Encouraging Inclusive Growth

Africa saw strong economic growth between 2001 and 2010, averaging 5.3 percent, but that growth has often not reached poor rural populations. As the sector that supports the livelihoods of 90 percent of Africa’s population and employs 70 percent of the region’s poorest communities, agriculture stands to play an enormous role in increasing sustainable, inclusive economic growth on the continent. According to a 2014 report from the African Development Bank Group, however, agriculture’s contribution to Africa’s growth and development has been hindered due to a multiplicity of factors, including: a widening technology divide, weak infrastructure, declining technical capacity, weak input and output markets, a lack of regional integration, land access and rights issues, limited access to affordable credit, governance issues and conflicts, climate change, and continuing epidemics of HIV/AIDS and other diseases.

Emphasizing the need to transform Africa’s smallholder population into more market-oriented actors, the report focuses on three inclusive growth components: agricultural productivity, rural employment, and welfare distribution/risk mitigation. Improving these three areas will involve six key drivers:

  1. Finance, investment, and regional integration;
  2. Agro-Industry;
  3. Agricultural research and development (R&D) and technology;
  4. Effective institutions;
  5. Social inclusion, food security, and climate change adaptation;
  6. Land rights and access

The report suggests that governments and donors should focus on encouraging more private sector investment in agricultural and rural areas. This will require governments to work to improve the private sector investment climate and reduce the cost of doing business for agricultural and agro-industry actors; in addition, both commercial and rural banks will need to develop innovative products, such as weather-based index insurance, to finance and protect agricultural value chains. Efforts to increase and improve integrated regional infrastructure will need to extend into the long term in order to reduce transport costs and stimulate intra-regional and global trade. One major priority will be the so-called “invisible middle” of rural-urban traders; these actors are key in driving food markets and input supplies but often receive little support from government policies.

Promoting and improving agricultural value chains will also be key to stimulating inclusive growth. Value chains need to include all actors throughout the agro-industry; this can be done by engaging with various private industries, taking steps to share risk along the value chain, and improve the availability and timeliness of market price information, particularly for farmers and traders in rural areas.

Adoption rates for new agricultural technologies remain low in Africa, and new technologies often do not even reach the farmers who would use them. This low diffusion and adoption is due to several factors, including inadequate funding, limited land rights and access, poor infrastructure, and the high cost of technology adoption. In addition, Africa south of the Sahara has the lowest share of private agricultural R&D investment in the world – 1.7 percent of overall public spending. To both stimulate R&D and lower the costs associated with it, future programs should focus on innovative and collaborative efforts that combine local and traditional knowledge with new research; in addition, research must take a more cost-effective, area-specific approach to tailor affordable efforts to the needs of specific populations. Existing ICT products, such as televisions, cell phones, and Internet connections, can be utilized to disseminate new technologies, reduce people’s hesitation to learn or utilize new technologies, and share lessons learned.

Farmers’ organizations and community associations need to be scaled up and included in district- and regional-level groups in order to impact agricultural productivity, rural employment, and inclusive land distribution. This will require capacity-strengthening support from governments and donors to help smallholders transition to commercial actors and manage the risks involved in becoming integrated into regional agricultural value chains.

Social protection and food security programs need to target the most vulnerable populations and should take a country-level approach to meet each country’s specific needs. Such programs could include the promotion of affordable drought-resistant crops, the use of crop insurance products to mitigate farmers’ risk, and the use of food and cash transfers to support populations in time of crisis. In addition, the promotion of women’s empowerment and climate-resilient agricultural techniques will be crucial in ensuring adequate food supplies and more inclusive societies.

Finally, land rights and access to land continue to be a challenge in many African countries. Ensuring more equitable rights will require governments to enact and enforce land registration laws, address customary rights issues in any government development strategy, and ensure that any future policies and reforms confer full political, social, economic and environmental rights to smallholder farmers, including women. Improving land rights and access will take strong political commitment, as well as transparent governance practices and strengthened administrative capacities.

Underpinning all of these is the need to encourage sustainable, or “green,” growth in order to prevent environmental degradation and loss of Africa’s crucial natural resources. The authors cite efforts to “re-green the Sahel” as one example of successful green growth. The governments of Burkina Faso and Niger, with help from various international organizations, have utilized both traditional practices and experimentation by small farmers to help transform the region into a more productive agricultural landscape. These programs included such actions as protecting trees, digging pits to concentrate manure, and terracing hilly landscapes to control rainfall and run-off to combat erosion.

The report concludes that while this list of key drivers of inclusive growth is extensive, all of these factors must be looked at together in order to encourage truly inclusive growth; this holistic approach will help governments and donors work with farmers and traders to increase farm productivity, reduce risk, and rebuild and protect environmental resources.

By: Sara Gustafson, IFPRI