1. IFPRI-Maputo Workshop
Maputo, Mozambique
18 October 2012
Public Investments
in and for Agriculture in Mozambique:
Tentative Insights to What They Have Achieved, and What
Determines Them
Tewodaj Mogues and Samuel Benin
International Food Policy Research Institute (IFPRI)
2. Impacts and Determinants of Public
Investments in Agriculture
Public
Determining Investments in Outcomes
factors and for
Agriculture
3. Impact of Public Investments in Agriculture
Public
Determining Investments in Outcomes
factors and for
Agriculture
4. Goal and Objectives of Study of Public
Investment Impacts
• Conceptualized initially:
• Assess impact of and returns to public investment in the agricultural
sector
• Estimate public investment required to achieve specific development
objective—e.g. 7% ag. GDP growth per year (recent goals)
• First objective is methodologically challenging; made even
more difficult by data constraints
• We use descriptive and trend analyses of available public spending and
TIA data to get a sense of likely influence
• Second objective depends on first objective and solid M&E
data
• Mozambique’s CAADP Investment Plan may face similar constraints
given the data scarcity
• We use parameters estimated for other countries to assess public
investment requirements
5. High overall agricultural performance
• Agricultural sector performance has been impressive.
Annual average growth rates b/w 2000 and 2011:
• AgGDP=8.4%; total public agricultural spending=12.2%; public
agricultural investment=13.2%
• Public spending and investment has, however, slowed down since
2005
Agricultural GDP and public spending Agricultural GDP and public spending
(billion Meticais, 2003 constant prices) (annual average growth rate, %)
60 5 40
AgGDP (left axis) 35
50 34.9
4
Expenditure (right axis) 30
40 25 27.2
Investment (right axis) 3
20
30
15
2
20 10 12.2 13.2
8.4 9.6
1 5 7.3
10 5.7 5.3
0
0 0 2000-11 2000-05 2005-10
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
AgGDP Expenditure Investment
Sources: Authors’ calculations based on MOF (CGE) and World Bank (agricultural PER 2011; WDI)
6. Is the high performance sustainable?
• Agricultural sector has performed beyond targeted growth rates
(CAADP 6% and PEDSA 7%); suggesting that continuing
business-as-usual may be desirable
• Key question: is the high performance sustainable?
̶ Indications are that it is not Total factor productivity and technical change
sustainable because: (Index, 1961=100)
it is starting from a 1.2
small base after the 1
civil war
there has been very 0.8
little or no technical 0.6
change
TFP growth is driven 0.4
by improvement in 0.2
efficiency of factor
use only 0
1961 1966 1971 1976 1981 1986 1991 1996 2001
TFP Efficiency Technical change
Source: Benin et al. (2011)
7. Land and labour productivity
have stagnated or declined
Sources: Cunguara and Kelly (2009)
8. Low use of ag. services and technologies
• Low and declining land and labor productivity are a reflection of low
use of productivity-enhancing agricultural services and technologies
• particularly for combined use of improved seeds, fertilizers and irrigation (less
than 2% of households)
• Except for irrigation, access to public services and use of technologies
have stagnated or declined
Access to services and use of technologies
(percent of households)
20%
15%
10%
5%
0%
2002
2003
2005
2006
2007
2008
2002
2003
2005
2006
2007
2008
2002
2003
2005
2006
2007
2008
2002
2003
2005
2006
2007
2008
2002
2003
2005
2006
2007
2008
2002
2003
2005
2006
2007
2008
2002
2003
2005
2006
2007
2008
2002
2003
2005
2006
2007
2008
Extension Improved seed Chemical Irrigation Improved seed Improved seed Fertilizers & Animal traction
fertilizers & fertilizers & & fertilzers irrigation
irrigation
Source: Authors’ calculations based on TIA data
9. Positive impact of services
and technologies (I)
• Greater access to public services and use of technologies
have contributed to higher productivity among
households using them, especially those using fertilizers
Maize productivity (kg per capita)
180
150 166.8
120
90 100.7 100.2
60 82.8 82.5 82.8
30
0
no yes no yes no yes
Received Used chemical Used animal
extension? fertilizers? traction?
Source: Cunguara and Kelly (2009)
10. Positive impact of services
and technologies (II)
• Greater access to public services and use of technologies
have also contributed to greater food security
Average number of months of surplus production of staple
10
8
6
4
2
0
no
yes
no
yes
no
yes
no
yes
no
yes
no
yes
no
yes
no
yes
no
yes
no
yes
no
yes
no
yes
no
yes
no
yes
no
yes
no
yes
2005 2006 2007 2008 2005 2006 2007 2008 2005 2006 2007 2008 2005 2006 2007 2008
Received extension? Used improved seed? Used chemical Irrigated fields?
