1) The document discusses investments needed to meet key goals of the SADC Regional Indicative Strategic Development Plan (SADC-RISDP) and the Comprehensive Africa Agriculture Development Programme (CAADP) in Southern Africa by 2015. 2) It finds that current levels of public investment in agriculture in the region are low and not sufficient to achieve the goals. Agricultural spending averages only 2.4% of total public spending. 3) The document estimates that countries will need to increase agricultural spending by 20-30% annually based on returns to investments. Higher investments are needed in areas like infrastructure, extension, research, and inputs to boost agricultural productivity.

1. IFPRI
What Investments are needed to
reach the SADC-RISDP and
CAADP goals in Southern Africa?
Babatunde Omilola
The Southern Africa Regional Conference on Agriculture
Theme: Agriculture-led Development for Southern Africa: Strategic
Investment Priorities for Halving Hunger and Poverty by 2015
Grand Palm Hotel, Gaborone, Botswana
December 8-9, 2008
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE 5/6/2009

2. Introduction: Importance of knowing resource flows and
investments required to meet key SADC-RISDP and CAADP Goals
 African governments and their development
partners need to know:
» how to sufficiently invest their available resources in key
productive sectors such as agriculture, education, health,
transport, communications, energy, etc to achieve desired
goals
» How and under what conditions should resources be
allocated in order to have maximum impact
» In agriculture, that is closely related to key RISDP and
CAADP Goals: which types of sub-sectors of agriculture
should investments target (e.g., research, extension,
subsidies, credit, infrastructure such as irrigation, feeder
roads, etc)
Page 2
IFPRI

3. Introduction-Contd.
 Impact projections of agricultural growth, food security
and poverty reduction should be based on strategic analysis
regarding investment expenditures and priorities to answer
the following:
» Could greater or better distributed outcomes and impacts be
obtained by reconfiguring investment portfolios?
» What are the different types of investments that can lead to greater
and more sustainable growth as well as greater and better distributed
outcomes and impacts?
» Based on these, what new targets must be set and the levels of
investments?
» Which types of sub-sectors of agriculture should investments target?
IFPRI

4. Outline of Presentation
IFPRI Part 1 1. Key SADC-RISDP and
CAADP Goals
2. Recent Trends of Public
Part 2 Investments in Agriculture in
the SADC region
Part 3 3. Investment Requirements for
Achieving key SADC-RISDP
and CAADP Goals
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

5. IFPRI
Part 1
Key SADC-RISDP and
CAADP Goals
CAADP-RISDP, CAADP and MDG 1 have key shared goals and
targets for addressing poverty, food insecurity and hunger issues
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

6. Key SADC-RISDP Goals
 Achieving a GDP growth of at least 7% a year and halve the proportion
of the population living on less than US$1 per day between 1990 and
2015.
 Doubling cropland under irrigation from 3.5% to 7% as a percentage
of the total by 2015.
 Increasing fertilizer consumption from 44.6 kilograms per hectare
((kg/ha) of arable land to 65 kg/ha of arable land by 2015 (world
average is 98.8 kg/ha).
 Increasing cereal yield in kg/ha hectare from an average of 1,392 to
2,000 (world average) by 2015
 Doubling the adoption rate of proven technologies such as improved
seed varieties, management of water and land by 2015
 Increasing the daily per capita dietary energy and protein intake from
2,160 kilocalories (kcal) to 2,700 kcal and 49g to 68g respectively by
2015.
 Halving the proportion of people who suffer from hunger by 2015.
IFPRI

7. Key CAADP Goals and Principles
» CAADP has revived interest in African agriculture
» Strategic framework for agriculture-led growth to
attain MDG 1
» Dedication of at least 10 percent of public
expenditure of each African country to agriculture
and rural development by 2008
» Attainment of an average annual growth rate of 6
percent in agriculture.
» Four main pillars to guide public investments
IFPRI

8. Linkage of Public Investment to the key SADC-RISDP
and CAADP Goal of Poverty Reduction
Total Government Spending
Finance
-Political
-Economic
-Governance Allocation: Education/Health, Infrastructure/technology, Targeted Programs
Efficacy
-Governance
Spending Outcome: Education/Health, Infrastructure, Technology
Non-farm Production Agricultural Production
Wages Nonfarm Employment/migration Targeted Programs
Food Prices
Other Exogenous Variables
-Population Growth
-Agroecological Conditions
-Urban Growth
-Macro and Trade Policies
-Asset (Land) Distribution
Poverty
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IFPRI

