| Food Security II -African Hunger |
A STRATEGY FOR CUTTING HUNGER IN AFRICA -- Part 6
(159) COMPETITIVENESS IN THE NEW GLOBAL ECONOMY
(160) So how to shift African agriculture from its low-input, low investment, low-value model, to a high-input, high-value, high-investment model? There are seven steps necessary to make this transformation:(1)
1. (161) Change the paradigm
2. (162) Continue to reform the role of the state
3. (163) Develop a private sector-public sector partnership
4. (164) Invest in knowledge and technology generation
5. (165) Invest in rural infrastructure
6. (166) Empower farmers
7. (167) Develop more sophisticated marketing, contracting and risk-sharing arrangements
(168) Changing the Paradigm
(169) In the Book of Proverbs it says, "My people perish for lack of vision." That verse has been particularly true of Africa, where, for the most part, the vision that has motivated most politicians has been the short-term one of maintaining power. Until recent years, in very few countries has there been a broad-based political debate, let alone a political consensus, on the direction the country should take. There has been an ability to take vague positions on a halcyon future, but little willingness to transform these positions into an effective plan or strategy. This lack of a transforming strategy has meant two things: (1) a concentration on the short-term over the long-term and (2) a failure to challenge the dominant ideology. Many times, donor policies have reinforced this focus on the short term because of pressure on the donor agencies to "move money" and "show results." During the Cold War, as noted earlier, the U.S. and the Soviet Union provided aid largely for strategic purposes, often without challenging the economic policies of their African allies. As a result, either governments developed policies and programs aimed at maintaining their political base (and in Africa this frequently meant using the government as a system for dispensing economic and political favors in ways that undermined good governance) or they developed policies and programs based on deeply flawed economic and political paradigms.
(170) For most of the independence period, the operating paradigm was based on state-led, import-substituting industrialization. African opinion leaders spoke of "capturing the commanding heights of the economy" and were supported in those efforts by many donors. The leaders felt that modernization and industrialization were synonymous and that the only way to promote industrialization was to protect the industrial base from external competition. Moreover, they distrusted private capital, because most of it was foreign, either in the form of large corporations owned by the former colonial power or smaller firms owned by minority ethnic groups such as the South Asians in East and Southern Africa or the Lebanese in West Africa.
(171) The new development paradigm turns the old one on its head. It is export-promoting as well as import-substituting, it emphasizes agriculture as an engine of growth rather than just industry, and it must be based on private-sector-led growth rather than state-led growth. By and large, much of Africa has adopted this model - the Washington consensus. But this is a late-twentieth century paradigm. It is not visionary, and it doesn't fully reflect the changes that globalization is bringing about. A twenty-first century development model must, in dialectic terms, bring some kind of synthesis between the old and the new. In particular, it must be based on a role of government that is much less than that envisaged by statism, but much more than that envisaged by the Washington consensus. Equally important, it must move beyond traditional models of comparative advantage, to models described by Michael Fairbanks as those of "competitive advantage," models that see competition in the world economy not as passive and responsive merely to price incentives, but models which actively seek out market opportunities, models in which firms and government cooperate to build the institutional base for competition.(2) Finally, and most important, the new paradigm sees regional and global opportunities as no longer based on traditional factors of production such as land and labor, but as based on knowledge and information.
(172) The following example may help describe the differences between the new and the old paradigms.
(173) The Uganda Flower Industry. The world's leading exporter of cut flowers has little land, extremely high priced labor and poor weather. What the Netherlands does have is first-class technical expertise, market recognition, low transport costs, heavy capital investment, and a deep, diversified industry (9,350 cut flower nurseries and 1,900 exporters). The Netherlands not only produces more flowers, it produces more varied and valuable flowers, each year coming up with new breeds of tulips and gladiolas. Uganda, on the other hand, has wonderful weather, plenty of cheap land, low-wage labor, high transport costs, limited market recognition, and rudimentary technical expertise. It produces mainly roses, competing on price rather than quality. The Netherlands exports $2.8 billion in cut flowers, while Uganda (with only 17 growers) exports $25 million. (The world flower market is about $5 billion, compared to a coffee market of $14.0 billion). In order to develop its non-traditional agricultural export industries, Uganda has had to radically reform its macroeconomic policies, deal with the export monopoly its airline held on airfreight charges, strengthen export institutions, develop its own packaging industry, and build cold storage facilities near Entebbe airport. Recently, Makerere University has developed a degree program in flower cultivation. Clearly, Uganda understands that if its cut flower industry is to prosper it needs to begin developing the skills and knowledge that will allow Ugandan flowers to become more differentiated, more desirable and more valuable.
(174) Continue to Reform the Role of the State
(175) African countries have made major strides in creating a policy environment that is more favorable to rapid growth. As was noted above, this is especially true in terms of macroeconomic policy. However, there has been some recent slippage, and countries are finding it hard to maintain fiscal discipline. And in agricultural policy there have been some substantial policy reversals, particularly in East and Southern Africa. What is the policy regime critical for promoting African development in the twenty-first century?
