Week 4 What does the World Think about Africa. Objectives To discuss what the world think about Africa To discuss the Structural Adjustment programs.

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    25-Dec-2015

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  • Slide 1
  • Week 4 What does the World Think about Africa
  • Slide 2
  • Objectives To discuss what the world think about Africa To discuss the Structural Adjustment programs (SAPs) for Africa Discuss the issues of agricultural production in: Ethiopia Somalia Malawi Zimbabwe To gauge student views on Africa The purpose of this topic today is to analyze the view of what the world think about Africa.
  • Slide 3
  • Introduction Most people think Africa is land with lots of problems; Associated with political instabilities leading to bad governance and corrupt practices Wars Economic and social Developmental challenges poverty and hunger Low agricultural productivity Scourge of diseases, etc., But they forget: Flourishing business environment Investing in the people - education Mining, Oil Agriculture cocoa, tea, coffee, sugarcane tourism This lesson will look at the causes of Africas down fall
  • Slide 4
  • Overview of Food Production in Africa The eve of independence in the mid-fifties, 45 colonies and two independent nations(Ethiopia and Liberia) in SSA Political independence was launched on grand scale in 1960 About 17 colonies won their independence In 1995 all forty-seven nations in SSA were free of colonial rule In the 1960, Africa had a booming agricultural export sector
  • Slide 5
  • Overview of Food production in Africa(2) It was a modest net exporter of food These favorable initial conditions and the removal of colonial shackles made Most leaders of new nations to optimistic that Africa could catch-up with industrial nation by the turn of the century Today, in Africa, the atmosphere is filled with disappointment Africa is poorest part of the global economy Hostage to a chronic food bottlenecks
  • Slide 6
  • Overview of Food production in Africa(3) In the past 50 decades, much can be learned about the complexity and diversity of African Agriculture Motivation of farmers Weather patterns The use and misuse of foreign aid There literally thousands of evaluations of ill-fated agricultural strategies and projects including many imported models; State farm Communal farms Farm settlement
  • Slide 7
  • Overview of Food production in Africa(4) Bad weather and alleged lack of economic motivation of African farmers are not the causes of Africas food crisis. Studies have shown that when African farmers have access to Incentives Technology Support services Markets They have proven to be as calculating money managers as farmers in Iowa, Arkansas or the rice bowl of Asia (Jones 1960) Weather can be ruled out as a cause of Africas chronic food gap Because annual food production grew at only half the rate of population This proves that drought for a year or two was not the cause of long-term agricultural stagnation
  • Slide 8
  • Sixties - seventies Failure of state farms, farm settlements, communal farms and integrated rural development projects Attention turned to poor economic policies as the cause of poor agrarian stagnation World Bank study led by Elliot Berg argued that the fundamental cause of Africas economic stagnation was the following: Bad economic policies which includes Overvalued exchanged rates Heavy taxation Money losing state industries Internal factors Africas response to the report charged that external policies of industrial nation were the cause of the development crisis
  • Slide 9
  • The First SAPs: IMF and World Bank Rationale The Berg report provided rationale for IMF and World Bank loans and grants for African Countries To help African governments carryout Structural Adjustment Programs (SAPs) Aims were to: Redesigning country policies Reducing the size of government bureaucracies and subsidies to industries Correcting the bias against agriculture in price, tax and exchange rate policies
  • Slide 10
  • The First SAPs: IMF and World Bank Rationale(2) History has also shown that redesigning economic policies are long-term and unpredictable processes New policy regime are put in place, cannot quickly slay the dragons of economic stagnation and poverty Africas structural adjustment experience humbled the World Bank
  • Slide 11
  • Second Round of SAPs Broadened to include: Institutional reform Rebuilding of human capital Fiscal decentralization Broader participation of civil society in the economy Africas transition from a controlled to a more open and market-oriented approach to managing economies requires more investigation.