9. Part 2
Recent Trends of Public
Investments in Agriculture in
Southern Africa
IFPRI

10. Current Status of Achieving key Goal of
Poverty Reduction
IFPRI

11. Average Annual Change in Poverty Rates in
Southern Africa
IFPRI

12. Current Level of Public Investment in Agriculture
in Southern Africa
IFPRI

13. Agricultural Spending in LDCs
Agriculture Agriculture as a
Expenditure, 2000 share of Total Agriculture as a
international dollars, Expenditure, % share of AgGDP, %
1994 1998 2004 1994 1998 2004 1994 1998 2004
West Africa 1.5 1.7 3.2 3.0 2.9 3.4 2.1 1.8 3.1
Southern Africa 4.2 4.8 4.9 2.7 2.6 2.4 14.3 13.9 15.1
SSA 7.4 7.6 10.1 3.2 2.8 2.9 5.5 4.7 5.7
Africa 12.7 13.2 17.5 3.7 3.5 3.7 6.9 6.0 7.2
Asia 122.38 141.61 220.6 10.1 7.72 5.53 8.43 8.14 10.8
LAC 19.19 17.68 23.7 3.41 3.25 2.82 11.02 9.72 11.8
IFPRI

14. Public Spending for Agriculture in Africa
IFPRI

15. Share of Agricultural ODA in Total ODA to SSA
Share of Agricultural ODA in Total ODA, All Donors
(1980-2005)
30
Percent (%)
25
20
15
10
5
0
1980 1985 1990 1995 2000 2005
Source: OECD database, 2007
IFPRI

16. Share of ODA spending in total
agricultural spending
Aid Dependency: ODA Spending as % of Total Spending for Ag
Nigeria
Zimbabwe
Cote d'Ivoire
Burkina Faso
Kenya
Benin
Zambia
Ethiopia
Madagascar
Cameroon
Burundi
Gambia, The
Mali
Malawi
Guinea-Bissau
Senegal
Chad
Guinea
Ghana
Tanzania
Uganda
Rwanda
Mozambique
Niger
0% 20% 40% 60% 80% 100%
Source: OECD database and IFPRI public expenditures database (work in progress)
IFPRI

17. Composition of Agricultural Spending:
The Case of Zambia
Example of Zambia’s 2005 Budget
Infrastructure
2%
Irrigation Development
3% Personnel Emoluments
Food Security Pack & 20%
EDRP
12%
Food Reserve Agency
Operational funds
Maize Marketing
11%
15%
Fertilizer Support Program
37%
Source: ReSAKSS-SA, MACO (Zambia), MSU (Zambia)
IFPRI

18. Part 3
Investment Requirements
for Achieving key SADC-
RISDP and CAADP Goals
Evidence based on agricultural growth-poverty and growth-expenditure elasticities to
estimate investments required
IFPRI

19. Returns to Investments in Sub-
Saharan Africa
Elasticity (% change Marginal returns
in TFP per 1% (% change in TFP per 1
change in spending) billion US$ increase in
spending)
Agriculture 0.0152 9.0
Transport and 0.0094 6.0
communication
Page 19
Benin, Nin-Pratt and Radriamamonjy, 2007
IFPRI

20. Agricultural Growth and Investment Requirements for
Achieving Key SADC-RISDP and CAADP Goals in Africa
Elasticity (% change Marginal returns
in TFP per 1% (% change in TFP per 1
change in spending) billion US$ increase in
spending)
Agriculture 0.0152 9.0
Transport and 0.0094 6.0
communication
Page 20
Source: Fan et al., 2008
IFPRI

21. Concluding Remarks
 Higher level of investments in long-term impact areas such as
infrastructure (roads and transportation), extension, agricultural R&D,
market information systems, postharvest handling facilities and
agricultural inputs
 Most countries need to increase agricultural spending by 20-30 percent
per year
 Required investments should be based on past progress in achieving key
SADC-RISDP and CAADP Goals and the role of agriculture in the
overall economy
 Increasing investment in agriculture is not enough, how increased
investments in agriculture is allocated to different subsectors is very
crucial. Hence, better systems for tracking investments are critical
IFPRI

22. Concluding Remarks
 Although overall ODA spending on African agriculture has risen, most
of it are allocated to emergency humanitarian aid
 The agricultural sector is under-funded, and is lagging far behind its
Asian and Latin American counterparts
 Sequencing and targeting of available investments and donor
coordination are critical, and enabling institutional environment is
important
 Although evidence indicate that investments in agricultural research and
extension, rural infrastructure and rural education have the greatest
impact on achieving key RISDP and CAADP Goals, investment
prioritization should be based on the particular context of each country.
This is because there is no common definition of agricultural spending.
IFPRI

23. Thank You
IFPRI