(184) Develop a Private Sector-Public Sector Partnership
(185) However, it is not only a matter of what countries shouldn't do, but also what they should do. They must first, as a Deputy governor of the central bank of Malaysia once said, "See the private sector as their partner. When the private sector grows, then the public sector benefits as well." The problem in Africa has been that most governments do not see the private sector as a partner, but rather as a competitor. Governments must look at their policies, strategies and programs from the point of view of how they will further the goal of private sector-led, poverty-reducing growth.
(186) Following are a number of examples of how such a partnership might work.
(187) Agricultural Research and Extension. A number of studies have have demonstrated investments in agricultural research and extension in Africa have demonstrated high economic rates of return.(3) African agricultural research has generally been the province of the public sector, although there are a number of examples of private sector-funded research, or indeed, of private sector research institutions. In general, private sector research is focused on crop breeding, especially for cash crops, whereas public sector research should be focused on farming systems, farming practices, environmental sustainability, etc., areas where information is not embodied in a product for sale. This definition would also include breeding of open pollinated varieties of food crops, where seed retention by farmers reduces the private sector's incentive to invest in developing new varieties.
(188) Currently, a team of leaders from African National Agricultural Research Systems (NARS) is preparing a set of recommendations to guide the needed restructuring of the International Agricultural Research Centers so these organizations will better serve African public as well as private sector interests in developing new food and cash crop technologies.(4)
Careful attention needs to be given to results from these deliberations to guide future investments in developing food and agricultural technology and related extension/delivery systems.
(189) There also needs to be some rebalancing in many countries between basic and more adaptive research. Few of these countries have the resources to do basic research and need to be in the role of borrowing and adapting technology. There is also much work to do on developing basic biosafety protocols before adoption of biotechnology can become more widespread. There has been too little work on the post-harvest side of the equation - storage, transport and processing, and here there is particular scope for private-public partnerships, especially given the large post-harvest losses of traditional crops and the vast opportunities for value added industries in agribusiness. This involves some serious reorientation of the way agricultural research institutions work since typically these institutions have viewed farmers as their main clients, and have neglected clients such as traders, processors, or consumers.
(190) What would be the nature of such partnerships? On the public sector side they would consist of the general policy prescriptions of macro-stability, reduced regulation and trade openness, as well as more positive steps of ensuring the provision of key infrastructural elements, effective phytosanitary regulation and a fair tax regime. Developing the relationships requires the government sitting down with potential agribusiness firms and discussing what these firms need in order to invest profitably, and then, excluding special privileges, filling those needs.
(191) Information Technology. African governments and donors must have a visionary perspective with respect to information technology. Currently, many governments view the internet and the telecommunications system as a monopoly they should control. Governments everywhere in the world worry about the free flow of information and try, for good reasons as well as bad, to regulate and limit the free flow of ideas. However, the power of a free market in ideas is difficult to envisage even at the beginning of the twenty-first century. Governments need to understand that the benefits of regulation and control need to be balanced against the power of an untrammelled market in ideas. Governments need to privatize telecommunications, develop a regulatory capacity, eliminate tariffs on computers and telecommunication equipment (many governments have treated computers as consumption goods in their tariff schedules), and license and sell off cell phone frequencies. Information is the engine for economic growth, and visionary governments will do everything they can to reduce costs and promote broad access. Governments should also develop strategies for expanding access to information technology, including the use of targeted subsidies.
(192) Transportation Infrastructure. Transportation is the life-blood of an economy. A number of countries have created public-private partnerships to manage a road fund, financed by gasoline taxes and other user fees, so as to ensure maintenance and rehabilitation of critical roads. Governments must site road construction and improvement in areas with high growth potential. Governments need to get out of the direct government construction business and contract out their construction needs. Key elements of transport infrastructure - particularly airlines, ports and railroads -should be either privatized or handed over to private management.
(193) Export Policy. It is no longer enough to have eliminated quantitative restrictions, liberalized the exchange rate regime, and made tariffs low and uniform. Governments and the private sector now need the capacity to deal with the plethora of international institutions and regulations engendered by the WTO system, and in particular those on agriculture and on phytosanitary regulations. They need to have the capacity to represent their interests effectively in the WTO. They need to have the ability to take information on the opportunities that WTO agreements provide and develop export strategies based on these opportunities. They need to work together with the private sector to provide critical assistance for penetrating new markets. Given the small sizes of these economies and the limited technical staff available, developing this type of information in a cost-effective way requires regional cooperation.
(194) Biotechnology Policy. African countries need to have a forward-looking biotechnology policy. Biotechnological advances offer tremendous opportunities for increasing yields, reducing pest damage, protecting the environment and improving the nutritional value of many crops. In order to make the best use of genetically modified varieties, governments need to (1) develop the capacity to facilitate the implementation of biosafety guidelines and regulations and (2) develop and strengthen policies, information systems and training in biotechnology. There is also a need to begin a broad discussion on the costs and benefits of biotechnology.