  • Slide 12
  • Today in Africa Food crisis is the most challenging problem Two-thirds of the people are dependent on agriculture and the rural economy for their livelihood Getting agriculture moving is high on main platforms Africans are looking inwards for ideas on increasing agricultural productivity
  • Slide 13
  • Mainstream news from Africa Todays mainstream news outlet focuses on the following: High level of inequality and poverty Dangerous levels of unemployment record droughts and flooding, rise in food prices, biofuel production and land grabs by foreign investors with an added emphasis on the role of the Somali terrorist group Al-Shabaab Political instabilities Policies that are backward oriented Yet these factors alone are not responsible for the famine or turmoil in Africa
  • Slide 14
  • Putting thing in Perspective The factors mentioned on the previous slide, intensified an already dire hunger crisis that has persisted in Sub-Saharan Africa for decades,persisted In Africa, lending policies pushed by the World Bank and International Monetary Fund (IMF) That transformed a self-sufficient, food-producing Africa into a continent dependent on imports and food aid, This has pinned the continent vulnerable to food emergencies and famine.
  • Slide 15
  • The Great Transformation The experience of Mexico and the Philippines was paralleled in one country after another subjected to the ministrations of the IMF and the WTO. A study of fourteen countries by the UN's Food and Agricultural Organization found that the levels of food imports in 1995-98 exceeded those in 1990-94. This was not surprising, since one of the main goals of the WTO's Agreement on Agriculture was to open up markets in developing countries so they could absorb surplus production in the North.
  • Slide 16
  • Great Transformation(2) In 1986, the then - Secretary John Block put it US Agriculture, "The idea that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on US agricultural products, which are available in most cases at lower cost."
  • Slide 17
  • Great Transformation..(3) The apostles of the free market and the defenders of dumping may seem to be at different ends of the spectrum, but the policies they advocate are bringing about the same result: a globalized capitalist industrial agriculture. Developing countries are being integrated into a system where export-oriented production of meat and grain, These are dominated by large industrial farms like those run by the multinational
  • Slide 18
  • Great Transformation..(4) Where technology is continually upgraded by advances in genetic engineering from firms like Monsanto. And the elimination of tariff and nontariff barriers is facilitating a global agricultural supermarket of elite and middle-class consumers Which are serviced by grain-trading corporations
  • Slide 19
  • Background on policy initiatives There is little room for the hundreds of millions of rural and urban poor in this integrated global market. They are confined to giant suburban, where they contend with food prices that are often much higher than the supermarket prices, or to rural reservations, where they are trapped in marginal agricultural activities and increasingly vulnerable to hunger. Indeed, within the same country, famine in the marginalized sector sometimes coexists with prosperity in the globalized sector
  • Slide 20
  • African Perspectives At the time of decolonization, in the 1960s, Africa was actually a net food exporter. Today the continent imports 25 percent of its food; Almost every country is a net importer. Hunger and famine have become recurrent phenomena, The past three years have seen food emergencies break out in The Horn of Africa, The Sahel, Southern and Central Africa.
  • Slide 21
  • Snapshot on Africa Agriculture in Africa is in deep crisis, The causes range from wars to bad governance, lack of agricultural technology and the spread of HIV/AIDS. However, as in Mexico and the Philippines, an important part of the explanation is The phasing out of government controls and support mechanisms under the IMF and World Bank -Structural Adjustment Programs (SAPs) imposed as the price for assistance in servicing external debt.
  • Slide 22
  • A scenario from Ethiopia Dr. Tewolde Behran, General Manager of the Environmental Protection Authority in Ethiopia, Explains that drought is not the cause of famine in Africa. Storage and transport are the two big problems. Two years ago in Ethiopia, when there was a surplus of food, Farmers could not sell their produce (locally or on the foreign market) and thus did not get the capital they needed for future crops.
  • Slide 23
  • A scenario from Ethiopia. One hundred kilos (2,2046 pounds) of maize would sell for as little as $4 and Saudi Arabia wanted to buy this cheap maize. However, by the time the maize got to the port its price would have tripled because transport costs are so high. It was marginally cheaper for Saudi Arabia to instead buy maize that came all the way from the U.S. The U.S. is underselling starving nations and the food shortages are actually exasperated by this practice.
  • Slide 24
  • A scenario from Ethiopia Instead of reducing the debt, since 1980, SAPs have increased African debt by 500 percent, creating a domino effect of disasters: prolonged famine, conflict, abject poverty, environmental exploitation) linked to an estimated 21 million deaths and, In the process, transferring hundreds of billion dollars to the West.
