Greening Africa: Public Expenditure for Agriculture Augustin K. FOSU UN University-WIDER and University of Ghana-Legon African Economic Conference (AEC)

Greening Africa: Public Expenditure for Agriculture

Augustin K. FOSU Augustin K. FOSU UN University-WIDERUN University-WIDER

and University of Ghana-Legonand University of Ghana-Legon

African Economic Conference (AEC)African Economic Conference (AEC)

Addis Ababa Addis Ababa

25-28 October 201125-28 October 2011

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OutlineOutline IntroductionIntroduction

Money matters for greening Africa: The CAADP 10 Money matters for greening Africa: The CAADP 10 % pledge% pledge

Trends in public expenditure on agriculture, by Trends in public expenditure on agriculture, by regionregion % of agricultural GDP % of agricultural GDP In 2000 int’l $In 2000 int’l $

Trends in public expenditure composition: SSA Trends in public expenditure composition: SSA and Africaand Africa

Expenditure share for agriculture by African Expenditure share for agriculture by African countrycountry

Determinants of the agriculture expenditure Determinants of the agriculture expenditure share: a review and some current results share: a review and some current results

Conclusion Conclusion

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IntroductionIntroduction

Money matters for greening Africa: Money matters for greening Africa: The CAADP 10 % pledgeThe CAADP 10 % pledge

Is the pledge being fulfilled?Is the pledge being fulfilled? Is the pledge likely to be fulfilled?Is the pledge likely to be fulfilled?

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Trends in public expenditure for Trends in public expenditure for agriculture (% agric GDP), by agriculture (% agric GDP), by

major global regionmajor global region

Source: Fan, S. et al (2009): ReSAKSS WP #28; original data from IMF Gov’t Fin. Stats.Yearbook (various issues)

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Trends in public expenditure for Trends in public expenditure for agriculture (% of agric. GDP), agriculture (% of agric. GDP),

SSA vs. NASSA vs. NA

Source: Fan. S. et al (2009): ReSAKSS WP #28; original data from IMF Gov’t Fin. Stats.Yearbook (various issues)

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Trends in public expenditure for Trends in public expenditure for agriculture, SSA & NA (2000 agriculture, SSA & NA (2000

international dollars, bils.)international dollars, bils.)


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Trends in public expenditure Trends in public expenditure composition (%): composition (%): SSA and AfricaSSA and Africa

Source: Fan, S. et al (2009): ReSAKSS WP #28; original data from IMF Gov’t Fin. Stats.Yearbook (various issues) Note: T & C = Transport and Communications

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Trends in agric’s public expenditure share Trends in agric’s public expenditure share (%): (%):

SSA and AfricaSSA and Africa


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% Agric pub. expend. share by African % Agric pub. expend. share by African countrycountry

Source: Fan, S. et al (2009): ReSAKSS WP #28; original data from IMF Gov’t Fin. Stats.Yearbook (various issues). Note: 2005 is latest year with near-complete data.

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% Agric pub. expend. share, ctry % Agric pub. expend. share, ctry orderingordering


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% change, agric pub. expend. share, % change, agric pub. expend. share, ctry orderingctry ordering


African countries meeting the African countries meeting the CAADP 10% target (source: see CAADP 10% target (source: see

above)above) Burkina Faso (20.4%, 2006)Burkina Faso (20.4%, 2006) Ethiopia (13.7%, 2005)Ethiopia (13.7%, 2005) Chad? (9.7%, 2004)Chad? (9.7%, 2004) Ghana (10.3%, 2008)Ghana (10.3%, 2008) Guinea (14.0%, 2004)Guinea (14.0%, 2004) Malawi (12.2%, 2007)Malawi (12.2%, 2007) Mali (11.0%, 2007)Mali (11.0%, 2007) Niger (15.1%, 2006)Niger (15.1%, 2006) Senegal (13.9%, 2008)Senegal (13.9%, 2008)

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Determinants of agric public Determinants of agric public expenditure share – Existing expenditure share – Existing

literatureliterature SAP decreased the agric expenditure SAP decreased the agric expenditure share share (Fan & Saurkar (?) and Fan & Rao (Fan & Saurkar (?) and Fan & Rao (2003); also above graphs show declines (2003); also above graphs show declines during 1980-2000) during 1980-2000) NoteNote: Agric spending increased in : Agric spending increased in real $real $ even even

during the SAP period (see above graph). during the SAP period (see above graph). Fosu (2010, AfDR) from AEC!: 1975-94 Fosu (2010, AfDR) from AEC!: 1975-94

samplesample PCGNP had a weak negative effect on the PCGNP had a weak negative effect on the

agric expenditure share, GEAGagric expenditure share, GEAG ODA’s effect was positive but insignificantODA’s effect was positive but insignificant Most importantly, XCONST had a strongly Most importantly, XCONST had a strongly

positive effect on GEAG positive effect on GEAG [email protected]

Determinants of agric public Determinants of agric public expenditure share – Current expenditure share – Current

regression results for 2003-08regression results for 2003-08 ODA has a positive effect on GEAGODA has a positive effect on GEAG The following variables have negative The following variables have negative

effects:effects: Debt service rate (DSR)Debt service rate (DSR) Rural population share (RURPOP)Rural population share (RURPOP) Per capita GDP (PCGDP)Per capita GDP (PCGDP) and very surprisingly XCONST (perhaps and very surprisingly XCONST (perhaps

due to strong executive branches being due to strong executive branches being better able to adjust the budget to meet the better able to adjust the budget to meet the requirements of the CAADP).requirements of the CAADP).

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ConclusionsConclusions Strong resurgence of public agricultural Strong resurgence of public agricultural

spending since 2000, perhaps due to CAADP, spending since 2000, perhaps due to CAADP, reversing the previous downward trend in the reversing the previous downward trend in the agric share, GEAGagric share, GEAG

Better governance represented by XCONST Better governance represented by XCONST favored relative agric spending in the past, while favored relative agric spending in the past, while the reverse seems to be the case currently the reverse seems to be the case currently following CAADPfollowing CAADP

Rising ODA and falling debt-service favor GEAG, Rising ODA and falling debt-service favor GEAG, but rising PCGDP and increasing XCONST tend but rising PCGDP and increasing XCONST tend to reduce GEAG for post-CAADPto reduce GEAG for post-CAADP

ConjectureConjecture: The 10% GEAG target may not be : The 10% GEAG target may not be achieved, as XCONST is likely to increase with achieved, as XCONST is likely to increase with improving governance, while PCGDP is likely to improving governance, while PCGDP is likely to rise, neither favoring GEAG (ODA and DSR rise, neither favoring GEAG (ODA and DSR unlikely to change much; indeed, ODA could fall unlikely to change much; indeed, ODA could fall and DSR rise!)and DSR rise!)

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Thank you!Thank you!

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Documents

Greening Africa: Public Expenditure for Agriculture Augustin K. FOSU UN University-WIDER and University of Ghana-Legon African Economic Conference (AEC)