Tag: agriculture

Core features for African Post-Covid-19 economic stimulus packages.

The global coronavirus pandemic has not only put public health and health systems under threat it has undermined livelihoods, businesses, and economies across the continent. As a result, many policymakers are turning their attention to how to get those economies started again, as they shift from the public health response. Some countries such as South Africa and Kenya have already released details on their stimulus packages. Each African country will need to come up with a package that works for them specifically. However, as diverse as these packages may be there are some core features and opportunities that I think apply to most if not all African states. That will not only aid in jumpstarting their economies but lay a foundation for long-term growth through tax reform, building social safety nets, and putting money in the right places. African states may not have the financial firepower that the developed world has deployed to keep their economies alive, but with some creative and bold policymaking African governments can not only jumpstart their economies out of the Coronavirus malaise but also lay the foundations for long term growth.

Investing in the right places

There are two sectors, agriculture, and the informal economy, that define sub-Saharan African economies, and will require specific focus in any form of stimulus.

Agriculture is the foundation of the African economy. At least 60% the population of sub-Saharan Africa are smallholder farmers, and about 23% of sub-Saharan Africa’s GDP comes from agriculture. Stimulus measures aimed at the agriculture sector are critical. This should include

  • Subsidies for inputs (fertiliser, seed, pesticides, etc.) for farmers, that will ease the cost of farming in a tough year.
  • Heavy investment in small farmer training and education that will enhance the skills and productivity of small farmers.
  • Investment in rural infrastructure such as warehouses and rural roads that improve farmer incomes cut the cost of storing and moving goods from farm to market, making those goods cheaper for consumers.
  • Facilitating through guarantees the provision of credit to businesses along the agricultural value chain that provides services to farmers, move agricultural goods or process agricultural goods.

Boosting agricultural incomes, productivity, and efficiency, will not only help drive growth out of the crisis but also help make food cheaper and more plentiful for consumers. In short, an agriculture targeted stimulus could be the foundation for long term food security

The second critical sector is the informal sector. The IMF has estimated that on average the informal sector contributes between 25% and 65% of GDP in Sub-Saharan Africa with Mauritius and South Africa at the low-end under 25% and Tanzania (over 50%) and Nigeria (over 60%) at the other end, and that the sector accounts for between 30% to 90% of non-agricultural employment.

For the informal sector, the key to a stimulus lies in cheap credit (or grants if the government can afford it). Many informal businesses have been subjected to weeks or months of low business volumes (or none at all) due to restrictions put in place to control the virus. This means they do not have working capital, to reopen and restart they will require this capital, and cheap credit is a quick and effective means of providing it. Governments can provide credit to Micro and small enterprises (as most informal businesses are) through existing channels that the informal sector already uses, such as mobile lending, cooperatives, savings groups, and microfinance institutions. Restarting the informal sector is critical to ensuring that people have jobs and incomes, livelihoods that do not just keep the economy turning but the food on tables and kids in school.

Combined the agriculture and the informal sector account for at least 40% of most African economies and are the primary providers of employment. The design of any African economic stimulus must have a significant focus on these two sectors if it is going to have any significant impact.

Tax reform

Some countries have introduced a set of tax cuts to ease consumer pain and help save businesses money. While tax relief will help a bit, outside of South Africa the tax base of most African countries is simply not big enough for tax cuts to have a big simulative effect.

However, taxes are a problem across the continent. African governments, do not collect enough taxes relying on a narrow base of taxpayers paying into a system riddled with tax loopholes, breaks and exemptions. Furthermore, the crisis will put millions out of work and cut the revenues of businesses significantly. However, as the American saying goes, never let a good crisis go to waste. This crisis presents a perfect opportunity for African governments to pursue genuine tax reform, that will help broaden the tax base and mobilize domestic funding for development rather than debt.

We can do this by reforming the tax system to make it, simpler. Make it easy to pay, easy to track and hard to confuse, this can be done through a combination of.

  • Removing existing individual and corporate tax breaks and exemptions while bringing down headline corporate tax rates.
  • Removing transfer pricing loopholes that allow large corporations to avoid paying local taxes.
  • Put in place new frameworks that will assess the proposed and existing tax breaks based on their verifiable impact. In other words, the impact of existing tax breaks should be clearly evident in the data and the justification for a new tax break should also include clear indicators on if it is working. This would prevent the myriad of loopholes creeping back into the system

Getting more companies in the tax net, on an evening playing field while doing away with all the complexity that enables the avoidance of taxes will broaden the tax base. This can be accompanied by a marginal lowering of headline rates as there will be more people and companies paying taxes. A smaller burden on more people will result in less stress on consumers and companies and higher tax revenue when the post-crisis recovery starts.

Safety Nets

One thing the crisis has done is put severe stress on the safety nets and support systems that most Africans rely on. Those with jobs, both formal and informal, often support their immediate and extended families. Foreign remittances (migrant workers sending money back home) has grown by ten times in the last 2 decades. This is a critical source of income and support for millions around the continent and in many countries is one of the largest sources of foreign currency and inward investment. Domestic and international transfers which essentially form our social safety nets are being ravaged. As the domestic economy sheds jobs and opportunities, incomes whether formal or informal will be cut or lost entirely. Internationally, as we have already seen job losses will be immense, and African migrants will be part of that and the World Bank expects international remittances to fall by 23%. Millions around the continent will be without vital support from struggling friends and families and governments must step in. This can take one of two forms:

  1. Give people money. Cash transfers (as I laid out in a previous post) are simple and effective and in a crisis potentially lifesaving. In Togo the government has deployed a cash transfer program called Novissi targeted at people whose daily income is no longer guaranteed due to disruptions caused by the Coronavirus crisis, using existing mobile money platforms. The cash transfer does not fully replace people’s incomes, but it does provide a lifeline, ensuring that people do fall into desperation. It also shows that a mass cash transfer program is possible and need not break the bank.