  • Slide 25
  • A case for Somalia The Globalization of Poverty, explains that despite frequent droughts, Somalias economy, The Globalization of Poverty Which is led by small-scale farmers and pastoralists or nomadic herdsmen, was self-sufficient in food well into the 1970s. The pastoralists proved quite successful as livestock produced 80 percent of Somalias export earnings through 1983. But under SAPs, veterinarian services for livestock were privatized, Making it difficult and unaffordable for herders in rural grazing areas to access animal healthcare, This led to ultimately devastating pastoralists who made up half of the population.
  • Slide 26
  • A case for Somalia As for agriculture, the cheap imports of rice and wheat displaced small farmers, and resources were diverted to grow export commodities. Exacerbating the problem, Water points and boreholes dried up due to lack of maintenance, or were privatized by local merchants and rich farmers, due to the privatization of water resources.
  • Slide 27
  • A case of Malawi The role of structural adjustment on Malawi in the late 1990s, when subsistence farmers were provided with starter packs of free fertilizers and seeds. The program yielded a surplus of maize But then the World Bank and IMF stepped in to dismantle the program and compelled the government to sell the majority of its grain reserves in order to service its debt.
  • Slide 28
  • A case of Zimbabwe Zimbabwes dualistic agricultural sectors has two subsectors: Large-scale commercial farming sector The smallholder sector Maize is the national food staple of Zimbabwe Smallholders have historically had the largest area of maize under cultivation Zimbabwe generated two maize revolutions The first was spearheaded by large-scale commercial farmers in the 1960s and 1970s The second was launched by smallholders after independence in 1980
  • Slide 29
  • Changing roles of the public and private sectors Experiences in the four mentioned countries (Ethiopia, Somalia, Malawi and Zimbabwe) illustrates that smallholders can fulfill their productivity potential if they are supported by Political leadership Macroeconomic stability Cost effective farmer support institutions A stream of new technology from home and abroad Access to domestic and international markets
  • Slide 30
  • Changing roles of the public and private sectors.(2) Develop legal framework and incentive that will encourage private investment in the entire food system, including R&D Farmer support organizations Production Marketing Processing Improvement in rural infrastructure telecommunications, roads and other infrastructural services in smallholder areas These should have economic, social, and political benefits in a long run.
  • Slide 31
  • SAPs and Famine in Africa What does this have to do with famine? Debt perpetual forces government to divert spending to debt repayments Rather than investing in basic infrastructure like health care, education SAPs initiated the collapse of African food security by; Diverting land, water and labor away from small-scale farming towards the production of cash crops Whose earning were used to pay debt These SAPs demanded the elimination of subsidies for small scale farmers Forced peasant farmers to compete with an influx of cheap subsidized commercial staples Meanwhile U.S and Europe continues to prove their agricultural sector with billions if dollars in subsidies.
  • Slide 32
  • In Summary Africa can rid itself from all the problems if proper policies are suggested and implemented. Africas structural adjustment (suggested by the WB) experience has humbled the World bank. The juxtaposition of the dream of the Berg report and the reality of Africas development experience in the 80s and 90s helps explain why the World bank recently declared that effective institution matter as much as sensible policies in development.
  • Slide 33
  • Top 5 Largest oil Reserves in Africa Proven Reserves of Oil (bbl)
  • Slide 34
  • Largest Economies in Africa Based on annual GDP
  • Slide 35
  • Reflection questions 1. What are your perceptions on Africa? 2. Which year/s was Africa a food exporter? 3. What does SAPs stands for? 4. Give two examples of SAP? 5. What does the SAPs have to do with famine? 6. Use the HDI Report to identify the top ten richest and top ten poorest countries in Africa. Use GNI as an indicator. 7. According to Dr. Tewolde Behran, what were the two major factors that caused famine in Ethiopia? Do you agree to this claim? 8. What are the major sectors of the Zimbabwean agriculture? 9. What was the problem caused by SAPs in Somalia? 10. How many countries produces oil in Africa? 11. Which countries produce cocoa and coffee in Africa? 12. Suggest any policies that can be helpful to increase agricultural productivity in smallholder farming?

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