Source: Authors’ calculations based on TIA data fertilizers?
However, the proportion of household farms using these
public services and technologies has remained too low over
time to bring about any technical change.
11. Policies and public spending
have promoted area expansion
Cultivated area
• The rapid growth in public 6.0 (in million ha)
spending (12.2% per year in 5.5
2000-2011) seem to have
5.0
promoted rapid expansion of
4.5
agricultural area.
4.0
• Between 2002 and 2007, total 2002 2003 2004 2005 2006 2007
cultivated area expanded by 5
Source: AgPER and TIA data
percent per year on average
• The slow down in area expansion in more recent years shows
that this type of agricultural growth may not be sustainable.
• Accelerating technical frontier is essential to compensate for
rapid growth in rural population and to improve rural incomes
12. Public investment required
for technical change (I)
• Because the current performance in growth has surpassed the
targets (CAADP 6% and PEDSA 7%), the critical issue is
changing the sources of growth as illustrated:
Illustration of desirable change in sources of
agricultural output growth (%), 2012-2017
9
6
3
0
2012 2013 2014 2015 2016 2017
(annual
average
Factors and Inputs
1993-2004) TFP-Technical change
TFP-Efficiency
Sources: Authors’ illustration based on World Bank (WDI) and Nin Pratt and Yu (2009)
13. Public investment required
for technical change (II)
• Approach and assumptions (based on Benin, Fan and
Johnson 2012)
• Overall agricultural growth remains unchanged at 2000-2011
average 8.4% per year
• Substitute growth due to factors of production (low rate=0.50 and
high rate=0.75 percentage points per year) with growth due to TFP
(allocate 1/3 to efficiency and 2/3 to technical change)
• Simulate using high (0.10) and low (0.05) scenarios for the
elasticity of TFP with respect to public investment in agriculture
• Other complementary expenditures (agricultural and non-
agricultural) or capacity of implementing agents expands
appropriately to absorb increased public investment
• Simulate over ten years: 2012 to 2022, with 2012 as base
14. Public investment required
for technical change (III)
• Public investment Public agricultural investment
30
must grow from requirement, 2012-2022
(Bil. Meticais, 2003 prices)
25
baseline rate of 13.2 %
Investment
per year to 18.2 and 20 Base
low conversion-low elasticity
28.2 % per year under 15 high conversion-low elasticity
low conversion-high elasticity
low and high 10 high conversion-high elasticity
investment scenarios,
5
respectively
0
2012
2014
2016
2018
2020
2022
Base High elasticity Low elasticity
(in billion Meticais; 2003 prices) low high low high
conv conv conv conv
Total amount 45.6 60.1 69.2 79.6 105.4
Additional amount (over base)
Total n.a. 14.5 23.5 34.0 59.8
Annual average n.a. 1.3 2.1 3.1 5.4
Sources: Authors’ simulation based on Benin et al. (2012), World Bank (WDI) and Mozambique CGE and AgPER
15. Conclusions from Preliminary Analysis
of Investment Outcomes
• Recent high agricultural growth performance in Mozambique
represents catching-up with the levels achieved in the early 1990s.
• The growth is driven largely by expansion in area cultivated, and to a
more limited extent use of fertilizers, and increased efficiency in use
of many inputs. There has been little or no technical change.
• The slowdown in area expansion and the rapid growth in rural
population necessitates technological change.
• This will require large incremental investment in agricultural R&D,
human capital, infrastructure, and institutional development.
• The types of agricultural investments and policies are important
because they are not growth neutral; those that deliver location-
differentiated technologies and that account for diversity of farmers
are likely to be critical.
17. Why Seek to Understand Determinants of
Agricultural Investments?
• Public investments in agriculture—as well as for
agriculture—can have profound contributions to
productivity, nutrition, reduction of poverty
• Much evidence on the impacts of different types of
investments in and for agriculture (Mogues et al. 2012)
• However, in some cases, strong research consensus on high
impact areas have not translated in higher investments on
the ground (and vice versa). Example: agricultural R&D.