(195) Invest in Knowledge and Related Technology Generation
(196) The new global economy is an information-based economy. This is true in ways both obvious and subtle. The knowledge economy is more than computer chips and the internet. It is, importantly, the use of product and market knowledge to produce high-value items for specific markets. For example, to go back to flowers; success in the world flower market requires technical knowledge (such as how to develop flowers which can maintain quality while being shipped long distances); marketing knowledge (what do consumers in Germany want this year?); and organizational knowledge (how can we get flowers cut today to Amsterdam tonight)? Clearly, the first step in building a knowledge-based economy is developing the human talent necessary to manage production based on technology, language and symbols. Helping develop African research capabilities, including in the public-good food crop technology area, is especially strategic to the process of helping farmers capture emerging local and global market opportunities.
(197) African countries and donors must make investing in education their most important long-term priority, and within that priority must put more emphasis on quality than quantity. The past decades have seen the erosion of quality at all levels of African education systems, and particularly of universities. There must be a renewed emphasis on math, science and technology with a commitment to hook up universities and schools to the internet. Public-private partnerships in the financing of technology centers are critical to success.
(198) Reform of the education system will be as difficult as other structural reforms. In most countries, the option of restricting access in order to maintain or improve quality is not politically viable. It may be possible to use modern information technology, particularly radio, as a mechanism for upgrading pedagogical inputs into the classroom. Parent participation, objective standards of performance, and more decentralization of responsibility and authority may all act to bring higher levels of accountability at the school level.
(199) Reforming universities, particularly in the area of more self-financing by students, is a political nightmare, with students being among the most politically active segments of the population. Yet the high level of subsidization of students without any means testing, has both shifted unnecessarily high proportions of the governments' limited education budgets into the tertiary sector and at the same time resulted in reducing available resources to levels that have adversely affected quality. Infrastructure is deteriorating, faculty are underpaid, books and journals unavailable. Yet there is hope. Makerere University in Uganda has demonstrated that carefully structured reform programs are possible, and that many students are willing to pay for quality education. Moreover, the decline of public universities has provided space, in many countries, for the rise of private universities and other tertiary institutions.
(200) Strengthening agricultural research systems, particularly to focus on adaptive research, remains a major challenge. With support from USAID and other donors in the 1980s, many African countries made major strides in streamlining their systems. Yet with the reductions in donor and domestic budget support in the 1990s, many of the systems have lost key personnel and remain strapped for operating funds. Regional research networks across countries help gain economies of scale by allowing different countries to focus on particular crops and then sharing results across the region. But regional networks are complementary to, not substitutes for well-functioning national research systems. Without a renewed dedication to strengthening agricultural research systems within Africa, the productivity growth needed to spur broad-based economic development will be unlikely to emerge.
(201) Invest in Rural Infrastructure
(202) For too many years African governments and donor agencies as well have underinvested in rural infrastructure (see Table VIII). Although data are hard to come by, "in most African countries the [agricultural] sector receives less than ten percent of public (recurrent and investment) spending but accounts for 30-80 percent of gross domestic output."(5) Even when investment in rural infrastructure, particularly roads, is added to the total, the proportion of public spending on the rural economy is much less than would be indicated by its importance to the economy. A strategy that is focused on agriculture as the primary engine for cutting hunger must increase in a major way the stock of public capital in the rural area.
(203) Roads. African marketing costs are the highest in the world. This is partly a result of geography. Bloom and Sachs have identified a number of geographic features (sparse populations, a large proportion of which lives very far from the sea, a small coastline relative to total area, the barrier of the Sahara) that makes transport expensive.(6) But it is also partly due to bad policy, including an inability to maintain roads. For most Africans living in rural areas, good roads are a lifeline to markets, health facilities and to other critical services. Poor road infrastructure reduces farm-gate prices and, thus, wage rates. This is a critical area that needs redressing by public policy makers.
(204) TABLE VIII. INFRASTRUCTURE INDICATORS BY REGION
| Country Group/Region | Electric Power Consumption (kw-hours) | Telephone
Mainlines Per 1,000 People |
Paved roads (%
of total roads) |
Dollar cost of three minute call to U.S. | Population with access to safe water (%) |
| 1996 | 1997 | 1997 | 1997 | 1995 | |
| Low and Middle Income | 851 | 60 | 30 | 6.22 | 75 |
| East Asia and Pacific | 624 | 50 | 10 | 5.60 | 77 |
| Europe and Central Asia | 2,788 | 204 | 83 | 4.33 | --- |
| Latin America and Caribbean | 1,347 | 110 | 26 | 4.42 | 75 |
| Middle East and North Africa | 1,166 | 75 | 50 | 6.02 | --- |
| South Asia | 313 | 18 | 41 | --- | 81 |
| Sub-Saharan Africa | 439 | 16 | 16 | 8.11 | 47 |
| Sub-Saharan Africa (exc. South Africa) | 146 | 10 | --- | --- | 46 |
Source: World Bank. Can Africa Claim the Twenty-First Century?
(205) Water. In much of Africa women provide most of the labor in agriculture. But women also must cook, care for children, gather firewood and haul water. Surveys in Burkina Faso, Uganda and Zambia have found that African women move, on average, 26 metric ton-kilometers per year, compared with less than 7 metric ton-kilometers for men.(7) While improved roads can reduce the time spent on transporting crops and fuel wood, improved provision of water will have many benefits, not the least of which will be the release of women's time for agriculture. Moreover, these infrastructural investments will also free the time of girls as well, thus making it more possible for them to attend school.
