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IFPRI/Badiane
Brussels Development Briefing n.33
Drivers of success for agricultural transformation in Africa 2nd October 2013
http://brusselsbriefings.net
Agricultural growth recovery and economic transformation in Africa
Ousmane Badiane, Director for Africa.
IFPRI/Badiane
OUSMANE BADIANEDirector for Africa
International Food Policy Research Institute
AGRICULTURAL GROWTH RECOVERY AND ECONOMIC TRANSFORMATION IN AFRICA
AFRICA IS UNDERGOING ITSLONGEST PERIOD OF SUSTAINED GROWTH SINCE THE 1960S
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
-8
-6
-4
-2
0
2
4
6
8
10
12
GDP, annual growth rate (%)Agriculture, hunting, forestry, fishing, annual growth rate (%)
Annu
al G
row
th R
ate
(%)
Source: UN National Accounts, 2013
IFPRI/Badiane
THE GROWTH IS ACCELERATINGAS WELL AS SPREADING GEOGRAPHICALLY
SOURCE: IFPRI / Badiane and UlimwenguData from national account s / UN database: http://data.un.org/Explorer.aspx?d=SNAAMA
THE ECONOMIC GROWTH PROCESS
COUNTRIES BECOME RICH BY PRODUCING MORE OUTPUT PER GIVEN WORKER
THIS INVOLVES PRODUCING MORE OF THE SAME GOOD
AND MORE IMPORTANTLY, PRODUCING A LARGER BASKET OF HIGHER VALUE GOODS
COUNTRIES ALSO BECOME RICH OVER TIME
STARTING FROM AN AGRICULTURAL AND RURAL BASE
MOVING TO AN URBAN AND INDUSTRIAL BASE
THE ECONOMIC GROWTH PROCESS
THE DOUBLE CHALLENGE OF MANAGING THE GROWTH PROCESS
RAISING PRODUCTIVITY AGRICULTURE AND THE RURAL ECONOMY
WHILE DIVERSIFYING INTO HIGHER VALUE GOODS OUTSIDE OF AGRICULTURE
DETERMINING FACTORS
HUMAN AND PHYSICAL ASSETS
INSTITUTIONAL AND TECHNOLOGICAL RESOURCES
POLICY AND COORDINATION CAPACITIES
Perc
enta
ge S
hare
Per-capita Income
Share of agriculture in total labor force
Share of agriculture in total GDP
low
HighAgricultural GDP per worker
Agricultural GDP
low high
AGRICULTURE IN THE ECONOMIC TRANSFORMATION PROCESS
Based on Timmer (2009)
Share of agriculture in total labor force
Share of agriculture in total GDP
AGRICULTURE IN THE ECONOMIC TRANSFORMATION PROCESS
Time Axis
0
100
Ag GDP Share = Ag labor shareAg incomes = Non Ag incomes
AGRICULTURE IN THE ECONOMIC TRANSFORMATION PROCESS
0
100
CONVERGENCE: [Ag GDP Share – Ag labor share] => 0
Share of agriculture in total labor force
Share of agriculture in total GDP
1960196219641966196819701972197419761978198019821984198619881990199219941996199820002002200420062008
(60)
(40)
(20)
-
20
40
60
80
100 CENTRAL AFRICA
Shar
e (%
)1960196219641966196819701972197419761978198019821984198619881990199219941996199820002002200420062008
(60)
(40)
(20)
-
20
40
60
80
100 EAST AFRICA
Shar
e (%
)
1960196219641966196819701972197419761978198019821984198619881990199219941996199820002002200420062008
(60)
(40)
(20)
-
20
40
60
80 SOUTHERN AFRICA
Shar
e (%
)
Ag GDP Share
Ag Emp. Share
Difference
1960196219641966196819701972197419761978198019821984198619881990199219941996199820002002200420062008
(60)
(40)
(20)
-
20
40
60
80
100 WEST AFRICA
Shar
e (%
)TRENDS IN STRUCTURAL CHANGE AMONG AFRICAN COUNTRIES 1960 - 2008
TRENDS IN LABOR PRODUCTIVITY AND EMPLOYMENT IN AFRICA 1980 - 2008
19801982
19841986
19881990
19921994
19961998
20002002
20042006
2008 -
20
40
60
80
100
120
140
LABOR PRODUCTIVITY
Inde
x:19
80=1
00
-
10
20
30
40
50
60
70
80
LABOR EMPLOYMENT SHARE
Shar
e (%
)
LABOR PRODUCTIVITY HAS STAGNATED IN AGRICULTUREAND DECLINED SHARPLY IN NON AGRICULTURAL SECTOR, DRIVEN PRIMARILY BY LOW-PRODUCTIVITY SERVICES
EMPLOYMENT HAS FALLEN SLIGHTLY IN AGRICULTURE AND INCREASED RAPIDLY IN NON AGRICULTURAL SECTOR, AGAIN DRIVEN BY SERVICES AND LESS BY INDUSTRY
Agriculture Non-agriculture
Source: FAOSTAT 2011
AGRICULTURAL SECTOR UNDERPERFORMANCE AND STRUCTURAL CHANGE
THE SHARE OF THE AGRICULTURAL SECTOR IN OVERALL GDP IS LOWER IN NEARLY ALL AFRICAN COUNTRIES THAN WOULD HAVE BEEN EXPECTED BASED ON THE LEVEL OF PER CAPITA
OBSERVED AVERAGE SHARES OVER THE LAST 30 YEARS ARE AROUND 30%, NEARLY 20 PERCFENTAGE POINTS BELOW WHAT WOULD BE EXPECTED BASED ON COUNTRIES’ LEVEL OF DEVELOPMENT
Observed Ag GDP Share Expected Ag GDP Share Relationship based on sample of 210 countries over 1960-2008 period
Djibouti
South A.
