Agriculture in Development of Select African Countries

1. CUTS Geneva Resource Centre Agriculture in Development of Select African Countries Key Findings of Five Country Studies

2. Structure of the presentation • INTRODUCTION • BRIEF SYNTHESIS OF FIVE COUNTRY STUDIES • Agriculture • Trade • THEMES AND MAIN RECOMMENDATIONS

3. Introduction Introduction | Brief Analysis | Agriculture | Trade | Recommendations CUTS GENEVA RESOURCE CENTRE For more than 25 years, CUTS International pursues research-based advocacy to promote consumer sovereignty with social justice and equality within and across borders. In 2008, CUTS Geneva Resource Centre started functioning to promote a pro-trade, pro-equity credible Southern voice in the Geneva trade and development community. CUTS GRC aims to provide services that would bridge the gap between capitals and Geneva on trade-related issues. At the same time it also launched its flagship three-year project entitled “Fostering Equity and Accountability in the Trading System (FEATS)” .

4. Introduction THE FEATS PROJECT Introduction | Brief Analysis | Agriculture | Trade | Recommendations Fostering Equity & Accountability in the Trading System

5. Introduction THE FEATS PROJECT Objectives • Enhancing positive linkages between Trade and Development in Africa • Advocacy with trade officials by establishing two-way linkages between activities in Geneva and Project Countries • Generating a more coherent and pro-trade for development voice in trade policy making and implementation.

6. Introduction THE FEATS PROJECT (Cont’d) Two-phase project • Phase One: • research on policy making processes • role of stakeholders at the national level • Phase Two: • research on country-specific issues related to trade in agriculture in the overall context of development constraints and objectives • today’s presentation is based on the findings from these studies

7. IntroductionKEY MESSAGES • Agriculture is key to inclusive growth and development: • increase investment to improve productivity • adopt and implement holistic and balanced policies • Trade can play an important role for inclusive development through agriculture: • reform international trade in agriculture and promote formal regional trade • urgently address trade facilitation constraints • Stakeholder involvement and capacity building is a must • prioritise capacity building of small farmers and traders • Encourage multi-stakeholder consultations and coordination

8. Introduction Introduction | Brief Analysis | Agriculture | Trade | Recommendations • The project was undertaken in LLCs Malawi, Uganda and Zambia, and non-LLCs Kenya and Tanzania. • In all the five countries, agriculture constitutes a substantial portion of the economy. Its role is crucial for food security, livelihoods and poverty reduction. • Therefore, strategies and policy interventions aimed at inclusive development should give precedence to the agriculture sector. • From the1990’s, these countries implemented trade liberalization measures, with mixed success. LINKING TRADE & AGRICULTURE IN SELECT AFRICAN COUNTRIES

9. Introduction Introduction | Brief Analysis | Agriculture | Trade | Recommendations LINKING TRADE & AGRICULTURE IN SELECT AFRICAN COUNTRIES • However, if well managed, trade can be a powerful instrument for growth and poverty reduction, as well as a tool to correct imbalances between areas of surplus and areas of deficit. • Therefore, by increasing opportunities and expanding markets, trade has a direct impact on competitiveness, productivity and livelihoods.

10. Research Findings from the Five Country Studies

11. Brief Country Analysis Introduction| Brief Analysis | Agriculture | Trade | Recommendations MAIN ECONOMIC INDICATORS

12. Brief Country Analysis Introduction| Brief Analysis | Agriculture | Trade | Recommendations MAIN ECONOMIC INDICATORS • Last decade witnessed good GDP growth rates with some variations across countries and between the first and second half of the decade. • Growth attributed to higher commodity prices, growing exports volumes, macro-economic policies, FDI and debt relief among others. • Although there are variations among them (e.g. in per capita GNI and population size), poverty is widespread in all project countries.