(206) Irrigation. Africa has the lowest level of irrigation of any region in the world. Moreover, the returns to irrigation, have in many cases been low largely because of poor government policy. Nevertheless, there are substantial opportunities for small-scale irrigation (which does not require public management), particularly for higher value crops. Here again, the key constraint is lack of resources.
(207) Electrification. A vibrant rural economy requires vibrant market towns, towns that buy food, process agricultural commodities, and market consumer goods and agricultural inputs. Electrification of these towns will enable the small- scale manufacturing sector to grow. It is the synergies between agriculture and non-agriculture that lead to rapid poverty-reducing growth. In many countries, there is a need to open electrical markets to greater competition, as the poor performance of national monopolies have slowed the growth of electrification.
(208) Empower Farmers
(209) As was noted above, one of the most promising changes that has taken place in Africa has been the progress in moving from authoritarian to democratic regimes. An important aspect of this change has been the increased empowerment of non-governmental groups, of what is called "civil society." This empowerment has several faces:
(210) increased space to make one's own decisions
(211) increased influence over public sector decisions
(212) increased collective action
(213) Increased Space to Make One's Own Decisions. This area of empowerment has largely occurred as the public sector has reduced its direct control over the economy. This is particularly true in the area of marketing where, with the caveats discussed above, the public sector's monopoly over marketing has been reduced, if not eliminated entirely. However, regulatory uncertainty has meant that the private sector has not always rushed in to fill the void left by the abolition of public monopolies.
(214) Increased Influence Over Public Sector Decisions. This area of empowerment takes two forms: macro and micro. At the macro level, farmers joining together into farmers' associations have the potential to influence government policy. This has yet to happen in any systematic way in most countries. While democracy has meant that political parties have to fight for votes, the political process in most of Africa has not yet evolved into one where economic issues and interests define the political parties. Thus, farmers need to use other mechanisms besides elections to influence public policy. Increasingly, donor assistance to farmers' organizations to enable them to understand the implications of economic policy, to articulate positions and to bring their positions before the political leadership will be an important mechanism for reordering public priorities.
(215) Increased collective action. There may have been more progress at the micro level, where governments and their donor partners are attempting to allow beneficiaries of public investments to have increasing influence over project choice, design and implementation. This has resulted from what seems to be a widely-accepted belief that projects work better with the active involvement of the beneficiaries. With increased decentralization on the one hand, and the reduction of central government capacities on the other, the space for local control has expanded in two ways - first, through increased influence on government programs and second, through the assumption of responsibility by local, private groups for services and functions formerly provided by government.
(216) It is this latter process, increased collective action by farmers' groups to take control over their own futures, which offers important hope for an agricultural transformation. Historically, cooperatives in Africa were state-controlled. It is only in recent years that we have seen the emergence of truly independent cooperative societies and other farmers' organizations. These groupings of producers not only offer the possibility of greater influence on public policy, but also provide an avenue for members to do things collectively that they couldn't do efficiently individually--buy inputs, obtain credit and market crops. The failure of government marketing systems has left a vacuum, and producer organizations are beginning to fill that vacuum, striking their own deals with banks and agribusiness firms. This is a very salutary development and it offers real hope for a middle way between inefficient public and sometimes monopolistic private marketing systems.
(217) Empowering traders and processors, particularly those operating on a small or medium scale, through the creation of professional groups, can have similar salutary effects. If the rules governing such groups are carefully designed so as to avoid collusion, collective action by trader and processor groups can help improve contract enforcement, develop grades and standards, facilitate group investment in infrastructure, and promote regional trade through the improvement of market information and creation of political pressure to reduce non-tariff trade barriers.
(218) Develop More Sophisticated Marketing, Contracting And Risk-Sharing Arrangements
(219) It has been demonstrated that liberalization of agricultural markets per se does not necessarily lead to sharp increases in either production or productivity in Africa.(8) Market institutions in most African countries are generally characterized by:
(232) Most of these problems arise from the structure of markets in African countries. This structure is characterized by semi-commercial production of food crops, high transactions costs, and high degree of uncertainty with respect to government policy. Marketing is marked by high costs and low investment because there are limited scale economies, financial markets are weak, and trade is largely carried out by traditional, small-scale entrepreneurs. In the export sector, institutions are more highly developed, either because of the historic role of state export companies, or because the nature of the trade itself requires more sophisticated markets.
(233) How to break out of what is a low-level equilibrium trap, where low levels of market articulation stem largely from low levels of income and commercialization? There are some areas where government action can improve things; in particular, more consistent and stable government agricultural policy, investments to improve market information, infrastructural investment that reduces transactions costs, and improvements in the implementation of the rule of law. In addition, any actions to increase the size of the market through regional integration will also be helpful.