 

  1. The second option is to invest heavily and quickly in the provision and delivery of key services. Ensure that critical needs such as power, healthcare, sanitation are provided cheaply or free as widely as possible and that critical income-generating venues such as food markets can run with social distancing and sanitary measures in place, that would ensure income generation but also keep people safe.

Neither of these two solutions (or a combination of both) should be short term solutions. Building viable social safety nets is a key need across the continent and if included in a stimulus package, they could be the basis for long term remaking of the social contract across the continent. Without putting in place viable safety nets to replace the informal ones that are being worn thin by the pandemic we may see more people forced into desperate poverty, which would set endanger millions more lives and threaten social stability.

Speed is key

 

The primary goal of any stimulus plan is to move an economy out of a crisis or recession. To do so the stimulus must be deployed quickly before too many businesses and consumers go broke or permanently change how they do things. In deploying their stimulus programs, African governments must ensure that they are deployed quickly. Businesses need credit before they go bankrupt, farmers need inputs before the next planting season and people need to eat today not next quarter. Getting a stimulus package out of government treasuries and into the economy as quickly as possible will amplify its effectiveness.

The right type of stimulus

 

No two stimulus programs will be the same, African economies are diverse and the priorities of each government differ. However, there are common features across the continent that will need to be addressed. With limited resources, we must be smart and bold. That requires putting our resources where the majority of African’s earn their livelihoods in the agricultural sector and informal economy. Making sure that vulnerable communities whose livelihoods have been decimated or support systems undone, get adequate support. And it is an opportunity to reset a tax system that is not fit for purpose to one that can raise the resources we need to fund our long-term development.

African economies need a jumpstart out of what the IMF is calling “an unprecedented threat to development”. As we design our stimulus programs, we must do so in a way that does not just tick the boxes of orthodox economic thinking but addresses the realities of our economies and looks to the future.

 

 

Warehousing African development

Amazon has built a trillion dollar business around them, farmers around the world rely on them, modern healthcare would be crippled without them, the manufacturing industry needs them to smooth out production and demand cycles and global trade needs them to work. They aren’t glamorous like railways and airports, nor are they as fulfilling for donors who prefer to build schools or fund feeding programs, but warehousing is critical to modern societies and economies and they will be crucial for the development of African economies.

Warehouses won’t make living conditions or livelihoods better by themselves, but they are a crucial enabler for things that will. What’s needed from African governments isn’t money or infrastructure, but rather the right set of policies that will enable businesses and individuals to build, and use warehouse facilities as they see fit, to the benefit of their businesses, communities, and the wider economy.

More than storage

Most people do not spend much time thinking about warehouses let alone their transformative power. To most of us, warehouses are just storage, inert spaces where goods and commodities are kept either in transit or until they are needed. I thought the same until I learned the role that certified warehouses (warehouses certified by the government or other trusted actor) and storage play in making the world that we live in. Which got me thinking about the role that certified warehouses could play in Africa’s development on several fronts.

Agriculture

The Food and Agriculture Organisation of the UN estimates that sub-Saharan Africa loses about 20 % of its cereals, 40%-50% of its tubers, fruits and vegetables, 27% of its oilseeds, meat, and milk, and 33% of its fish, to post-harvest losses. This is millions of dollars of lost income for African farmers and it is enough food to feed at least 48 million people, equivalent to the population of Angola, Zimbabwe, Swaziland, Namibia, and Malawi all together.[1] A significant contributor to this phenomenon is the lack of adequate and suitable storage for agricultural goods. This forces African farmers to sell whatever produce they can at whatever rates they can get (the much hated farmgate price) or simply to let their produce go to waste if they can’t find a buyer.

Available (within reasonable distance), affordable (reasonably priced) and suitable (the facilities can store perishables goods appropriately), could cut post-harvest losses dramatically, simply by giving farmers somewhere to store their produce. Thus at the most basic level, proper storage ensures adequate food supply and food security. In addition, it could significantly improve farmer incomes as they will be able to store produce and search for the best prices rather than be forced to take whatever is given to them.

However, certified storage can do a lot more than simply bolster food supplies, farm incomes and cut losses. Certified storage can open the door to farmers gaining access to credit, having produce in a certified warehouse is an asset that farmers can use collateral for credit. Smallholder farmers produce almost 70% of food consumed on the continent, an improvement in their productivity would impact on poverty and living standards throughout Africa (something I cover in more detail here).  Providing smallholder farmers with access to credit is essential to unlocking long-term, sustainable gains in African agriculture. Without credit, farmers cannot afford inputs such as quality seed and fertilizer, they cannot purchase or rent tools that increase efficiency and reduce labour costs, they cannot afford training and support services. Certified storage can be the key to unlocking agricultural credit, as financial institutions will have collateral which they can sell if the farmer defaults, and farmers will not be rendered destitute as their primary asset, their land, will not be taken away as collateral. Furthermore, it could allow farmers access to financial instruments that farmers in the west have long had access to such as hedging (locking in a price for the next harvest) and providing themselves with some security.

The third thing certified warehouses can do for African agriculture is enable commodity exchanges, depositing agricultural produce in certified warehouses will allow that produce to be listed on commodity exchanges and traded, enabling farmers to sell their produce to buyers anywhere in their country, region, or even continent, and allowing consumers (through large purchases like millers and supermarkets) a larger selection of producers to buy from and thus a better chance of getting better prices.