• Must begin to ask why, by undertaking serious investigations
of what are the drivers of public investment decisionmaking
• Purpose of such investigation is to support policy‐ and
decisionmakers on how to encourage high‐impact
investments and scale back ineffective ones
19. I. The Budget Process as a Driver of
Agricultural Public Investments
20. Theories on Processes of
Budgetary Decisionmaking
• Formal procedures underlying the budget process
• ‘Garbage‐can budgeting model’: Allocations are random
(Cohen et al. 1972)
• Budgetary model of incrementalism: Inertia and path‐
dependency in investment decisionmaking (Davis 1971; Cowart et
al. 1975; Ostrom 1977) … or continuity / stability
• Budget implementation (vs. approved budgets)
• E.g. in Nigeria, on average 21 % of agricultural budget never spent
(Mogues et al. 2012)
• Sudden revenue short‐ (or wind)falls; use of funds for other
purposes; leakages; etc.
• Striking results from public expenditure tracking survey (e.g.
Uganda: 13 % of expenditures in education reached intended
services) (Reinikka & Svensson 2004)
24. Studies on the implications of the budget
process in Mozambique
• De jure vs. de facto planning & budget process—
both must be understood
• Correspondence between the agricultural budget
and the PAAO, given process of PAAO’s creation
• Change in nature of intergovernmental co‐
ordination in the budget process:
• Shift from weight on vertical co‐ordination between agricultural
offices at central, provincial and district level, to horizontal co‐
ordination between agricultural and finance/planning offices
• Trade‐off between national agricultural priorities and local priorities
across sectors
25. II. Actors, their Incentives and Constraints:
Consequences for Agricultural Investments
26. Theories on Role of Various Actors in
Public Investment Decisionmaking
• Policymaker as ‘benevolent and unencumbered’ social planner
(Tridimas 2001; Reddick 2002)
• Politicians vs bureaucrats (Niskanen 1971)
• Strength of economic groups to lobby for provision of public
investments benefiting them is larger when:
• more spatially concentrated dispersed agricultural households vs.
concentrated urban residents (Olson 1985)
• better transport and communications infrastructure urban vs rural
• Size of group small agricultural population much larger in many
developing countries, reverse in rich countries (Olson 1965)
• Average income and education of group member is higher low
among smallholder agricultural households (Binswanger & Deininger 1997;
Krueger 1996)
• Donors’ contribution to ag. investments:
• Direct vs. indirect; fungibility; etc.
27. Role of Actors in Ag. Investments:
Recent Studies on Mozambique
• Ag. industry and policymakers: Embeddedness
improves policy support (Buur and Whitfield, 2011)
• Diverse interests among the key actors with
proximity to policymaking (Buur, 2012)
• Inter‐party competition and agricultural investments
(do Rosario 2011)
• Role of Donors:
• Underestimation of the influence of domestic institutions vis‐à‐vis that
of donors (Buur et al. 2011)
• Donor influence on aggregate ag. investments: Limited due to partial
crowding‐out of domestic agricultural investments? (Cabral, 2009)
• Strong influence on composition of ag. expenditures (for institutional
strengthening vis‐à‐vis direct production support) (Cabral et al. 2007)
29. Characteristics of Public Investments and
their Influence on Resource Allocation
• Attributability of investments to conscious decisions
made by politicians (e.g. visibility, “markability”) (Keefer
& Khemani 2005)
• Temporal features of public investments
• Long lag perturbs attributability
• Lag of investments vs. political cycle
• Time may allow for “things to go wrong”—greater uncertainty
30. Characteristics of Public Investments:
Studies on Mozambique
• Heightened visibility of “promotional activities” as
opposed to “core services” (World Bank 2011)
• Attributability an important element in trade‐off b/w
projectised aid and sector budget support (Hodges &
Tibana, 2004)
• Lag between expenditures and outputs/outcomes:
Influence on irrigation investments (World Bank 2011)
• Lag of effects of investments in institutional
strengthening: Lessons from ProAgri I (Cabral et al. 2007)
32. CAADP Process in Mozambique
8. Stake-
1. Sensi- holder 9. Round-
Workshop 16. Execution
tisation table
June
2010
7. 10. Donor
2. Focal 15. Operatio-
Analytical Confe-
Point nal Design
Work rence
9. Dec.
13. Dec.
2011
2010
6. Stock- 11. 14. Business
3. Launch
taking Compact Meeting
Being
drafted as
we speak! 13.
5. Cabinet Technical
4. Com-
Memo 12. Invest- Review
mittees
ment Plan
33. Evidence on How CAADP Processes
Influence Agricultural Investments
• Very little research evidence on this to‐date for any
part of Africa!
