| Food Security II -African Hunger |
A STRATEGY FOR CUTTING HUNGER IN AFRICA -- Part 3
(36) THE CHANGING INTERNATIONAL CONTEXT
(37) While events in Africa have gradually improved the opportunities for reducing hunger, the changes in the international environment are much more dramatic. The world is fundamentally different today than it was even twenty years ago, and the opportunities for broad-based development are much more prevalent now.
(38) Globalization
(39) Much of this change has been summed up by a word that has stirred great passion for the last several years - globalization. From a narrow technical perspective "globalization" has meant the increasing integration of the international economy, manifested in increased trade, increased capital and labor mobility, and increased flows of technology. In a broader sense, fueled by the information revolution, globalization has meant a radically increased interpenetration into traditional societies of global, almost always Western and frequently American ideas, values and culture. The outward manifestations of this interpenetration are McDonald's restaurants, Nike athletic shoes, and table grapes from Chile.
(40) Table I demonstrates some of the dimensions of globalization. Over the decade 1988 to 1998, the share of world trade in goods as a percentage of GDP increased by 33% and the share of direct foreign investment in GDP doubled. The median annual growth rate for exports over the 1990-97 period was 6.2%; while the median rate by which export growth exceeded GDP growth was 3.0%. These are very dramatic numbers. As can be seen in the table, virtually every region of the less developed world has participated in this process, although Africa has not been as successful, particularly in terms of attracting foreign investment, as other regions such as Latin America. Nevertheless, annual export volume growth in Sub-Saharan Africa has increased dramatically from a median of 2.0% in the 1980s to 7.5% in the 1990s.
(41) TABLE I: ECONOMIC INTEGRATION
| Region | Trade in Goods (as a % of PPP GDP) | Gross Foreign Direct Investment
(as a % OF PPP GDP) |
| 1988 | 1998 | 1988 | 1998 | |
| East Asia & Pacific | 13.3 | 15.5 | 0.4 | 1.3 |
| Europe & Central Asia | 9.0 | 21.1 | … | 1.0 |
| Latin America | 9.4 | 19.1 | 0.5 | 2.5 |
| Middle East & North Africa | 17.6 | 17.4 | 0.3 | 0.9 |
| South Asia | 4.2 | 4.8 | 0.0 | 0.1 |
| Sub-Saharan Africa | 15.4 | 16.8 | 0.3 | 0.7 |
| World | 21.2 | 28.3 | 1.7 | 3.8 |
Source: World Bank, World Development Indicators.
(42) Globalization thus offers substantial new opportunities in international markets in both products and factors that are growing at historically high levels. But these opportunities require a much more sophisticated response. Exports of traditional commodities alone are not enough to lead to dynamic growth in Africa. There has been a continuous secular decline in agricultural commodity prices since 1960, with the index of agricultural prices falling from 208 in 1960 to 90 in 1999, an average decline of 2.4% per year. Some of this decline can be attributable to productivity gains in Africa's chief competitors, which underline the critical importance of investment in agriculture. Moreover, market access is becoming more difficult and more complex. Increasingly, access to world markets requires tighter product specification for agricultural and non-agricultural products, brought about by the greater role of niche markets and the desire to build brand loyalty. What this means is that international companies that buy and market products are getting increasingly involved in tightly coordinating production and marketing chains--the rise of both private and ISO standards. Success in participation in the dynamic global market for higher-valued specific products (as opposed to generic commodities) requires sophisticated management, greater human capital, a deep understanding of international market opportunities, quality control, improved packaging, faster, cheaper and more reliable transportation, attention to environmental and health standards, a welcoming environment for international capital and management, and macroeconomic stability. At the same time substantial efforts must be made to reduce marketing costs and increase productivity in Africa's traditional crops, both domestic and export.
(43) New Technologies
(44) One of the most exciting aspects of globalization is the fact that information is now more broadly available more cheaply than ever before. Capturing the information revolution is central to being able to participate effectively in the new global economy. What opportunities does the information revolution hold for Africa?
(45) Access to information about new market opportunities
(46) Access to the latest information on new technologies
(47) Opportunities to integrate markets by providing price and demand information instantaneously
(48) Opportunities to reduce risks from drought
(49) Opportunities to disseminate technological information to farmers more cheaply and more effectively
(50) This only scratches the surface. It is difficult to predict today what the future of the information revolution holds, but we do know that to seize the opportunities it may afford will require a careful and calculated effort to build the kind of capacity required to adapt to a radically changing technical environment.
