the national and sub-regional levels to encompass the global regional market - a common and single African market. Developing vertically coordinated regional chains (of production, processing and marketing) for such commodities would further require building public private partnerships to create an environment that is conducive to ensuring both profitability and security of regional private investment. The creation of such an environment could proceed from the opening of Free Sub-Regional/Regional Investment Zones in those areas where the greatest unexploited production potential for selected strategic agricultural commodities lies, so as to stimulate the mobilization of pooled private investment into agriculture at a regional scale. Major river basin-wide initiatives such as those of the Niger and Nile rivers could lend themselves to a strategy of free regional investment zones for the development of vertically-coordinated chains of production, processing and marketing of strategic food and agricultural commodities/products. The recent offer by the Government of Mali to CENSAD member countries of 100,000 hectares out of the 1,000,000 hectares potential for irrigated agriculture of the Niger River basin is an encouraging political move in this direction. In such zones, the creation of the right policy, institutional and legal frameworks for the development and management of land and water resources and the provision of the necessary supportive public infrastructure and services for the establishment of trans-national agribusiness companies would grant further incentives and security for private investment. This would be conducive to the mobilization of pooled investment through regional agricultural joint ventures with a view to developing, in a vertically coordinated manner, the different stages -- primary production, processing, transport and regional marketing -- of the strategic food commodity chains. This strategy could be further strengthened by the development of capital markets so as to contribute to optimal development of the production potential as well as the sectoral growth and employment linkages within an integrated regional agriculture system. This strategy of regionalism for agricultural transformation was proposed and discussed during the preparation of the African Union Summit on Agriculture and Water held in February 2004, at Sirte, Libya. And I am pleased to draw your attention on the fact that some of the key building blocks of the strategy -- especially the concept of strategic commodities and the principle of a common African market for such commodities - have been endorsed politically by African Heads of State of Governments and explicitly reflected in their Sirte Declaration. Here again, the remaining challenge is implementation. Excellency Mr. President, Honorable Ministers, Distinguished Delegates and Participants, Ladies and Gentlemen, Let me now speak to the third and final way in which I suggest that we need to innovate for agricultural transformation in Africa, namely the operational approach to innovations for agricultural transformation. As we all know, an important requirement for increasing the productivity and competitiveness of African agriculture is to significantly reduce unit costs of production, processing and distribution by increasing productivity at all stages. Technological developments in the biological sciences, energy, information and communications offer new opportunities that could help address this challenge. Africa is offered great opportunities to harness both conventional green revolution as well as emerging gene revolution technologies to make significant headways to sustainable agricultural development and food security. The public and private sectors in African countries must be encouraged to seek out and exploit these opportunities. Public investments in research and technology generation and diffusion is needed to encourage broad-based adoption of available technologies and to strengthen indigenous capacities to develop and/or adapt and diffuse the kinds of technologies needed to compete effectively in domestic, regional and global markets. This will require strengthening African research capabilities. In the face of small national budgets, the establishment and/or strengthening of sub-regional/regional Centers of Excellence of agricultural research would help build critical research personnel and financial resource mass and achieve economies of scale. I am also pleased to draw to your attention that the idea of promoting the creation/strengthening of sub-regional/regional Centers of Excellence for higher agricultural education and research for technology generation/adaptation/diffusion is fully endorsed and reflected in the AU/NEPAD CAADP framework and the AU Sirte Declaration on Agriculture and Water. These Centers of Excellence could be created along the lines of agro-ecological zones and strategic agricultural commodities mentioned earlier. Such Centers of Excellence would give special attention not only to farm-level technologies, but also to adaptive research on post-harvest stage technologies (storage, processing, transport) and appropriate biotechnologies for food as well as cash crops. Furthermore, to capitalize the available scientific and technological skills we need to:
Although the private sector in most African countries has yet to play a significant role in agricultural research, there are excellent prospects for public-private partnerships in innovations for agricultural transformation in Africa. For instance, the private sector could focus on crop and livestock breeding and the assimilation and adaptation of new technological advances in molecular biology. The public sector would continue to focus on ways to improve farming systems, farming practices, and environmental sustainability, which represent areas where information is more of a public-good nature. The area of post-harvest operations (i.e., storage, transport and processing) could also offer good economic opportunities for public-private sector research partnerships. Excellency Mr. President, Honorable Ministers, Distinguished Delegates and Participants, Ladies and Gentlemen, To conclude, let me suggest that success in innovations to transform agriculture for improved livelihoods and development in Africa relates to getting the TIIP (an acronym of my own) right: T (Technologies), I (Infrastructure), I (Institutions) and P (Policies). On the policy front, agricultural development/transformation should feature high on the agenda of the Poverty Reduction Strategies of African countries. Unlike in past business, the aim here should be the promotion and support of community-based and private-sector-led development. On the institutional front, we need to promote and support the empowerment of decentralized rural community-based organizations, private-sector business communities, and formal systems of agricultural education and research for technology generation/adaptation/diffusion at the national, sub-regional and regional levels. We also need to strengthen international solidarity in pro-poor technology development, sharing and transfer for the benefit of the direct stakeholders of agricultural transformation for improved livelihoods and development in Africa. However, none of these actions will yield tangible long-term impact on agricultural transformation and poverty reduction if we fail to innovate in addressing the central issue of the very survival and preservation of the human capital of the continent's agriculture, particularly the rural poor and most segments of the population. In this regard, we all know that the HIV/AIDS pandemic is the greatest public health disaster of our age. Overcoming HIV/AIDS is a survival issue, not only for tens of millions of people in Africa, but also for our aspirations for overcoming poverty and hunger. HIV/AIDS is both a crisis and chronic condition in Africa. It is a crisis because of the speed of the spread of the epidemic and its interactions with other stresses and shocks. It is also a chronic condition because it impacts most heavily on the most productive segment of the agricultural labor force of the African economies, namely prime-aged adults. In recognition of the scale and urgency of this peril and the other challenges for innovations outlined earlier, the ECA has consistently advocated for a more effective response to the HIV/AIDS challenge and its impacts on Africa's capacity to govern and develop itself, as well as for the strategies outlined above with a view to triggering a structural transformation of agriculture for improved livelihoods and sustainable development in Africa. With no reservations, the ECA remains available and ready to bring its fair share of contribution in genuine partnership in facing up to the challenges, as evidenced by explicit efforts and initiatives undertaken by the Commission for promoting an African Green Revolution and building endogenous capacities in biotechnology for sustainable development in Africa. Thank you for your kind attention, and God bless us all in this endeavor.
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