(234) CONCLUSIONS
(235) To recapitulate the argument that has been made above: Cutting hunger can only be accomplished by reducing poverty, and reducing poverty depends on rapid agricultural-led growth. Such growth can best come about by taking advantage of the new opportunities provided by a rapidly growing international market - seeking new, higher value agricultural export markets. However, succeeding in these markets will be difficult and requires a number of radical changes. Most important, countries need to develop a new vision of development that puts the economic diversification agenda at the center of their strategies. Second, countries need to radically reform their economic policies to center them on encouraging the development of the new global, private sector-led economy. Third, governments must develop new active partnerships with the private sector to develop new institutional mechanisms to solve a number of thorny questions. Fourth, governments and external donors must invest in knowledge generation in a much more intensive and effective way than they have so far. Fifth, governments and donors must invest heavily in rural infrastructure - roads, water, telecommunications, power and irrigation. Sixth, governments and donors must empower rural producers to find solutions for their own problems through collective action. And finally, governments must work together with the private sector to develop more sophisticated and highly articulated market institutions. In conclusion, the approach advocated thus does not see a "retreat" of the state, but rather a redefinition of the state, with the state playing a key, but different, catalytic role in helping energize market-oriented development.
(236) This paper has been about what to do rather than how to do it. There are three important "how" questions that have not been dealt with. And while the paper offers no solutions, it is important to at least discuss these tough questions more fully.
(237) Resource Mobilization.
(238) In many ways, the strategy presented here is not primarily based on massive new flows of resources, but rather on a radical restructuring of resource use. Nevertheless, rapid growth requires higher levels of investment and saving than is currently the case. Africa is currently investing 17% of GDP, the lowest level of any developing country region. Of this 17%, 15 percent of GDP comes from domestic savings (again the lowest level of any developing country region), while 2% comes from foreign sources. What are the likely sources of new savings in Africa?
(239) The most important source is from the people themselves. A critical issue here is government, which, on the one hand needs to be able to raise sufficient tax revenues to provide a critical level of public goods, while on the other hand not crowd out private investment.(9) Traditionally, African governments have been running deficits of around 6.5% of GDP, of which 4% has been financed by donor assistance and 2.5% by borrowing domestically. While there are no good figures on public investment, it is unlikely to be more than 5% of GDP, meaning that the government is a net borrower.
(240) That means that the private sector must provide between 20 and 25% of GDP in savings and investment if the economy is to have the kind of growth needed to cut hunger quickly. This is not that great a stretch, although it may not occur quickly. Domestic savings rates are around 20% in most of the developing world (they are an incredible 37% in East Asia). Opening up the economy to new investment opportunities will engender new saving and investment. There is substantial capital that Africans hold abroad because of political and economic instability. Moreover, there have been times when the capital flight out of Africa has reversed itself, as economic conditions in certain countries became more favorable. Moreover, the new globalization era means that there are substantial amounts of international private finance looking for good investment opportunities.
(241) But the real issue is less the quantity of investment than the quality of that investment. In large measure that means a reduction in the public sector share and an increase in the private sector share. But it also means a pronounced improvement in the quality of public expenditure. This will be discussed below in the section on governance, but a little arithmetic is helpful. Growth is the product of investment times the effectiveness of that investment (traditionally, the capital-output ratio). An economy that invests a net 20% of GDP and has a capital-output ratio of four will grow at 5% per year. For each 1% increase in the investment rate or 1% improvement in the capital-output ratio, the growth rate will increase by 1%. However, improvements in the capital-output ratio that result from deregulation, improved quality of government expenditure, etc. could also improve the efficiency of the capital already invested, increase the private rate of return, and encourage more investment. So efficiency improvement, all things being equal, has broader effects than quantity improvement.
(242) This is also true of donor assistance, which has been provided to the wrong countries for the wrong reasons in the wrong sectors. For Africa to see a reduction in hunger, donors must redress the imbalance of the past decade when they abandoned the rural economy and abandoned public investments in rural infrastructure. Given shrinking donor resources, donors must be much more strategic. Unfortunately, increasingly, donors are being driven by narrow domestic constituencies which push for one or another "silver bullet" interventions, and fail to see the overall picture. Unless this is turned around, Africa will not receive all the help it needs to avoid more decades of development failure.
(243) A word on debt. It is estimated that African countries carry about $230 billion in international debt, and pay about$14.1 billion in debt service, or $22 per capita. There has been a lot of public discussion of this debt, but the fact remains that actual African debt service is the lowest in the world as a share of GDP and of exports. Moreover, this debt service is offset by $28.0 billion annually in overseas development assistance, which, even in net terms, is higher than that received by any other region in terms of per capita assistance ($44), share of GNP (4.1%) and share of gross domestic investment (22.3%). These numbers are even larger if we exclude Nigeria and South Africa, both of which receive little aid.(10) While there is no tradeoff between debt relief and reduced foreign assistance, it is important to recognize the magnitude of these net flows, even in the face of substantial debt service.