(51) The same can be said about the biotechnological revolution. As with the new information technology, it is difficult to predict with certainty how biotechnology will be used to increase agricultural productivity in Africa. Biotechnology's potential for higher yields, improved pest control, greater drought resistance, reduced dependence on chemical fertilizers, shorter growing seasons, and increased nutritional value could lead to an agricultural revolution even more dramatic than the "Green Revolution" of the mid-twentieth century. But three major obstacles remain.
(52) In the first place, the majority of African research institutions and African researchers are not yet capable of taking the biotechnological advances that are being made in the West and adopting them to African circumstances. Second, most of the advances in biotechnology are being introduced by private firms that are patenting the genetic advances, rather than by public institutions that see the genetic material as public goods. This means that not only is the transmission of new technologies constrained by whether or not there are profitable marketing opportunities, but also that research is generally confined to areas of particular importance to developed country agriculture. Finally, the whole area of genetic engineering has raised a number of important questions of threats to the environment and human health, which, while they have often raised more heat than light, will make it more difficult to move quickly in transferring new technologies to Africa. These are not insurmountable obstacles. However, a strategy to cut hunger in Africa needs to confront these obstacles head on and be explicit about how to take advantage of the biotechnological revolution for African agriculture.
(53) International Capital Flows
(54) As noted above, there has been a dramatic increase in international capital flows, which now have reached levels 10 times the level of overseas development assistance (ODA). However, foreign direct and portfolio investment still lag in Sub-Saharan Africa and have been concentrated in a few countries and in a few sectors. What the international experience has shown is that capital will follow opportunities wherever they may be found, but also that international investors have many options, so that countries with high levels of political risk or macroeconomic instability or high barriers to entry will be left behind. Moreover, especially in the case of portfolio investment, international capital movements are extremely volatile. Again, this points to the fact that while globalization offers many new opportunities, it also presents increased risks, and requires concerted effort and radical change to take advantage of these opportunities.
(55) The New Philanthropists. The technological revolution has spawned a whole new generation of fabulously wealthy capitalists, who like the Fords and Rockefellers before them, are interested in giving back some of the wealth they have acquired. This has meant a virtual explosion of new foundations, and a generation of new philanthropists, like Bill Gates and Ted Turner, who are looking abroad as well as domestically for opportunities to which to contribute. For the most part, these new foundations have limited capacities and limited mandates, concentrating on the social sectors. However, these new foundations are still finding their way, and have not, for the most part, identified strongly with any particular development agenda.
(56) The End of The Cold War
(57) The end of the Cold War has changed the international political climate in important ways. For the first three decades of their independence African countries were important, albeit secondary, battlefields in the great power conflict. Many of these countries were able to play off the big powers against each other, generating substantial resources that enabled corrupt and ineffective governments to stay in power. The United States, in particular, wasted millions of dollars of foreign assistance to prop up corrupt authoritarian regimes in Sudan, Somalia, Liberia and Zaire. At the same time, the Cold War also generated an ideological conflict, one that promoted the development of dirigisme and other statist philosophies.
(58) The new international political climate makes it possible for the West to have a more mature relationship with Africa, one based on their mutual interest in reducing poverty and increasing prosperity. The United States has had great difficulty in defining a post-Cold War foreign policy, particularly with respect to Africa, and the various rationales for foreign assistance - international public goods such as health and environmental protection - always come down to the same thing - the United States is better off in a peaceful, prosperous world.(1) In Africa, peace and prosperity will only come through economic development, and a judicious and generous foreign assistance program can help promote that development.
(59) However, the 1990s have seen a sharp reduction in foreign assistance, with overall levels dropping from $56.5 billion in 1993 to $51.9 in 1998. In Sub-Saharan Africa, real per capita aid levels fell by one-third between 1990 and 1998. This is unconscionable in a time of unparalleled prosperity. Moreover, assistance for agriculture has dropped even more sharply. For example, World Bank lending for rural development in Africa fell from 23 projects valued at $1.0 billion in 1990 to 8 projects, valued at $224 million in 1999. As a result, just when the international community has decided to focus on poverty reduction, as reflected in the International Development Goals of the Development Assistance Committee(2) it has reduced its ability to achieve this reduction.
(60) This is a profound tragedy. Africa faces a development crisis of perhaps historic proportions. For the first time, because of political and economic reform, the opportunities for effective poverty-reducing investments are manifest. Four decades of struggling to achieve development have not been without deep learning on the part of both the African and assistance communities. The world economy is evolving rapidly and is offering new, exciting opportunities. Technological change provides hope that many of the existing problems can be solved. This is no time to turn away when the goal is so close at hand.