Trade

Trade (both domestic and international) relies on finance, specifically trade finance. Formally its where banks and financial institutions provide credit, hedges, guarantees, and increasingly complex structured products to companies and people buying and selling goods across borders. On the informal scale, it’s the trader who borrows a bit of money (usually on a mobile lending platform) which he uses to buy produce or some other goods, which they then take to market and sell at a profit, paying back the loan with interest and keeping their profit margin. Fundamentally, both formal and informal, trade finance relies on trust. A key issue that hampers trade finance and thus trade across the continent is the lack of trust within the African trade ecosystem.

For instance, financial institutions (both big banks and mobile lenders) do not trust warehousing facilities and are thus unwilling to lend with those goods as security. Thus, financial institutions add a significant risk premium (high interest) to their financing which traders are unable to pay, or the few facilities that are trusted can charge exorbitant rates thus raising the cost of trade. Certified warehouses which issue verified receipts of the goods deposited in their warehouse could fill this gap and get rid of this hurdle to trade on the African continent because in the rest of the world this is precisely what certified warehouses do. Like in agriculture, having a place where you can store your goods verified by a trusted actor will kickstart trade by enabling their crucial lubricant, credit.

Healthcare

Markets and economics aren’t the only benefactors of proper warehouses. Pharmaceuticals are volatile things, they are carefully engineered chemical substances which need to be kept at stable temperatures and conditions. They need what’s called a cold chain, which is a series of refrigerated production, storage, and distribution facilities and capabilities. Refrigerated storage is a key link in that chain, as it would allow government and health systems to store medicines, smoothing out distribution chains, making public health campaigns (like vaccination drives) easier and allow health authorities to plan for contingencies, for instance, stocking vital medicines for a possible Ebola breakout. Storage isn’t just about commerce it’s a key enabler for health systems as well.

Warehousing policy

If storage is a key enabler in a number of developmentally key areas the question becomes what’s needed. The first thing that comes to my mind is to stay away from the solution that so many governments on the continent have tried, government-owned and operated storage facilities. Particularly in Africa they have become magnets for corruption and are often neglected to the point that it’s not worth storing anything in them.

The bare minimum that is needed from government is a legally enforceable framework that does two key things. First, it must put in place a trusted regulator who is able to certify warehouses. To be trusted it cannot simply be another government entity it must incorporate stakeholders from the private sector like the stock exchange, trusted multilateral institutions like the AfDB or TDB, independent bodies like central banks and industry associations to ensure that when it does issue a certificate everyone from farmers to banks will trust them. This regulator must have legally enforceable repercussions for those who violate standards and regulations set by the regulatory authority. Trust is not just about having someone in charge whom you have confidence in, it’s the certainty that when the rules are violated, for instance, someone’s goods are stored improperly, that those responsible are in fact held responsible, in this instance all affected parties are compensated.

Second, is that governments must get out of the way and encourage innovation, particularly in agriculture. Where to this day, far too many African governments maintain outdated systems of produce boards whom farmers are compelled to sell to, and control prices and maintain substandard storage facilities.

Third, is to ensure that small farmers are accounted for in any warehousing policy, e.g having a requirement that warehouses devote a certain percentage of their storage space to small farmers, or cater for small farmers at a discounted price (e.g tax-free storage for small farmers)

In an ideal world, African government would go beyond putting in place a trusted regulator and getting out of the way of farmers, they would actively encourage the building the storage facilities. This could take a number of forms that again do not require significant taxpayer investment such as:

  • Making land available to warehouse developers in agricultural areas to ensure that farmers have access to storage facilities.
  • Allow goods in transit held in certified warehouses to be held tax free, to help the free movement of goods, development of commodities markets and encourage trade.
  • Set standards for databases and goods tracking so that all stakeholders will be able to track goods through the certified storage system, thus bringing more trust into the system.
  • Make available guarantees or funding to groups of smallholder farmers enabling them to build their own suitable storage facilities and engage in the market without fear of being taken advantage of.
  • Give tax incentives to developers willing to invest in cold-chain suitable storage facilities that could benefit the health system.
  • Take a holistic view of warehousing aligning it with other development efforts, such as ensuring that rural roads lead to warehouse sites, that electricity, mobile networks, and data cables reach warehouse sites

Conclusion

It may seem odd to focus on something as mundane as warehouses and storage. Unlike other development policies like universal healthcare, infrastructure or police it is not grand and flashy. However, not all of development policy is grand and flashy, often times to make the big things like agricultural reform, universal healthcare or intra-African trade possible, it requires investment in the mundane things, like a policy and regulatory framework for certified warehouses. Proper and certified storage is an enabler for a number of key developmental goals, my hope is that policymakers are aware of this, that if they want the new railways and roads, they are rushing to build across the continent to work and spur a new era of growth and trade they will require humble storage facilities, certifiably trusted and available to all.

[1] http://www.fao.org/africa/news/detail-news/en/c/445333/

African Land Reform: the need for courage, clarity and inclusivity

Land. It is quite possibly the most emotive and explosive political issue on the continent. Today in South Africa, where approximately 67% of commercial arable land is owned by white farmers politics is consumed by the question of land expropriation without compensation to resolve the historical land injustices which have left the majority of the population landless. In Kenya the spectre of historical land injustice and contemporary land grabbing constantly haunts politics. In Nigeria, Benue state has seen conflict between pastoralists and farmers over resources and land. And these are only examples of a continent wide problem, which will only be exacerbated as foreign governments and corporations buy up huge tracts of land on the continent.

The land issue is a difficult and painful one, but from a policy perspective it is not an impossible one. The rise of the East Asian Tigers (namely Japan, South Korea and Taiwan) was built on the foundation of land reform, which sparked agricultural and industrial transformation. With smart policy Africa can untie the gordian knot of land, but to do so policy makers will have to have courage in confronting vested interests, clarity of purpose and be committed to constructing an inclusive settlement.