(244) Human Capacity In The HIV/AIDS Era
(245) There is no doubt that the HIV/AIDS pandemic has the potential to seriously increase poverty and hunger and reduce the capacity for accelerating economic growth in medium to high prevalence countries. At the macroeconomic level AIDS will seriously reduce the quantity of skilled labor through both death and morbidity and reduce private savings. While it is hard to quantify the impact of these effects, several studies estimate that they could shave one to two percent off of overall economic growth, and from 0.3% to 1.0% off per capita growth.(11) To cut hunger substantially by 2015 requires per capita growth rates of 4-5% per year and overall growth rates of 7-8%, so the impact of AIDS could mean needing to increase the non-AIDS growth rate by at least a third.
(246) At the household level the impact can be severe. Poor households have little margin in terms of savings and income. An AIDS illness can result in increased time spent on caring for the sick person, the loss of labor from the AIDS-infected family member, increased expenditures on health care and on funerals. The end result is sharply reduced consumption. For example, in Cote d'Ivoire, average consumption fell by 44% in the year following the death or absence of the AIDS-infected household member. Moreover, the impact of AIDS on the household is a long-term one, as families lose the vibrant middle, and children are forced to leave school because they are orphaned or are needed to replace lost household labor, and older people are left without their children to support them in their old age.
(247) Much of this leads to a fall in agricultural production. In Zimbabwe, for example, an AIDS death to a breadwinner has been estimated to reduce farm-level agricultural output by 61% for maize and 47% for cotton. In Tanzania, a household with an AIDS patient lost from between 29% and 43% of its labor supply during that year.
(248) So what can be done? This is not the paper to present an AIDS prevention strategy. Nevertheless, there has been success, both in Africa and in the developing world at large, in combating AIDS. What is needed is the highest level of political commitment, and a broad approach that examines the impact of every development activity on the pandemic and the impact of the pandemic on the activity. This does not mean, however, that every development project needs an HIV/AIDS component, as this may create parallel structures duplicating each other's efforts, but none reaching a critical mass. It may be better to concentrate resources on a more systematic national HIV/AIDS program. For example, because of HIV/AIDS it may be important to concentrate on labor-saving technologies, such as moving away from relying principally on natural methods of providing soil nutrients to the broader use of chemical fertilizers, the development of better hand tools, such as mechanical tillers, and the increased investment in labor-saving infrastructure such as piped water, better wheeled transport, etc.
(249) Governance
(250) The most enduring reason for the high levels of hunger in Africa is the poor governance the region has experienced since independence (Table IX). As Table IX demonstrates African states have the worst governance records of any region in the world, with over 50% in the two lowest quintiles, and only 13% in the two highest. A critical question that needs to be addressed is what are the causes of this poor governance. It is merely a matter of bad leadership? Does it have its roots in Africa's colonial experience? Are there cultural issues at play? Geography?
(251) There have been a number of studies of what are called in the literature "weak states." These studies suggest that the problems that African states face are organic, embedded in their history and geography, and in some cases, their culture. Most African states are made up of a number of different ethnic groups, and the central political task they have faced is to build a national identity, or at least a stable political majority. The early attempts at nationalism, coming out of a fight against colonialism, centered around the symbol of the "big man." These heroes - Nkrumah, Kenyatta, Nyerere - were men of great international stature. For many of them, l'etat, c'est moi," was a reality, and their faces could be found everywhere - on the currency and on the walls of every public building.
(252) TABLE IX. DISTRIBUTION OF GOOD GOVERNANCE
| Country Group/Region: | Governance Quintiles (% of Quintile) |
|||||
| Highest | 2nd Highest | Middle | 2nd Lowest | Lowest | Sample | |
| East Asia | 8.6 | 2.9 | 2.9 | 2.9 | 0.0 | 3.4 |
| Africa | 2.9 | 14.3 | 38.2 | 32.4 | 42.9 | 25.9 |
| Middle East & North Africa | 0.0 | 25.7 | 11.8 | 5.9 | 14.3 | 10.9 |
| South and Southeast Asia | 0.0 | 14.3 | 8.8 | 17.6 | 14.3 | 10.9 |
| Europe and
Central Asia |
14.3 | 17.1 | 14.7 | 20.6 | 22.9 | 19.5 |
| OECD | 65.7 | 5.7 | 0.0 | 0.0 | 0.0 | 14.4 |
| Latin America and Caribbean | 8.6 | 20.0 | 23.5 | 20.6 | 5.7 | 14.9 |
Source: D. Kaufmann, A. Kraay, and P. Zoido-Lobaton, "Aggregating Governance Indicator" (1999), World Bank Working Paper # 2195. See document for definition of governance indicator. http://www.worldbank.org/research/growth/corrupt_data.htm
(253) Many of these leaders were revolutionaries, steeped in socialist thinking, fighting the economic power embedded in multinational companies. Their economic philosophy was import-substituting industrialization, and they saw the state as the instrument of transformation. The state also became the instrument for maintaining political power, and the dispensing of state favors was more important than the coercive power of the state. This use of the state was no means just an African phenomenon, but coupled with the traditional network of obligations to kith and kin, the state apparatus was quickly politicized, and the bureaucracy often de-professionalized.