(61) Changing Donor Practices
(62) Changing Donor Interests and Earmarks. Foreign assistance has always been very faddish, shifting priorities every decade or so. During the nineties, especially in response to concerns raised by domestic constituencies, an increasing proportion of donor funds were directed to specific areas which were seen to have a direct impact on poverty, such as child survival and health, or to areas which reflected domestic political concerns such as the environment and gender issues. In the context of a static or shrinking pie, this meant less was available for focus on the economic sectors, particularly agriculture and the food system.
(63) Moreover, these pressures seemed to be universal, and the idea of donor comparative advantage no longer held currency. Thus all donors shifted resources into the social sectors at the expense of the productive sectors, including donors with traditional interest in agriculture such as USAID and the World Bank. Donor pressures to push specific interests often conflicted with building a coherent national strategy, but many African countries lacked the well-trained analysts to argue these points with the donors (and lacked the discipline to turn down the donor money that came with these shifting priorities.)
(64) What has been lost is a balanced approach to development. There is no doubt that investment in human development, in the educational and health sectors in particular, is vital to sustainable growth. Moreover, education and health are important goods in their own right, as well as being absolutely necessary for agricultural growth. The same is obviously true for investments in environmental sustainability. However, the long-term capacity for improving quality and access to these critical social services depends on increased capacity for the public sector to provide these services and that depends on increasing government revenues, which depends on a growing economy. There is a clear synergistic relationship between improvements in the social sectors and those of the productive sectors. Over the past few years this balance has been disturbed, particularly in the USAID program.
(65) Results Orientation. Changes in strategic thinking have led to an increased emphasis on results in aid agencies. Here USAID, because of government-wide reforms as codified in the Government Performance and Results Act (GPRA), has been the leader. Unfortunately, the emphasis on results has often been operationalized as an emphasis on short-term results. Development programs with indirect or hard-to-quantify results or results that occur over the longer-term have tended to be underemphasized. This is best seen in the substantial reduction in USAID investment in long-term training and agricultural research.
(66) Erosion of Technical Capacity. The shift away from investing in agriculture and rural development has led to a substantial reduction in agricultural technical staff of donor agencies as well. This is a vicious cycle, where reduced programming results in reduced staff and reduced staff results in reduced programming.
(67) Foreign Assistance and Non-Governmental Organizations (NGOs). Increased political activism by the Private Voluntary Organization (PVO) community coupled with the erosion of state capacities have led donors to increasingly rely on NGOs to deliver assistance. This is a very complex issue, tied up in support for democratic processes and civil society and concerns about governmental effectiveness. However, the increasing concentration on non-governmental actors, to the extent that it reduces involvement with African governments, can be self-defeating. In the end, poverty cannot be reduced without effective, developmentally driven government.
(68) Opening OECD Markets
(69) If African countries are to make a major effort to compete in global markets, they will need some honest responses by OECD countries. While there has been substantial progress on this front in the latest round of WTO negotiations, and especially with the passage of the African Growth and Opportunity Act (AGOA) and the new open markets policy toward the least developed countries announced by the European Union, OECD agricultural policy continues to be inimical to poor countries. It has been estimated that the total sum of OECD agricultural subsidies equals the GDP of Sub-Saharan Africa.(3) These subsidies, coupled with the careless use of food aid, have undermined both domestic and international markets for African agriculture. This problem has been compounded by the loss of development assistance funds for NGOs, which now increasingly rely on monetized food aid to fund their activities and thus have become a lobby for expanded food aid. At same time, new flexibility in use of monetized funds may offer new opportunities to use food aid monetization revenues in ways that could strengthen long-term agricultural growth.
1. 0 However, it is interesting to note that the American public believes: (1) that the U.S. has a moral responsibility to provide assistance to the poorest countries; (2) that the U.S. gives up to 10 times more in foreign assistance than it actually does; (3) that the U.S. should provide a much higher level of assistance to poor countries; (4) that the main rationale should be moral rather than self-interest; and (5) that foreign assistance is frequently ineffective. See University of Maryland, Program on International Policy Attitudes, "Americans on Foreign Aid and World Hunger: A Study of Public Attitudes," February, 2001. at: http://www.pipa.org/index.html
2. 0See A Better World for All, Progress Towards International Development, OECD, July, 2000.
3. 0 See Binswanger and Townsend, "The Growth Performance of Agriculture in Sub-Saharan Africa, American Journal of Agricultural Economics, 82:5, pp. 1075-1086.