The East Asian example

African leaders are fond of stating their desire to replicate the rapid industrialisation and development of the East Asian Tigers and have sought to initiate industrialisation and export policies with that goal in mind. However, often glossed over are the policies upon which rapid industrialisation was based, namely land reform. Japan, Taiwan and South Korea all pursued pro-poor land reforms, aimed at giving peasant farmers legal title to smallholder family farms. In South Korea after the Korean war the government redistributed land held by the former Japanese colonial government and obliged large landholders to divest most of their land which was then given to smallholder families. Similarly, in Taiwan in the 1950s the nationalist government redistributed land held by large landlords to smallholders. And in Japan land reform had been doing away with old feudal laws since 1873 but in 1947 they carried out their most radical reform called Nōchi-kaihō (emancipation of the land). 38% of the country’s arable land was purchased from landlords and sold at low prices to the 3 million farmers who worked them. The results of these reforms were revolutionary. In Japan in the decade after the land reform agricultural production increased by 50%, in Taiwan rice yields increased by 60% and in South Korea (after they had recovered from the Korean war) rice paddy yields doubled. This set the stage for industrialisation, as well as providing food security, rising incomes among farmers were spent on domestically manufactured goods which provided crucial demand for emerging industries that later became exporters, increased savings from farmers were used by banks to fund the growing industrial sector, and the increased tax revenue allowed the government to invest in public goods such as education and infrastructure. Land reform was a critical foundational pillar of the East Asian miracle and if Africa is going to try and conjure its own economic miracle it cannot ignore that.

What’s Past is Prologue – inclusive, historically sensitive process

“What’s past is prologue’ is a phrase that Shakespeare invented, over time it has come to mean that the past is a preface to the future, in other words we can’t forget the lessons of history. When it comes to land in Africa, we cannot forget the past, in fact we must actively address it. Any policy that intends to solve the land problem must have as its first action, a process that listens and learns. Listens, to the voices of those who have been dispossessed by colonialism, development, conservation, profit, corruption conflict or any other of the myriad of reasons that African’s have been chased off their land. And learn from that painful past, where possible making recommendations that could provide restitution and at the very least making those voices heard, these stories and the pain of them part of our common history and experience and recommending concrete policy measures to prevent them happening again. Starting a comprehensive land policy with an inclusive process that engages with its painful history is the only way to ensure that the policy does not become just another chapter in the all to often tragic history of land policy in Africa.

Clarity

What are we looking to achieve? That is the question that must be at the centre of land policy and must be answered plainly. In the case of the East Asian Tigers land reform had two clear goals. First to break the power and wealth of the old feudal structures, by doing away with large feudal land holdings. Second to boost agricultural production by giving farmers ownership of the land and the incentives and where necessary help to make their land more productive. What is the goal of land reform in Africa? As with most things on the continent it will differ from country to country, but will most likely be one or a mix of the following:

  • Addressing historical land injustices,
  • Addressing socio-economic inequalities,
  • Relieving social tensions over land,
  • Increasing agricultural productivity.

With an issue like land, ambiguous goals will create outcomes that are both dissatisfactory and ineffective. Whatever it happens to be, the goals of land policy must be well defined. From clear goals, clear policy actions can be extracted. For instance, if the primary goal is increasing productivity, then policies similar to those pursued in Japan where land was redistributed to existing farmers (those with existing knowledge, experience and skills in farming) and they were supported through investment and subsidy programs, would be at the centre of land reform. If relieving social tension is the core goal then alternative modes of land ownership, access and use such communally owned land, trusts etc, would be the focus of your policy actions.

Courage

Courage is not a word you hear often in policy circles, but when it comes to land reform policy in Africa it is a requirement. This is because there are multiple groups who have a stake in land reform and the policy process requires confronting all of these interests, in full recognition that you may not be able to make all of them happy. In most cases there are large land owners who are economically powerful and automatically dislike the idea of land reform as it carries the prospect of reducing their own land holdings. There are the landless and land hungry who by their sheer numbers are the gallery that politicians play to in their hunt for votes, making wild promises or statements that often fuel tensions. In many countries there are pastoralists or nomadic communities for whom access to large tracts of land are vital to their survival. Inclusivity requires listening to all these interests and having the courage to confront the pain of generations. Clarity requires having the courage to set goals and make a clear case for them. Finally, policy formulation and implementation require the courage to actually confront all the interests and politics around land. Most of all land reform requires the courage to acknowledge that we have ignored this vital element of socio-economic policy for too long. Land is the foundation of an economy and society, how you use it and who has it has a massive impact on economic development and social cohesion, and since independence most African states have let rapacious private business and political interests decide those crucial questions rather than come up with a coherent policy.

Land reform will not look the same in every African country, that is why I have not tried to suggest specific policies. We can learn from each other’s experiences and contexts but on our diverse continent, the land question stems from a variety of issues that are not the same across the continent. What is clear, is that across the continent for there to be comprehensive, coherent, beneficial land reform we must be willing to confront the injustices of the past and include everyone in the land reform conversation, we must be clear about what it is we are seeking to achieve, and we must have the courage to confront the vested interests. Doing so would yield some novel approaches to land reform, but they would be effective and set the foundation for fairer societies and economic growth.

 

Seizing Africa’s Climate change opportunity

Saving our planet, lifting people out of poverty, advancing economic growth… these are one and the same fight – Ban Ki-moon former UN Secretary-General

On the 8th October the UN Intergovernmental Panel on Climate Change released a report and  its frightening. The report warns that there are only 12 years for global warming to be kept to a maximum of a 1.5C rise set by the Paris accords. Anything beyond that will radically increase the risks of flooding, droughts, and extreme heat. Keeping warming to 1.5C is possible but will require concerted global action, something that has been elusive thus far.

