Wednesday, 4 December 2013


Smallholder farmers will be key to African efforts not only to feed itself, but also to become a major food supplier for the rest of the world. Africa’s agricultural potential is clear. With large amounts of uncultivated arable land, roughly 60 percent of the global total, it has plenty of space to lift production. Meanwhile, productivity can also be boosted. African cereal yields are just over one-third of the developing world average, for example, linked to the fact that as much as 80 percent of Africa’s agriculture still depends on rain not irrigation. Some African governments see the efficiencies of large-scale commercial farming as a means to fulfil this potential. But Africa cannot increase its food production, create jobs, and reduce poverty on the scale required without unlocking the potential of smallholder agriculture. Nearly two out of three Africans depend on agriculture for their livelihoods. Indeed, Africa’s rapidly growing youth population makes job creation an urgent matter for many of the continent’s governments. In countries such as Ethiopia and Kenya, agricultural growth has been shown to reduce poverty twice as fast as any other sector.

In Africa Progress Report 2013, highlighted some of the ways in which the continent’s oil, gas, and mining sectors could improve the lives of millions. Agriculture is a good example of how the use of natural resource revenues for more – and more effective – public spending could have major knock-on benefits. Nigeria clearly has ambitions for plenty more progress, but it is already making impressive strides. Describing agriculture as ‘the new oil’, Nigeria’s agriculture minister has launched an ambitious plan to add 20 million metric tons of food to the domestic supply and create 3.5 million new jobs in the process. In the first year of its transformation push, Nigeria reached over 75 percent of its job creation target and has met the UN Millennium Development Goal, Number 1, reducing the population of hungry people by half, three years ahead of schedule.

But while Nigeria’s agricultural sector employs 58 percent of the country’s active workforce and cultivates just 40 percent of its available arable land, official sources say it spends just 2 percent of its GDP on agriculture. Even in Nigeria, there is room for further progress. Nigeria must spend an additional US$2.4 billion per year on much-needed agricultural investments to meet the 10 percent target established by the Maputo Declaration.
Increased transparency of its oil revenues could be a critical step. Conducted within the framework of the Extractive Industries Transparency Initiative (EITI), subsequent reviews of Nigeria’s oil sector found that financial and accounting cost the country billions of dollars.

African governments – and the international community – must also manage better large scale land acquisitions, which have also not brought enough benefits to smallholder farmers. Global population growth, a burgeoning global middle class, and the search for low-carbon energy sources mean that demand for food and biofuels has shot through the roof. Spotting profit opportunity, foreign investors are scrambling for a piece of the action. They rent land, use the latest agricultural methods (plus precious water from nearby sources), export the food, and make a fortune. These contracts are often negotiated behind closed doors without consulting affected communities. Indeed, many of these schemes have seen local communities forcibly removed from their land. At the Africa Progress Panel, we support the combination of foreign expertise with local knowledge to increase production, generate jobs, and transfer technical know-how. But what Africa does not need, and cannot afford, is the use of African land and water by foreign investors who use Africa’s scarce resources to supply food and biofuels to other countries. For Africans, the benefits of large-scale land acquisitions have been questionable.

Africa’s smallholder farmers need protection in such deals. The African Union should develop a framework for managing foreign investment in agriculture, and governments should assess large-scale land deals and consider a moratorium pending legislation to protect smallholder farmers. Governments and others must help smallholder farmers manage risk more effectively. Crisis in the Horn of Africa and Sahel have highlighted the risks faced by smallholder farmers, who are barely able to feed themselves and their families as it is.
Finally, we want to see the international community devote more money and more effort to improving food security and nutrition in Africa, an issue that goes to the heart of so many other development challenges. By weakening a child’s resistance to disease, malnutrition is a major contributor to child mortality. A global study in 2008 found that an average one third of all child deaths were related to malnutrition.

African leaders and their partners must all do more to shape the continent’s mighty farming potential. One day Africa could feed the world. But first it must feed itself. And smallholder farmers must be part of the solution.