(254) Thus, African states became characterized by the identification of the leader and his party with the nation-state itself, ethnic tension, lack of a coherent national vision, the use of the state to dispense political favors, the expansion of the state's role beyond its administrative capacity, and the erosion of the professionalism of the civil service. Without a tradition of strong institutions of accountability, it became commonplace in many countries for both politicians and bureaucrats to use the power they controlled to enrich themselves.
(255) Over time, the promises and hopes of self-determination began to fade, and the inability of the political system to transform the economy became more evident. Governments, responding to their development failures, became more coercive and lost legitimacy. The military stepped in, and each succeeding generation, from generals to colonels to sergeants, saw the coup as a way to achieve power and wealth. Ethnic tensions were exacerbated and sometimes broke out into civil war. The oil crises in 1974, and especially 1979, exposed the economic weaknesses of these societies and plunged them into an economic freefall, but not before they had managed to borrow and squander billions of petro-dollars.
(256) Structural adjustment and political liberalization followed. But the new liberal economic and political systems still face the same problems. How to build the nation-state out of many ethnic groups? How to make government an effective instrument for providing critical economic and social services? How to distribute the benefits of the political system fairly? How to shift allegiance from the party and the person to the state and the government? How to build institutions of accountability, including a free and responsible press? How to make the government smaller and more focused? How to move from a system of rule by men to a system of rule by law?
(257) Too many of the forty years following independence have seen much too little progress in successfully fighting poverty, and African countries face the same problems in a much more difficult environment - reduced natural resources, rapidly growing populations, high levels of urbanization, the specter of HIV/AIDS. The strategy presented in this paper will only work if these political and governance problems can be solved.
(258) So, is this a feasible strategy? Not everywhere, and maybe, not in most African countries at this time. It is probably necessary to begin working on a broad scale with a few African countries that already have some of the prerequisites for such a strategy to work - Uganda, Mali, Mozambique, Ghana, Nigeria, possibly Kenya and Ethiopia, and most importantly, South Africa. In other countries, it may not be possible to implement the full strategic agenda presented here, although many parts of the strategy can be. But this "variable geometry," should be used to Africa's advantage, an opportunity for deep learning and sharing of experiences.
(259)TOWARDS A U.S. RESPONS
(260) U.S. efforts need to help stimulate African economies, reduce poverty, and help the poor feed themselves. The U.S. must assist African nations to improve the performance of agriculture and the broader food system. No country has been able to reduce poverty substantially and spur economic transformation without first sharply increasing productivity in its agricultural and food system. This focus will help avert future crises and generate the resources within Africa to address ongoing humanitarian concerns, such as improving health, nutrition, and education.
(261) Development involves much more than economic growth. It involves improving human welfare and allowing all people the opportunity to achieve their full potential. Particularly important is addressing the needs of those most excluded from the benefits of the current system, who are disproportionately women and children. But without broad-based economic growth, African countries will lack the resources to finance their health care systems, schools, and safety-net programs for the destitute. Employment opportunities for the poor, especially women, in micro-enterprises, will wither because of a lack of purchasing power among the mass of the population for the products of these small firms. And the natural environment will suffer, as people exploit whatever resource they can to assure day-to-day subsistence.
(262) Broad-based economic growth from improvements in agriculture and food can contribute significantly to these other important development priorities. Use of cost-effective techniques to promote child survival, such as vaccinations and oral rehydration therapy, can only be sustained over the long-term if the economy is growing enough to help finance these services and if families have the income to get access to them. Better education (especially for girls) and nutrition programs similarly require local economic growth to be sustainable. Environmental protection will be enhanced because increased agricultural productivity reduces pressures to expand farming into fragile environments and increases carbon sequestration in more luxuriant biomass. Chemical fertilizers used in conjunction with organic inputs and herbicides, in a no-till system, can greatly reduce labor requirements in farming, thus allowing households whose main breadwinners have been killed or incapacitated by AIDS to continue to produce some of their own food. Political stability will be enhanced by expanded employment opportunities for the burgeoning labor force and more stable prices for basic staples.
(263) Elements of the a New U.S. Strategy (These elements will be developed further based on feedback from key leaders and organizations in Africa and the U.S.)
(264) U.S. assistance to cut hunger in Africa should focus on particular U.S. expertise. There is no quick fix. Economic growth in Africa requires a sustained 15-20 year effort. Medium-term progress can be made and can be measurable by helping African nations to:
(265) Develop programs and policies that strengthen farmers, businesses, and markets to compete in the global economy. African countries need to continue to open their economies to the private sector and make policy processes more transparent. They need assistance in strengthening local capacity to analyze and formulate programs and policies that will enhance public-private partnerships and foster broad-based growth. Particularly important will be increasing agricultural production and making African products more internationally competitive. Rapid urbanization and growing regional and international trade will offer both new opportunities for farmers as well as put existing marketing arrangements under stress. Transportation infrastructure upgrades are needed, but these may be best done through multi-lateral assistance.