Gabon
Angola
NamibiaCongo
Moro
cco
Zambia
Swazil
and
GuineaEgyp
t
Leso
tho
Madagasca
rDRC
Kenya
Moza
mb...Chad
Togo
Sierra
L.
Malawi
GhanaCAR
UgandaNiger
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Agric
ultu
ral s
hare
of G
DP
(%)
East Asia & Pacific Latin America & Caribbean
Middle East & North Africa
South Asia Sub-Saharan Africa
-
5
10
15
20
25
30
35
40
45
Average Share of Agriculture in GDP
1965-1980 1980-1995 1995-2008
Shar
e (%
)CONLUSION NO. 2
RELATIVELY UNDERSIZED HIGHER-PRODUCTIVITY AGRICULTURAL SECTORHAS IMPACTED NEGATIVELY ON TRANSFORMATION
$1,758 $4,767 $1,909 $682 $618
SOURCE: IFPRI/Badiane & Makombe based on data from WDI, 2009
Pc GDP in 2008
OVERSIZED SERVICE SECTOR AND STRUCTURAL CHANGE IN AFRICA
ON THE OTHER HAND, THE SHARE OF THE SERVICES SECTOR IN GDP IS MUCH LARGER IN THE MAJORITY OF COUNTRIES COMPARED WHAT WOULD HAVE BEEN EXPECTED BASED ON THE LEVEL PER CAPITA INCOMES
THE RELATIVELY BIGGER SERVICES SECTOR IS LINKED TO THE UNDERSIZED AGRICULTURAL SECTOR
IT IS A REFLECTION OF “NEGATIVE DIVERSIFICATION” WITH LABOR LEAVING THE UNDERPERFOMING AGRICULTURAL SECTOR TO MOVE INTO THE EQUALLY UNPRODUCTIVE OR LESS PRODUCTIVE SERVICES SECTOR
E. Guinea
Liberia
Guinea-B.
Mali
UgandaGhana
DRC
Zambia
Malawi
Maurit
...
Swazil
and
Leso
thoSu
danChad
Came...
GuineaKenya
Benin
Zimb...
Gambia
South A.
Tunisia
Eritre
a
Seyc
he...0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
Serv
ices
shar
e of
GD
P (%
)
Observed Ag GDP Share Expected Ag GDP Share Relationship based on sample of 210 countries over 1960-2008 period
East
Asia &
Pacific
Latin Americ
a & Cari
bbean
Middle
East
& North
Africa
South
Asia
Sub-Sa
haran Afri
ca -
10
20
30
40
50
60
70 Average Share of Services in GDP
1965-1980 1980-1995 1995-2008
Shar
e (%
)
SOURCE: IFPRI/Badiane & Makombe Data from WDI, 2009
CONCLUSION NO. 3
RELATIVELY OVERSIZED LOWER-PRODUCTIVITY SERVICES SECTORHAS IMPACTED NEGATIVELY ON TRANSFORMATION
$1,758 $4,767 $1,909 $682 $618
IFPRI/Badiane
NEED TO FOSTER AGRICULTURAL GROWTH AND ITS CONTRIBUTION TO ECONOMIC TRANSFORMATION
AGRIC. GROWTH
INDUST. GROWTH
1%Growth
1%To
1.32%
AGR. GROWTH AND INDUSTRIAL GROWTH
Mal
awi
Moz
ambi
que
Rwan
da
Uga
nda
Beni
n
Nig
er
Zam
bia
Burk
ina
Faso
Gha
na
Keny
a
Togo
0
10
20
30
40
50
60
70
80
90
100
(%)
2015 Target Poverty Rate Target Poverty Rate in 2015
Projected 2015 Poverty Rate under CAADP 6% Growth Rate
Projected Required Spending Growth to Achieve CAADP 6% Growth Rate
Actual Poverty Rate in 1990
PRIORITY No. 1 MAXIMIZING GROWTH IMPACT OF AG SECTOR EXPENDITURES
Badiane and Ulimwengu (2010)
IFPRI/Badiane
19801981
19821983
19841985
19861987
19881989
19901991
19921993
19941995
19961997
19981999
20002001
20022003
20042005
0
100
200
300
400
500
600
Agriculture Education Health Social Security
Trends in public sector expenditures (1980 = 100%)
PRIORITY No. 2FOCUS SOCIAL SECTOR EXPENDITURES ON GROWTH
Badiane and Ulimwengu (2010)
Efficiency effects of a 10% change in different types of health expenditures in Uganda: All diseases19
All households Poor households Non poor households0
3
6
9
Consultation Medicine Hospitalization
Percent increase efficiency
FOCUS SOCIAL SERVICES ON PRODUCTIVITY GROWTHEXEMPLE OF HEALTH SECTOR EXPENDITURES
Badiane and Ulimwengu (2012)
Effects of a 10% change in consultation expenditures on farm output (Burkina Faso)
Series10
1
2
3
4
5
6
7
8
9
Respiratory Diseases Digestive Diseases Malaria
Percent increase in farm output
FOCUS SOCIAL SERVICES ON PRODUCTIVITY GROWTHEXEMPLE OF HEALTH SECTOR EXPENDITURES
PROMOTING SUCCESSFUL STRUCTURAL CHANGEIMPLICATIONS FOR AGRICULTURAL GROWTH AND INDUSTRIALIZATION STATEGIES