For Africa the situation is dire, the continent will bear the brunt of climate change. As CarbonBrief  points out the heat waves will get hotter, the rainy seasons will become more erratic and droughts more likely. For a continent largely reliant on rain fed agriculture it means yet more cycles of drought and famine. The implications of climate change for Africa, if we do nothing, will further entrench poverty for another generation, and displace millions creating climate refugees.

However, this does not need to happen. Climate change is not a good thing, but as the saying goes ‘you should never let a good crisis go to waste’. Climate change is a crisis for Africa, but it is also an opportunity. Rather, than hold out our proverbial begging bowl for money and technical assistance to foster resilience, which is the strategy of most African governments at climate change summits. We can use climate change as the spark for transformation, as we actively seek to mitigate its effects and minimise the continents contribution to climate change. It can be an opportunity to harness science and technology and equip our farmers with tools to feed the continent in an era of shifting weather patterns. To leapfrog fossil fuel energy and lay the foundation of Africa’s economic and social development on green sustainable energy. And to take up the mantle of leadership where the worlds advanced nations have failed to do so. In previous posts (here and here) I have advocated for a conception of development in Africa with the dignity of all Africans as its core goal. Anybody thinking about development in Africa in the 21st century has to account for climate change, as climate change not only endangers our environment but our development and dignity as well. However, with smart, forward-looking policy it need not be a disaster.

Harnessing science to transform agriculture

Agriculture is the employer and source of livelihood for about 60% of the continent. The impact of climate change on agriculture in Africa will be significant and we are already seeing it. This is only the beginning, as pointed out earlier, the bigger the increase in warming the more pronounced these effects will be. This poses a challenge to African states, farmers and consumers; how can we ensure that we can grow enough to feed a growing continent. A large part of that answer lies in investing in science and technology to empower African farmers. To give them the tools (such as GM crops which I have written about previously) that can handle the changing climatic conditions and boost yields. Using technology to give farmers better knowledge about weather, soil and water conditions so they can improve yields, access to markets so they can get the best prices, and access to storage facilities so that we can cut post-harvest losses.

Investing in science and technology would not only help farmers and feed the continent it could provide the push we need to grow our scientific and technological capabilities on the continent. Industrialisation, development, science and technology are intimately linked and if Africa is to succeed in the 21st century digital and knowledge economy it must develop its STEM capabilities. Confronting the challenges of climate change, such as the ones it poses to agriculture could be the African moonshot, that spurs innovation and industry throughout the economy.

Leapfrogging dirty energy

Leapfrogging is the idea that less developed regions, countries or companies can advance rapidly through the adoption of modern systems without going through intermediary steps. The classic case of this in Africa is mobile phones. Mobile phones allowed most of the continent to skip expensive copper land lines, and the embrace of the technology has revolutionised many aspects of life and the economy. Like phone lines we have the ability to leapfrog fossil fuels. Renewable energy is now getting to a stage where they are almost as cheap and will soon be cheaper than fossil fuels. There are some who would argue that fossil fuels like coal are cheap and readily available, however that is increasingly untrue and African countries have free and broad access to the sun and wind. There are others who argue that developed nations used fossil fuels to industrialise and thus why should Africa be disadvantaged by not using them. But that sounds like a petulant child arguing that they too should be allowed to misbehave because everyone else did, frankly Africa has to be better than that. By investing in green ways of generating energy and innovative (e.g. mini-grids) of getting it to the people who need it, Africa can lay a sustainable foundation for its development. We can leapfrog the dirty fossil fuel generating plants and possibly even the expensive centralised electricity grid systems, most importantly we can develop our economies not at the expense of future generations but with their welfare in mind.

Leading the world

We may be a poor continent but that does not mean that Africa cannot lead on key issues. From the 1960’s onwards African nations led the international and diplomatic fight against apartheid South Africa. Boycotting international events, helping South African exiles and the ANC, getting the apartheid government banned from international fora and sports, sanctioning and boycotting their economy, it took a while eventually the rest of the world caught up and the apartheid system fell. The developed world has displayed a remarkable lack of leadership on the issue of climate change. Australia and the USA have leaders in charge who, despite the mass of evidence, deny climate change. Canada and the EU talk a good game but are yet to make those hard choices that would have a real impact on carbon emissions (like taxing carbon). There is a gap which Africa could fill. With policies, like putting a tax on the carbon emissions content of imports. with actions and putting our money where our mouth is, such as investing in green energy instead of fossil fuels. And smart diplomacy – combining our voice on the global stage to help build consensus, shame others into action and forge constructive engagement with the issue of climate change. Not all global leadership issues require a big wallet, or a big gun, determination and concerted effort can make a difference. This is not just wishful thinking on my part, as the continent in line to bear the biggest impacts of climate change, utilising whatever influence we may have to get global action is effort well spent.

Climate opportunity

The 2018 winners of the Nobel prize for economics were Paul Romer and William Nordhaus. Both won for their work on economic growth over the long term and though they did not work together, the work they did does dovetail. Romer’s work looked at how innovation and new technologies come about, and he found that by investing in innovation (like funding research and development initiatives) you can boost economic growth in the wider economy. Nordhaus’ work looked at the connection between the economy and the environment and the impact of climate change on the economy and wider society. Their work comes together in a rather simple way, to combat climate change, to shift our societies and economies to low-carbon ones, will require innovation, new technologies and new policies. We need to invest in the knowledge and ideas that will combat and mitigate the effects of climate change.  Most importantly what Nordhaus and Romer’s work suggests is that by investing in knowledge and ideas and implementing them you can generate long-term growth. Thus, by combating climate change we could actually stimulate economic growth.

For Africa this is an opportunity to do the right thing for current and future generations, and to lay the foundation for the development that we have been chasing for the last half century. Climate change could be a disaster for Africa, or it could be the thing that forces us to pursue a path that leads to long-term, sustainable growth. It will require us to be innovative with our policies, to rethink our ideas of development and industrialisation and to invest in the ingenuity, knowledge and innovation of African’s from all walks of life. Climate change will be one of the defining issues of the 21st century and Africa faces a choice, we can be a victim, or we can take the initiative, take responsibility and make it the springboard to a sustainable successful future.

