Sunday, November 23, 2014
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Planting the Seeds of Africa’s Growth

WEST LAFAYETTE, INDIANA – After decades of bad news, at least three major trends are turning Africa’s way: agricultural policies, rural demography, and farm productivity all promise improved opportunities for farm families across the continent. These trends move too slowly to make headlines, but cumulatively they offer a whole new world of bigger payoffs from public and private investment in agriculture and rural development.

Each country in every year faces a unique set of circumstances. Novelties get the most attention, like the possibility that outside investors might control large areas of farmland. Spatial diversity is also important, because it ensures that each place differs from the aggregate average. For Africa as a whole, however, at least three slow trends have recent turning points that offer game-changing new incentives for entrepreneurs and governments.

The first turning point is political. New data from a World Bank study that compares farm policies around the world since 1955 shows for the first time just how far today’s African governments have gone to reduce the cost to farmers of the export taxes, marketing boards, and other interventions imposed by previous regimes (www.worldbank.org/agdistortions). Africa’s policy-induced price distortions peaked in the late 1970’s, and reforms since then have removed about two-thirds of that burden, greatly facilitating productivity growth and poverty alleviation. Further reforms could yield additional benefits, but much of the handicap imposed on African farmers by post-colonial governments has now been removed.

The second transition is demographic. Census data compiled in recent revisions of United Nations population projections reveal the slowly unfolding implications of African history. African households obtained access to modern medicine much later and more suddenly than people in other regions. The resulting improvement in child survival rates and population growth during the 1970’s and 1980’s were faster than those seen earlier in Asia or Latin America.

Africa’s towns and cities have been growing at some of the world’s fastest rates, but their absolute size is so small that they can absorb only a fraction of all new workers. Consequently, Africa’s rural population has been growing faster and for longer than any other in human history, with a correspondingly rapid and prolonged decline in per-capita endowments of land and other natural resources. Moreover, post-independence improvements in child survival triggered a rise in child dependency rates, which also reached historically unprecedented levels in the 1970’s and 1980’s.

Africa’s demographic burdens began to lighten in the 1990’s, thanks to gradual reduction in fertility rates and continued urbanization. As seen earlier in Asia, the slowdown in rural population growth and the reduced burden of childcare creates a window of opportunity for new investment to bring larger year-on-year increases in output per capita.

The third turning point in this sequence is technological: national estimates of cereal crop productivity show how, after decades of stagnation during the Asian green revolution, African yields have grown steadily over the past decade, so that estimated cereal grain output per capita now equals that of South Asia.

The start of this turnaround could be associated with the other two trends, as the cumulative result of more favorable policies and increased labor per hectare, but it could also reflect the gradual spread of improved crop varieties that resulted from earlier investment in agricultural technology. The inflow of foreign aid to boost agricultural production did not rise until after the world food crisis of the 1970’s, and it peaked in the late 1980’s, yielding payoffs some years later.

Taken together, African politics, demography, and the delayed arrival of new technologies imposed severe headwinds against per-capita growth of agricultural output in the last quarter of the twentieth century. But, looking forward, as these headwinds fade, faster growth and poverty alleviation are becoming easier to achieve.

Of course there is no guarantee of further progress. The engines of growth include public and private investment, particularly for the new technologies needed to raise farm productivity. Past efforts have been victims of their own success: as the burst of worldwide agricultural research and development in the 1970’s and 1980’s led to global food abundance in the 1990’s and 2000’s, foreign-aid donors turned to other priorities, and their per-capita support for African agriculture fell to a historical low in 2006 of around one dollar per year. The global food crisis of 2007-2008 brought a brutal end to that complacency, and many investors have pledged a renewed focus on agriculture, but the proof will be in the spending.

African agriculture continues to face serious challenges. Soil nutrients are being depleted, soil moisture is falling, temperatures are rising, and disease pressures are worsening. Fortunately, a growing arsenal of solutions is available through local innovations that are increasingly well adapted to Africa’s unique needs.

Generalizations and predictions rarely survive for long on a continent as diverse and volatile as Africa is. But African countries do have some things in common: widespread improvements in farm policy, improved demographic conditions, and the availability of new technologies create new opportunities for the decade ahead. These three mega-trends put African farmers in a better position than ever before to take advantage of increased public and private investment.

As the obstacles created by previous government policies and past population growth are gradually removed, adopting successful innovations will yield increasingly large payoffs and faster per-capita growth over time. For investors, the deepest obstacles are informational: what works best, and under which circumstances? New data sources about relative impacts are becoming available, and are desperately needed.

Governments, donors, and other investors can still make bad choices, but there are unprecedented opportunities for high-payoff growth. If funders take notice, farmers are poised to respond – and 2010 could mark the start of a bright new era in African agriculture.

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