Already enjoying increased macroeconomic stability and more democratic politics, Africa has also been touched by the so-called global commodities super-cycle. Strong demand for the continent’s oil, gas, and minerals have combined with high prices to fuel economic growth in many of its resource-rich countries, including Equatorial Guinea and Angola. Across the continent, progress has accelerated on education, child survival, and on the fights against killer diseases such as HIV/AIDS and malaria.
Unfortunately, much of this progress remains too slow and uneven. Inequality has become a pressing issue for the continent, slowing both economic growth and poverty reduction. In the long-term, this inequality will also fuel dangerous social and political pressures. Oil-rich Equatorial Guinea saw its GDP grow by an average 16.9% every year in the first decade of this century. Its average income is now higher than that of Poland. But three-quarters of Equatorial Guinea’s population still live in poverty and child mortality rates are among the highest in the world.
So how can African governments and the international community pursue growth in Africa that is more equitable and inclusive? Chaired by former UN Secretary-General, Kofi Annan, the Africa Progress Panel released a report in May on precisely this theme. The report Equity in Extractives – Stewarding Africa’s natural resources for all found that few Africans have benefitted from their countries’ natural resources and inequality has increased. This rising inequality is slowing the rate at which growth reduces poverty and in many countries, the poor have seen their share of income shrink. Equity in Extractives recommends a series of policies which, if implemented, will help ensure that Africa’s natural resource wealth brings more inclusive and equitable growth.
As a starting point, African governments must link extraction of their natural resources with plans to reduce inequality and boost inclusive growth. They must identify extractive projects that can generate more jobs, through linkages with the local economy. By processing natural resources before export, they can also bring extra value to the national economy. But public spending is the key mechanism that connects government revenues with the wider population. And African governments must spend their revenue more fairly. Too often, public spending is heavily skewed against the poor.
Nigeria spends around 6% of its GDP on education. That is a relatively high share by international standards, but unequal allocations across states, a strong emphasis on grants for tertiary students, and the bypassing of urban slums leaves millions of the country’s poorest children without schooling. Nigeria has an estimated 10 million children out of school.
Misguided priorities can also distort public spending on basic services. Nigeria’s fuel subsidies reached US$9 billion in 2011, or 4% of its GDP. But the benefits often go to the richest households, which consume the most fuel. And they reduce the amount of cash available for urgently needed public spending on infrastructure such as power, ports, and roads. This limits growth and critical job creation, too.
Crucially, African governments must put transparency and accountability at the heart of their natural resource policies. Transparency is so critical, because it reduces the opportunities for corruption. This corruption is facilitated, of course, by the behaviours, norms, and laws of others within the international community. G8 and G20 governments in particular must do more to ensure transparency and accountability, especially in the extractives industries. Some extractive companies generate healthy profits that do not translate into commensurate government revenues. They benefit unfairly from excessive tax concessions, tax evasion and the undervaluation of assets.
By itself, trade mispricing, the misrepresentation of export and import values to lower tax payments, now costs Africa an estimated US$38 billion per year, more than the continent receives in either international aid or foreign direct investment. Too many trusts and companies are owned by anonymous individuals, effectively hiding the illegal payments between corrupt business people and government officials.
Equity in Extractives described five deals in the Democratic Republic of the Congo (DRC), involving the sale of national mining assets to anonymous individuals. Together these five deals cost the DRC an estimated US$1.4 billion, equal to twice the combined annual budgets for health and education – a tragedy in a country where seven million children are out of school.
But momentum is accelerating towards greater transparency. The United States and Europe have introduced legislation to require greater financial disclosure from extractive companies. African governments, such as Guinea, Liberia, and Ghana, are now publishing their contracts. Currently reviewing its money laundering rules, with a fourth anti-money laundering directive expected later this year, the European Union has a major role to play in tackling the non-transparent ownership of companies and trusts.
Tax evasion, illicit transfers of wealth and unfair pricing practices are sustained by global trading and financial systems. But international action can create an enabling environment for strengthened governance in Africa. And global problems need multilateral solutions. With the right political will and building on the continent’s many successes, African societies will become more prosperous, fair and equal. This is a prize which we will all share, wherever we live.

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