Genetically modified crops can work for Africa, but only if Africa owns it.

“Sixty per cent of the world’s arable land available today is in Africa. All efforts to feed the world — not just to feed Africa, but to feed the world — in the next decade or more are going to focus on Africa. Which means Africa has to do it right and have the scientific basis not to mess it up.” – Calestous Juma

Genetically Modified Organisms (GMO) are a topic that provokes spirited debate between its detractors and proponents. One side insists that GM crops offer a second green revolution to a continent with persistent food security problems, and governments and people should just get over their reservations and embrace them. The other side warns of dire ecological, economic, health and neo-colonial consequences if Africa allows its crops to come under the control of the corporate mono-culturalists for whom profit is their sole goal with the apparent concern around the health and well-being of Africans and their environment being PR at best.

This is not a black and white issue. Both sides have valid viewpoints. GM crops do have the potential to be highly beneficial to African farmers and enhance the food security and health of millions around the continent. However, the practices of the corporations that make, distribute and are lobbying for GM crops are disturbing. Furthermore, the concerns for people’s health and ecological sustainability should not be dismissed but addressed with data and testing.

Like the debate around GM crops, Africa does not face a black and white choice of refusal or submission GM crops and the companies that make them. Africa can chart a different path, with a policy that puts African farmers, food security and innovation at its heart. Africa can tap into the potential benefits of GM crops, driven by the needs of its farmers and innovations of scientists without having to give our agricultural future to the profit motives of foreign multinational Agri-corps. For that to happen, GM policy in Africa would have to be based around the ideals of public ownership, accountability and collaboration.

 

Potential and pitfalls

When dealing with the topic it is crucial that a proper definition of GMO’s be used. With that in mind I will use the WHO definition of “Organisms (i.e. plants, animals or microorganisms) in which the genetic material (DNA) has been altered in a way that does not occur naturally by mating and/or natural recombination… It allows selected individual genes to be transferred from one organism into another, also between nonrelated species.” [1]. People have been altering crops and animals for millennia, through techniques such as selective breeding. What makes GM different is that we are altering the blueprints of the organism, its DNA, to add or remove characteristics that we may like or dislike. This is a potentially powerful technology and it is unsurprising that it provokes such strong feelings.

The Potential – Higher, healthier yields with less inputs

By inserting desirable traits into the genes of plants, there are a number of advantageous properties that could be given to plants.

First are the yields farmers get, which genetic modification can significantly increase through several avenues. Plants can be modified to be resistant to bacterial, viral or fungal diseases as well as pests, reducing the number of crops farmers loose to these scourges. In addition, plants can be given genes that allow them to withstand environmental stresses. For instance, as rains become less consistent it would be a great benefit to have crops that can withstand periods of drought or heavy rains. With climate change causing shifting weather patterns resilient crops will be critical.

The second great benefit is health, and this come about in two forms. GM crops that can be made naturally resistant to pests and infections require less pesticide, herbicide, fungicide etc. This is healthy for the farmers who would handle less chemicals, healthier for consumers as less chemical use means less of these substances being ingested, and its better for the environment as there are fewer of these chemicals getting into the wider environment and having adverse effects (e.g. water run off into rivers and lakes that causes fish deaths and algal blooms). The second possible health benefit of GM is nutritional. Through genetic modification the nutritional value of the plant can be enhanced. An example of this is yellow rice which has been modified to produce Vitamin A in order to prevent Vitamin A deficiency in children which can cause blindness.

The third broad benefit is an offshoot of the other two. By modifying plants to require less pesticide, herbicide, fungicides and fertiliser, you reduce the inputs necessary for farming. In a continent where, expensive farm inputs such as fertiliser and pesticides are a constant burden for farmers, reducing the amount of inputs required while sustaining or improving yields would give farmers a leg up without having to resort to expensive subsidies or government programs as we do now.

The Pitfalls

However, GMO’s are not all rosy. First, is the reality that “life finds a way”. Try as we may eventually GM crops will mix with and reproduce with indigenous crops. What effect will this have on the farmers who have chosen not to grow GM crops, what characteristics will these crops have, and if the GM crops are patented will they be forced to pay royalties.

Which brings us to the second issue, and in my mind the most crucial. Corporate control. Currently GM crops are largely a corporate creation, patented and controlled by large agricultural biotech corporations whose prime motivation is profit and not the interests of African farmers and consumers. Companies like Monsanto develop crops to be compatible with their own herbicide so that you only get good yields when used in conjunction with their other products. In addition, such crops tend to have terminator seeds. The seeds produced by the plants are sterile and thus farmers must purchase new seeds every year guaranteeing the company a revenue stream. Furthermore, the patents that these corporations have on these crops blocks innovation, evolution and adaption forcing farmers into farming in a specific way.

The third question is one of safety. Do we know enough about GM crops and their impacts on the environment and human health to be confident enough to allow them into the market? Do we have the systems regulations and facilities to test these crops to ensure their safety?