• Partly because of recent nature of implementation, and only in some
countries have final stages been reached
• Three studies in other African countries give a mixed
review
• On Ghana: Already advanced policy process meant CAADP had little
added‐value (Kolavalli et al. 2010)
• On Kenya, Ghana, Uganda: Narrower breadth of participation than
initially anticipated (Zimmermann et al. 2009)
• On 15 countries: CAADP very relevant, but misperceptions about CAADP
led to deflated interest at national level (Ackello‐Ogutu et al. 2010)
34. How will CAADP Process in
Mozambique Influence Investments?
• Proposal to undertake rigorous study to support the CAADP
Process in Mozambique
• By providing information on which factors could help and which could be
a bottleneck in achieving intended investments
• Important to initiate this investigation at this early stage, as
baseline data are critical to being able to attribute evolution of
investment portfolio to CAADP
• Followed up by midline and endline data collection
• Qualitative research method appropriate to disentangle
complex pathways leading to investment choices
• although both qualitative and quantitative data needed)
• Draw on the most relevant theoretical frameworks regarding (i)
processes, (ii) actors, and (iii) characteristics of publicly provided
goods, as as the drivers of public investments
36. IFPRI-Maputo Workshop
Maputo, Mozambique
18 October 2012
Public Investments
in and for Agriculture in Mozambique:
Tentative Insights to What They Have Achieved, and
What Determines Them
Tewodaj Mogues and Samuel Benin
International Food Policy Research Institute (IFPRI)
37. Abbreviated Version of Selected References
• Ackello‐Ogutu et al. 2010. CAADP Review: Renewing the commitment to African agriculture.
• Benin et al. 2011. Annual Trends and Outlook Report, ReSAKSS.
• Benin et al. 2012. Estimating public agricultural spending requirements. In: Diao, Thurlow, Benin and Fan, 2012. Strategies and Priorities for African
Agriculture: Economywide Perspectives from Country Studies. IFPRI, Washington, DC.
• Buur. 2012. Mozambique Synthesis Analysis: Between Pockets of Efficiency and Elite Capture
• Buur and Whitfield. 2011. Engaging in productive sector development: Comparisons between Mozambique and Ghana.
• Buur et al. (2011): Strategic privatisation: rehabilitating the Mozambican sugar industry, Review of African Political Economy.
• Cabral. 2009. Sector Budget Support in Practice: Desk Study Agriculture Sector in Mozambique
• Cabral et al. 2007. Formulating and Implementing Sector‐wide Approaches in Agriculture and Rural Development
• Cunguara and Kelly (2009). The impact of PARPA II in promoting the agricultural sector in rural Mozambique, 2002‐2008.
• Hodges, T. and R. Tibana. 2004. Political Economy of the Budget in Mozambique.
• Keefer, P., and S. Khemani. 2005. “Democracy, Public Expenditures and the Poor: Understanding Political Incentives for Providing Public Services.”
World Bank Research Observer 20 (1): 1–27.
• Kolavalli et al. 2010. Do Comprehensive Africa Agriculture Development Program (CAADP) Processes Make a Difference to Country Commitments
to Develop Agriculture? The Case of Ghana. IFPRI Discussion Paper # 1006.
• Mogues. 2012. What Determines Public Expenditure Allocations? A Review of Theories and Implications for Agricultural Public Investments. IFPRI
Discussion Paper, forthcoming.
• Mogues et al. 2012a. “Agricultural Public Spending in Nigeria.” In: Public Expenditures for Agricultural and Rural Development in Africa, edited by T.
Mogues and S. Benin. London and New York: Routledge.
• Mogues et al. 2012b. The Impacts of Public Investments in and for Agriculture: Synthesis of the Existing Evidence and New Empirical Analysis. IFPRI
Discussion Paper. Washington, DC: International Food Policy Research Institute, forthcoming.
• Nin Pratt, A., and B. Yu. 2008. An Updated Look at the Recovery of Agricultural Productivity in Sub‐Saharan Africa. IFPRI Discussion Paper 787.
• do Rosario. 2011. From Negligence to Populism: An Analysis of Mozambique’s Agricultural Political Economy.
• World Bank. 2011. Report No. 59918‐MZ, Mozambique, Analysis of Public Expenditure in Agriculture, Volume I: Core Analysis.
• Zimmermann, et al. 2009. Agricultural Policies in Sub‐Saharan Africa: Understanding CAADP and APRM Policy Processes.
