Complying with the Maputo Declaration: How serious are African governments

1. Complying with the Maputo Declaration:How serious are African governments Sam Benin,IFPRI Conference on The Challenge of Developing Countries from the Bottom-up Institute for the Study of International Development (ISID) McGill University, Montreal 22 March 2013

2. Background and Motivation • In 2003, African governments adopted Comprehensive Africa Agriculture Development Programme (CAADP) • Achieve 6% ag GDP growth rate per year • Spend 10% of national expenditure on ag – Maputo Declaration • Public spending (fiscal policy in general) is a key instrument for developing country governments • Most of poor work in the ag. sector and in rural areas • Sector employs 65% of the labor force and accounts for 32% of GDP. Public spending that raises ag growth: • promoting overall economic growth • achieving MDG1 (halving proportion of poor and hungry people) • 1% increase in ag GDP leads to a 1.61% increase in incomes of the poorest quintile (Gallup et al.) • experience of Green Revolution (especially India and China)

3. Objective and outline of presentation • Present patterns and trends in public agricultural expenditure (PAE) in Africa • Assess progress in achieving the Maputo Declaration target of spending 10% of national expenditures in the agriculture sector • Implications of the Declaration on spending behavior and optimal PAE allocation

4. Progress in Complying with Maputo Declaration • Share of public agriculture expenditure (PAE) in total expenditures for Africa as a whole declined in 2003-09 (post CAADP) compared to 1995-2003 (pre-CAADP) • Differences across different regions and countries

5. Meeting the Maputo Declaration: Central Africa • Apart from Burundi, Rep of Congo, Chad and São Tomé and Principe, others spend less than 5% of total expenditure on agriculture • Region is the lowest performer against the target

6. Meeting the Maputo Declaration: East Africa • Many countries in East Africa spend 5-10% percent of total expenditure on agriculture • Shares have been increasing over time in several countries (especially Ethiopia, Rwanda, Sudan)

7. Meeting the Maputo Declaration: North Africa • Countries are of middle income status with significant nonagricultural sources of growth and development. • Divergence from the 10% target. • Is there shift of resource to sectors with larger returns?

8. Meeting the Maputo Declaration: Southern Africa • Malawi and Zambia stand out with large farm subsidies • Shares in others (most middle income) have stagnated. Is it because they have reached equilibrium, where returns to additional spending in ag and nonag are equal?

9. Meeting the Maputo Declaration: West Africa • Region where many countries have achieved target • Burkina Faso, Mali and Niger have continuously cut back. Is because they think the CAADP 10 percent target is optimal or because they are not getting the expected returns?

10. Meeting the Maputo Declaration • Since 2003 when the declaration was made • only 11 countries have surpassed the CAADP 10 target in any year—Burkina Faso, Chad, Ethiopia, Ghana, Guinea, Malawi, Mali, Niger, Senegal, Zambia, and Zimbabwe • only 7 countries have consistently surpassed the target in most years—Burkina Faso, Ethiopia, Guinea, Malawi, Mali, Niger, and Senegal • The issue of what to count as public agriculture expenditure (PAE) has continuously been debated • Accounting issue: in general, the evidence shows that PAE is greater than previously reported • Effectiveness issue: effect of different components of PAE are not equal

11. Composition of public agriculture expenditure: Case of Ghana (% of total expenditure) Accounting has changed over time, likely to comply with Maputo Declaration without changing underlying expenditure allocation

12. Public agriculture expenditure before structural adjustment (% of total expenditure) Share of PAE has declined. Governments were directly involved in agriculture production, cooperatives, and marketing boardsthen. These were abandoned.

13. Public agriculture expenditure:before structural adjustment and now • Interestingly, a new form of direct governmental involvement in agricultural production and marketing resurfaced—similar to the situation in the 1980s and 1990s, but without the direct hiring of agricultural workers and marketing boards by the government • Question that arises is the extent to which these programs (still deemed controversial with regard to their cost-effectiveness) have been refurbished to take account of their negative experiences in the period prior to structural adjustment

14. Conclusions and Implications • The amount of PAE in Africa as a whole increased rapidly, but at a slower pace than the growth in total expenditures resulting in a decline in the share of PAE in total expenditures for Africa as a whole • Some governments’ reports on compliance with the Maputo Declaration has generated controversy on what to count as PAE • resulting in a debate that may be polarizing behavior around the fundamental issue of the investments needed to achieve development results • i.e. what types of investment, how much of each type of investment, where should they be invested, and when should they be invested

15. Thank You

16. Spending on Ag Research and Development