GMO’s with an African (policy) flavour

The answer to the issues presented by GMO’s both their potential and pitfalls, is not to completely ban them or allow agro-chemical industry free reign in the continent. What is needed is good policy. Good policy on GMO’s in Africa would consist of three elements. The first is public ownership and accountability. A major problem with GM crops is their corporate nature. The only way to ensure that GMO’s would be beneficial to Africa is to strip the profit motive from their research, design, testing and regulation. And the only way to do that is public ownership. This brings us to the second element, accountability. There is a lot of mistrust around GMO’s, the motives behind them, their ecological and health impacts and their use. The only way to assuage these concerns is transparency. No for-profit corporation will be transparent about commercially sensitive information such as its own GMO’s, but public institutions can be transparent and can be designed to be so, by incorporating stakeholders and their concerns into their design and decision-making structures to ensure that those concerns are met. The third element is collaboration. If GMO’s are truly going to be beneficial to Africa it will require collaboration on two levels. First between stakeholders within the agricultural industry, research scientists, farmers, environmentalists, doctors, consumers will all need to come together to guide the development of GM crops for the African context. A context in which small farmers are the vast majority of farmers, where climate change and changing weather patterns are making farming harder and where growing populations require more agricultural productivity to feed them. The second level is internationally. No single African country has the ability to set up and sustainably fund institutions that can design, develop, test and disseminate GM crops over the long term. However, together they could do so. The ability to pool funding, expertise, and facilities only makes sense, especially as many African countries face similar agricultural challenges and most staple and commercial crops are grown across multiple countries.

African GMO’s

GMO’s need not be a threat to Africa, they could be an opportunity. However, in their current corporate dominated form they do pose a threat. They threaten to yoke African agriculture to the profit motives of multinational Agri-biotech companies, who are not accountable to the African public or governments.

As Calestous Juma urged, Africa must do agriculture right, and to do that we have to embrace and own the science. Since Fritz Haber and Carl Bosch invented the Haber-Bosch Process in the early 20th century that allowed the production of fertiliser on an industrial scale, to Norman Borlaug and short stalk wheat in the 60s and 70s that saved millions from famine, science in agriculture is how we have fed the world. If we are to feed and develop Africa we must embrace science as part of the solution, and GMO’s as part of that. Smart policy, that is public, transparent, accountable and collaborative, would help ensure that Africa owns its GMO’s and its own agricultural destiny.

[1] http://www.who.int/foodsafety/areas_work/food-technology/faq-genetically-modified-food/en/

Africa’s Development Begins with Agriculture

 

“It is time to change the way we think. Farmers are not the cause of Africa’s poverty; they are a potential solution. They are key to creating the future envisioned by the SDGs.” — Kofi Annan, former UN Secretary General

The development narrative in Africa is dominated by two key strategies. The first is massive infrastructure investment and development and the second is big top down policies broadly seeking to achieve the Sustainable Development Goal’s (SDG’s). Neither of these two strategies are inherently wrong, Africa needs infrastructure to ease and stimulate commerce, trade, industry and to make people’s lives easier. In addition, the SDG’s are laudable and the goals they seek to achieve would undoubtedly make millions of lives better. However, this approach has reinforced a problematic issue in Africa’s economic story, the failure to put agriculture first. Agriculture, in particular small holder farming was and remains the largest economic sector on the continent, thus its development or lack of has a significant impact on the development trajectory of the continent. The policies and strategies adopted by many African governments at independence (and that many governments still profess today) saw smallholder agriculture as secondary to industry and were in many cases hostile to small farmers. In doing so, the core of the African economy and its engine of development was undermined. In Asia the opposite approach was taken came agricultural transformation took place before industrialisation providing the foundation of the Asian miracle. In a previous post on reimagining industrialisation I urged that we start seeing agriculture as industry, which would not only need African countries to step back from the policies that have failed the continent for the last 50 years but enact a set of policies that would empower farmers, improve livelihoods and drive growth and development.

Why agriculture

The primary reason for focusing on agriculture is its importance on the continent. Today much as at independence, agriculture remains central to the African economy accounting for over 60 percent of jobs and a meagre quarter of the continent’s GDP. The poor performance of the sector is illustrated by the fact that 90 per cent of those living in poverty are engaged in farming,[1]. If nothing else agricultural transformation in Africa would not only benefit the most people but also those who most need help.

Agricultural transformation, which we can define as the process by which the sector evolves from being subsistence and farm focused to one that is more productive, commercialised and linked to the non-farm sectors of the economy at the core of economic development. First off increases in productivity also means GDP growth (remember that GDP is the measure of the value of everything produced within an economy). Secondly, as productivity increases so does farmer income, when most of the population is involved in agricultural production these income increases have multiple positive impacts on the wider economy. Increased income means rural populations have more cash to spend and they will most likely spend that income on more local goods and services. Increased demand for local goods and services, as Africa tries to kickstart manufacturing and other industries a local market to sustain those industries is crucial and farmers with increased incomes could provide that mass market. In addition increased agricultural income generates savings, savings are the basis of investment in an economy as it what banks use when they lend money to businesses. Third higher agricultural productivity has benefits for urban populations as well, increased productivity increases the supply of and brings down the price of food, thus bringing down the cost of living. Crucially, this pro-poor developmental stimulus performance of agriculture requires the participation of small farmers, small farmers dominate agriculture in many developing economies and it is their transformation from subsistence to market participation, productivity and income gains that are the precursor to development. This process was what happened in East Asia where the technology of the green revolution combined with supportive government policies and land reform kickstarted rural economic growth, stimulating demand for local non-farm goods and services and providing the basis for industrialisation

What happened to African agriculture?

The lack of transformation in the agricultural sector since independence has had significant impacts on development on the continent. Between 1960 and 2000 agricultural productivity grew at a paltry 0.6 per cent in sub-Saharan Africa compared to 3 percent in developing countries as a whole, this can be seen clearly in the graph below comparing African and Asian agricultural productivity.