13. Agriculture

14. Agriculture in LLCs Zambia, Malawi and Uganda PRODUCTIVITY In landlocked Zambia, Malawi and Uganda, the study focused on agricultural productivity, livelihoods, and trade. Introduction | Brief Analysis | Agriculture | Trade | Recommendations

15. Agriculture in LLCs Zambia, Malawi and Uganda • Findings: • Heavily dependent on Agriculture, making the sector critical for overall economic development. • Some strengths, e.g. availability of land, comparative advantage in many Ag. Products, and large scope for improving agricultural productivity. • However, there are constraints such as infrastructure, economic policies, legal frameworks and cultural attributes affecting agricultural productivity and production. PRODUCTIVITY (Con’d) Introduction | Brief Analysis | Agriculture | Trade | Recommendations

16. Agriculture in LLCs Zambia, Malawi and Uganda PRODUCTIVITY (Con’d) • Factors Affecting Agricultural Productivity: • Limited availability and poor quality of inputs used. • Only a limited segment of Ag. production is carried out on commercial basis. • Land tenure system Introduction | Brief Analysis | Agriculture | Trade | Recommendations

17. Agriculture in Non-LLCs Kenya and Tanzania FOOD SECURITY • In non-landlocked Kenya and Tanzania the study focused on regional trade and food security Introduction | Brief Analysis | Agriculture | Trade | Recommendations

18. Agriculture in Non-LLCs Kenya and Tanzania FOOD SECURITY (cont’d) Both countries face the challenge of Food Insecurity. (Data indicates that Food Insecurity in these countries is linked to poverty.) Introduction | Brief Analysis | Agriculture | Trade | Recommendations

19. Agriculture in Non-LLCs Kenya and Tanzania FOOD SECURITY (Cont’d) • Three key elements widely agreed as necessary for food security: • Availability of enough food • Access to the available food • Stability of availability and access Introduction | Brief Analysis | Agriculture | Trade | Recommendations

20. Agriculture in Non-LLCs Kenya and Tanzania FOOD SECURITY (cont’d) • A number of factors responsible for this situation, that can be categorized as follows: • Economic • Environmental • Political and Institutional Introduction | Brief Analysis | Agriculture | Trade | Recommendations

21. Agriculture in Non-LLCs Kenya and Tanzania ECONOMIC FOOD SECURITY (cont’d) Introduction | Brief Analysis | Agriculture | Trade | Recommendations

22. Agriculture in Non-LLCs Kenya and Tanzania FOOD SECURITY (cont’d) ENVIRONMENTAL Introduction | Brief Analysis | Agriculture | Trade | Recommendations

23. Agriculture in Non-LLCs A case study of Kenya and Tanzania FOOD SECURITY (cont’d) POLITICAL AND INSTITUTIONAL Introduction | Brief Analysis | Agriculture | Trade | Recommendations

24. Agriculture in Non-LLCs Kenya and Tanzania FOOD SECURITY (Con’d) Trade impacts on food security, either: Introduction | Brief Analysis | Agriculture | Trade | Recommendations

25. Trade

26. Trade INTERNATIONAL TRADE PROFILE OF PROJECT COUNTRIES Introduction | Brief Analysis | Agriculture | Trade | Recommendations

27. Trade INTERNATIONAL TRADE PROFILE OF PROJECT COUNTRIES (Cont’d) • Project countries significantly integrated into the world economy if measured by the share of imports/exports in their respective GDPs. • Hence they need to focus more on improving the contribution of trade to growth. • Major exports mostly agricultural commodities except for Zambia (dependent on mineral commodity exports) Introduction | Brief Analysis | Agriculture | Trade | Recommendations

28. Trade INTERNATIONAL TRADE PROFILE OF PROJECT COUNTRIES (Cont’d) • Dependence on primary commodity exports exposes them to declining terms of trade and price shocks. • Diversification in export markets is a positive development because: • Traditional European partners are growing much slower than Asian markets • Diversified export markets provide some cushion against shocks in individual markets. • All project countries run unsustainably high levels of current account deficits due to imports being much higher than exports, which can lead to macro economic instability. Introduction | Brief Analysis | Agriculture | Trade | Recommendations

29. Agricultural Trade PROFILE OF PROJECT COUNTRIES Introduction | Brief Analysis | Agriculture | Trade | Recommendations