(266) Strengthen rural education, training, and public institutions. Education is especially critical for rural economic progress and a better quality of life. Women, particularly, need improved literacy, better education for careers, and basic skills to improve the health and nutrition of their families. African economies are constrained by declines in scientists, educators and extension specialists, and the lack of institutions to train them. One major casualty of the short-term focus of USAID is the decline in long-term training and institutional strengthening, particularly for agriculture. Training and institution building were the major contributions the U.S. made to the economic development of Asia and Latin America in the 1950s and 1960s. The progress of many African countries in the 1990s was due in part to the contributions of scientists and policy analysts trained earlier in the U.S. New information technologies offer expanded opportunities for lower-cost training and building institutions, for example, through partnerships linking U.S. and African universities in agriculture, biotechnology, and policy analysis.
(267) Expand agricultural research and outreach to exploit science-based agriculture and information technologies, stimulate new ties with business, and avoid damage to the environment. Food and agricultural research in Africa remain weak, in spite of recent substantial reforms. Research and extension must be responsive to the needs of farmers and to market demands. Biotechnology offers special opportunities for increasing yields, refining crops for local conditions, and decreasing environmental damage. Once improved agricultural technology is developed, it needs to reach farmers, traders, and processors. Greater use of private-public partnerships, competitive grants, and links with the U.S. agricultural research community are all means of better developing and disseminating vital new knowledge. New information technologies offer special opportunities to extend these collaborations.
(268) Improve rural governance. Many African countries are decentralizing services, creating local units of government, and growing vibrant civil society. In rural areas where most Africans live, these changes allow greater local initiative through farmer organizations, local school and health boards, and county and township governments. The U.S., through knowledge of federalism and strong extension services, is well suited to helping Africans improve these local organizations.
(269) Link emergency food relief with long-term development. Humanitarian emergencies will remain. The United States Government has made substantial progress in recent years in framing its relief operations within a longer-term development outlook. This emphasis needs to continue.
(270) Coordinate food and agricultural programs with actions to combat HIV/AIDS. The growing tragedy poses a huge challenge. FAO projects up to one-quarter of agricultural workers may be lost by 2020 in the nine countries (all in Eastern and Southern Africa) hardest hit by HIV/AIDS. Agricultural technologies need to be developed with attention to the special needs of these severely constrained rural economies. Agriculture and food can contribute substantially to the battle against AIDS, which is spreading rapidly in rural areas. Better nutrition from home gardens can prolong survival rates; extension offices can counsel on health and nutrition, and agricultural distribution systems can distribute condoms.
(271)Not for the first time Africa stands at a crossroads. But this may be the last, great chance Africa faces. There are huge opportunities and huge obstacles. Success could not only mean a cutting of hunger by half in fifteen years, but also the beginning of a virtuous circle that could mean the reduction of poverty, disease and war on a broad and continuing basis. This is a chance that must be seized.
1. 0 Much of this discussion is derived from Howard et al. op.cit.
2. 0 See Michael Fairbanks and Stace Lindsay, Plowing the Sea. Harvard Business School Press (Boston, Ma. 1997). For an African perspective see Yumkella, Roepstorff, Viranchianchi and Hawkins, "Globalization and Structural Transformation in Sub-Saharan Africa," presented at the Workshop on Agricultural Transformation in Africa (June, 1999); http://www.aec.msu.edu/agecon/fs2/ag_transformation/atw_yumkella.pdf
3. 0 James F. Oehmke and Eric W. Crawford.1993. "The Impact of Agricultural Technology in Sub-Saharan Africa: A Synthesis of Symposium Findings." MSU International Development Paper no. 14. East Lansing: Dept. of Agricultural Economics and Dept. of Economics, Michigan State University. http://www.aec.msu.edu/agecon/fs2/papers/idp14.pdf
4. 0 SPAAR Secretariat. 1999. SPAAR/FARA Vision of African Agricultural Research and Development,, op. cit. and forthcoming SPAAR/FARA plenary session to be held from April 2-7 in Addis Ababa, Ethiopia
5. 0 Can Africa Claim the Twenty-First Century, op. cit., p.189
6. 0 Bloom, David E. and Jeffrey D. Sachs, "Geography, demography and Economic Growth in Africa," Brookings Papers on Economic Activity 2.
7. 0 Can Africa Claim the Twenty-First Century, p.140.
8. 0 This section is largely derived from Jayne, et. al, "Improving the Impact of Market Reform on Agricultural Productivity in Africa: How Institutional Design Makes a Difference," MSU International Development Working paper no. 66, 1997. http://www.aec.msu.edu/agecon/fs2/papers/idwp66.pdf
9. 0 But if government can raise 16% of GDP through efficient tax collection, and if donors provide an additional 4%, then it should be possible to provide the necessary public expenditures (in percentage of GDP - 5% for education, 2% for health, 6% for infrastructure and agriculture, and the remainder for general administration, defense and internal security) without borrowing. Of that 20%, the ratio of recurrent to capital expenditures should probably be on the order of three to one, 15% recurrent and 5% investment. That would enable the government to be a net saver, rather than a net borrower.
10. 0 For SSA, excluding Nigeria and South Africa, net ODA equals $13.4 billion or $27 per capita, 7.6% of GDP and 38.5% of gross domestic investment.
11. 0 Lori Bollinger and John Stover, "The Economic Impact of AIDS," (The Futures Group, 1999)