So, what happened to African agriculture, in short bad policy. At the core of the African economy at independence and today is agriculture in particular the small-scale farmer. However rather than enacting policies that would have supported farmers, increasing productivity and its associated increases in spending and saving African governments sought to rapidly modernise their economies. In this vision of modernisation, the focus of the economy is industrial, manufacturing and urban. The policies that this view entailed placed a significant burden on the agricultural economy of African countries, where governments not only underpaid farmers for their produce, but sought to extract revenue to fund industrialisation as well as keep the cost of living down for people in urban areas who worked in those industries. The creation of state corporations whose mission was to industrialise African agriculture into large-scale commercial farming not only failed but became avenues for rent seeking and corruption. It was not long until farmers retreated from markets to subsistence farming and parallel markets. As African agriculture was pushed into crisis by bad policy, African economies lost their primary source of growth. Africa’s development failure is rooted in the failure of its agricultural sector whose origins are to be found in the agricultural policies pursued by African governments, thus overturning these policies should be the first step towards reversing that failure.

New policies for agricultural transformation

If past agricultural policy in Africa provides a handbook on what not to do, then what policies should African countries be looking at to make agriculture an engine of growth. These policies must be aimed at assisting farmers in increasing productivity and connecting them to markets so that the wider populace and economy can benefit.

  • Assisting farmers

At the core of agricultural transformation is the farmers who work the land and the first policy should be providing them with the assistance they need. Rather than telling them what to do or grow (as has been done in the past) farmer assistance should be aimed at providing farmers with the skills and tools. At the core of this would be extension services which consists of farmer support through education, support and advisory and these would include:

  • Education and advisory services on the science and technology of farming such as water and irrigation, soil types, what to consider when choosing a crop to plant, what to consider when acquiring fertiliser, certified seed and where to get it.
  • Sustainability strategies on how to maintain your soil, prevent erosion and depletion.
  • Making farmers aware of market opportunities and government programs and services which they can take advantage of.
  • Facilitating the organisation and cooperation of farmers so that they can share knowledge and skills with each other and possibly enable farmers to form cooperatives or commercial groups to gain more favourable trading terms.
  • Deploying agricultural extension officers to rural areas employed by the government who can provide ongoing advice and support to farmers.

Farmer assistance policy would be aimed building the capacities of farmers to take initiative and improve their farms how they see fit, building on the expertise provided through the training and education and the experiences of their fellow farmers. In short it is about enabling farmers to be better farmers rather than old policies which tried to dictate to farmers the right way to farm.

  • rural infrastructure

As mentioned earlier much of the continent is on an infrastructure building binge, however most of that infrastructure is big infrastructure such as powerplants, railways and highways meant to facilitate international trade and industry. However, the rural and agricultural economies also need infrastructure, namely roads and storage facilities. Rural roads will help connect farmers to a higher number of potential markets and cut transport costs for agricultural goods, which will help reduce the cost of food.

Storage is crucial, post-harvest losses (agricultural produce lost between the farm and its final destination) in Africa are significant. The Food and Agriculture Organisation of the UN estimates that “sub-Saharan Africa food losses of about 20 % for cereals, 40%-50% for tubers, fruits and vegetables, 27% for oilseeds, meat and milk, and 33% for fish, that has an expenditure evaluated at US$4 billion per year – enough to feed at least 48 million people, equivalent to the population of Angola, Zimbabwe, Swaziland, Namibia and Malawi all together.”[2] Proper, affordable and widely available storage is key to ending losses and preventing produce from rotting due to a lack of refrigeration or unsuitable storage conditions. Preventing post-harvest loss through the provision of adequate storage facilities is the simplest way to increase productivity and improve farmer incomes. Governments have multiple options available to do this such as building public storage facilities, or incentivising the private sector to invest in storage solutions

  • Embrace science and technology

In the early sixties India was on the brink of famine and in search of a solution. The ministry of agriculture invited a scientist Norman Borlaug who had been working on new high yielding strains of wheat and rice and they soon adopted new 2 “miracle” rice variety. By the 1990s rice yields per hectare had risen threefold and India had gone from near famine to one of the worlds major rice producers and exporters. This is the story of the green revolution, where new technologies and research in agricultural science were successfully transferred to practice boosting productivity particularly in Asia where like India, many countries faced the spectre of mass famine. In 1970 Norman Borlaug was awarded the Nobel Peace Prize for his work in helping to feed the world. Much like Asia in the 1960’s Africa must pursue and embrace agricultural science, with climate change and shifting weather patterns farmers around the continent are facing significant challenges. If productivity is to be maintained and improved for an ever-growing population farmers will need new tools particularly those that science can provide such as drought resistant higher yielding crops. For this to happen African governments have to put more money and effort behind the agricultural research institutes and agricultural departments in African universities to come up with the tools that African farmers can use. If African governments don’t do this someone else will and they will own the rights to those innovations, making African farmers more dependent on foreign companies. New seed varieties, and technologies funded by African governments can be sold to farmers and licensed to African companies at much lower financial cost and without the strings attached to global multinational corporations.

Agriculture as the foundation for development

If Africa’s growth failure lies in policy that marginalised agriculture, the implications of this should be clear to policy makers on a continent whose economies are still agriculturally based. If, as the World Bank puts it, Africa is to claim the 21st century[3] then African governments must realise that industrialisation is not achieved without agriculture but rather with agriculture at its centre. As East Asia’s did, Africa’s agriculture sector holds immense potential not just for growing produce but for value addition (processing and marketing of agricultural products) and stimulating the wider economy. Boosting productivity would boost incomes, savings and quality of life for most of the population and the multiplier effects could spark the very industrialisation that African leaders sought at independence and still seek today. Agriculture can drive Africa’s development, but only with the right policies, policies that place the Africa’s farmers at its centre.

[1] Africa Development Bank Group – p.11-12 https://www.afdb.org/fileadmin/uploads/afdb/Documents/Policy-Documents/Feed_Africa-Strategy-En.pdf

[2] http://www.fao.org/africa/news/detail-news/en/c/445333/

[3] http://siteresources.worldbank.org/INTAFRICA/Resources/complete.pdf