30. Agricultural Trade PROFILE OF PROJECT COUNTRIES (Cont’d) • The share of agricultural exports in total substantially decreased between 2000 and 2006, but it still forms the bulk of exports in these countries (1/3 for Kenya, Uganda and Tanzania in 2006) • Similarly, share of agricultural imports in total has decreased in the period for four project countries (almost doubled in Uganda) Introduction | Brief Analysis | Agriculture | Trade | Recommendations

31. Agricultural Trade PROFILE OF PROJECT COUNTRIES (Cont’d) • While Ag. Exports are mostly cash crops, Ag. Imports are mostly food products. • Possible positive impact on FS if exports generate greater purchasing power and if imports reach food deficit areas. • Possible positive impact on livelihood if returns on export-oriented production are higher and evenly distributed. Introduction | Brief Analysis | Agriculture | Trade | Recommendations

32. Agricultural Trade • Potential of Regional Trade • creating larger markets and reducing dependence on traditional export markets • improving production and productivity • reducing the trading costs through facilitated regional trade infrastructure development • improving food security by enabling movement from surplus to deficit areas within the region REGIONAL TRADE IN AGRICULTURE Introduction | Brief Analysis | Agriculture | Trade | Recommendations

33. Agricultural Trade • Production and regulatory constraints to regional trade • Over dependence on single primary commodities • Exports mostly geared for markets outside Africa • Production of similar Ag. outputs, not complementary for trade between themselves • Poor Infrastructure a key bottleneck for intra-regional trade • Lack of harmonized regulations • Non-Tariff Barriers remain in the region: 1/3 of Africa’s imports face NTBs, higher than OECD and Fast Growing Economies. REGIONAL TRADE IN AGRICULTURE (Cont’d) Introduction | Brief Analysis | Agriculture | Trade | Recommendations

34. Agricultural Trade REGIONAL TRADE IN AGRICULTURE (Cont’d) • Lack of an enabling agriculture business environment • Virtual absence of production, financing and marketing channels among businesses in Africa • Imperfect and/or asymmetric information on opportunities for businesses in African Markets • Multiple currencies and convertibility problems Introduction | Brief Analysis | Agriculture | Trade | Recommendations

35. Agricultural Trade • 80% of regional agricultural trade in East Africa is informal. • Reasons • Restrictive policies such as import tariffs, quotas, exchange controls etc. • Legal requirements for Trade in Agriculture and in food products, e.g. compliance with SPS and Livestock Clearance Certificate. • Delays at the border and corruption REGIONAL TRADE IN AGRICULTURE (Cont’d) Introduction | Brief Analysis | Agriculture | Trade | Recommendations

36. Agricultural Trade REGIONAL TRADE IN AGRICULTURE (Cont’d) • Implications of informal trade • Positive: increases business activities and enhances income and employment for poor households in the border regions, and allows movement of food products from surplus to deficit areas in the region • Negative: no incentives to invest in formal economy, compromises implementation of health safety and environmental standards, and erodes government revenues Introduction | Brief Analysis | Agriculture | Trade | Recommendations

37. Trade for LLCs • Constraints to trade specific to LLCs • The major determinant for trade in the case of LLCs is the cost of transportation, resulting from distance to the sea and inadequate infrastructure. Landlocked LDCs spend almost double the percentage of their export earnings for transport than the average developing country • Due to “price takers” in the international market, high transportation costs reduce producers’ incomes and discourage them from investing and trading. • Ag. products are perishable, requiring faster and efficient transportation LANDLOCKEDNESS AND TRADE FACILITATION Introduction | Brief Analysis | Agriculture | Trade | Recommendations

38. Trade for LLCs • Constraints to trade specific to LLCs • Neighbors are not strong enough economically to enable project LLCs to expand their markets • Project countries are not rich to generate enough domestic demand, nor they are resource rich. LANDLOCKEDNESS AND TRADE FACILITATION (cont’d) Introduction | Brief Analysis | Agriculture | Trade | Recommendations

39. Recommendations

40. 1 1. Recognize agriculture as key to inclusive growth and development • Prioritize agriculture development through policies at the national, regional and international levels, with enhanced support from IGOs, RECs, donors, etc. • Increase government expenditure on agriculture (at least 10% of annual budget) • CSOs should identify and promote an enabling environment for private sector led and farmer friendly agricultural development Introduction | Brief Analysis | Agriculture | Trade | Recommendations

41. 2 2. Improve agricultural productivity • Strengthen governmental efforts in the sector, e.g. farm input subsidies, promotion of organic manure, infrastructure etc. • Promote Farmer-Private sector collaborations through Out-Grower Schemes (OGS) • Encourage small-holder participation in cash-crop farming • Create collaboration networks involving researchers, extension services and farmers towards productivity improvements. Introduction | Brief Analysis | Agriculture | Trade | Recommendations

42. 3 3. Promote formal regional trade • Government should encourage formal trade by • reducing tariff and non-tariff barriers • clamping down illegal payments • harmonizing SPS and food safety standards at the regional level • The secretariats of RECs should disseminate information and knowledge regarding the regional market • Cooperation between regional farmer/trader organisations Introduction | Brief Analysis | Agriculture | Trade | Recommendations

43. 4 4. Urgently address trade facilitation issues in landlocked countries • Strengthen border transit efficiency • Upgrade facilities, e.g. customs infrastructure, transportation systems, etc. • Facilitate interconnections between countries at the regional level Introduction | Brief Analysis | Agriculture | Trade | Recommendations

44. 5 5. Develop and implement holistic, balanced and specific government policies and strategies • How to implement it • Governments should adopt comprehensive and balanced trade and agriculture policies that are inter-linked, tackling bottlenecks of trade and distribution mechanisms • Set up farm service centers to address farmers’ needs: inputs, machinery, etc. • Improve warehouse facilities to better manage harvests and food insecurity issues • Ensure fair trade between farmers and sponsors of Out-Grower Schemes (OGS) • Facilitate commercialization of small-scale farmers by building their capacities • Establish security enabling smallholders to access credits • Invest in irrigation technology • Coordinate activities of donors to ensure effective and efficient use of funds Introduction | Brief Analysis | Agriculture | Trade | Recommendations

45. 6 6. Educate and build capacity of small farmers and traders • Strength research extension services to farmers in order to improve agricultural productivity • Other stakeholders, such as REC secretariats, private sector, donors and CSOs should assist the governments educate farmers and traders and disseminate information widely Introduction | Brief Analysis | Agriculture | Trade | Recommendations

46. 7 7. Encourage multi-stakeholder consultations and coordination • Close collaboration between the ministries of agriculture and trade to bridge the gaps between trade, rural livelihoods, agriculture and food security issues • Farmers and traders should be involved in policy making and implementing processes through formal consultative mechanisms • Farmer/trade regional organisations (e.g., EAGC) should take the responsibilities of honest brokers at the regional level • Establish national and regional consultative and coordination mechanisms Introduction | Brief Analysis | Agriculture | Trade | Recommendations

47. 8 8. Define a more positive role for donors in the host and home countries • Donor assistance should shift to land and labour productivity improvements • Donors should collaborate in the implementation of agriculture-related projects, e.g. corridors in Africa • Lobby their governments to reduce entry barriers for imports from project countries • Encourage MNCs from their home countries to take on corporate social responsibilities Introduction | Brief Analysis | Agriculture | Trade | Recommendations

48. 9 9. CSOs as important partners in these endeavours • CSOs should strengthen research and information dissemination to all stakeholders • Lobby for domestic policies to promote welfare of small-scale farmers • Build international networks among project countries • Lobby for the creation of bodies that act as fair arbiters between farmers and agribusiness orgs • Lobby for increased government spending on poverty reducing oriented agricultural projects • Design programs targeted at sensitizing the farmers on the commercial side of agriculture • Other stakeholders, e.g. governments, REC secretariats and donors should recognize the importance of CSOs for inclusive development of agriculture through trade Introduction | Brief Analysis | Agriculture | Trade | Recommendations

49. Thank You ! Questions ?