ReSAKSS Regional Analysis on Agricultural Expenditures and Agricultural Policy Bias: West Africa_2009

ReSAKSS Regional Analysis on Agricultural Expenditures and

Agricultural Policy Bias:West Africa

Babatunde Omilola and Melissa LambertApril, 2009

Contents

• Reaching MDG1 in West Africa• Ghana

– Reaching MDG1 and overcoming inequality

• Niger• Benin

– Reaching MDG1

• Togo– Reaching MDG1

• Burkina Faso– Reaching MDG1

MDG1 in West Africa

• Despite recent strong signs of rapid economic growth in West Africa, the region is likely to have more poor people in 2015 than it did in 1990– the poverty rate declined marginally between 1990 and 2004, from 60

to 54 percent

• To achieve MDG1, the region will require a 5.2 percent annual reduction in poverty between now and 2015

• At current growth rates, West Africa would reach MDG1 after the year 2020

• If agriculture grew at 6.8 percent annually, the region would be able to halve the poverty rate by 2015, but not at the individual country level (except for Ghana)– This would require public annual agriculture expenditures to increase

from the current base of $6.6 billion (2004) to $8 billion by 2008 and reach $31.8 billion by 2015, a progression equivalent to an annual growth of 20 percent

Source: Johnson, et al. 2008. ReSAKSS Working Paper No. 22

Ghana the Success Story

• Agriculture accounts for 40 percent of GDP and three quarters of export earnings

• Employs 55 percent of the labor force• 10 percent of the government budget is spent on agriculture• Ghana has been achieving GDP and agricultural GDP growth rates

close to or exceeding 6 percent in recent years and is bound to become the first sub-Saharan African country to achieve MDG1

1990s 2000s Current Period

Indicator Proportion Proportion Proportion Year

National Poverty Rate (%) 52.0 37.3 25.6* 2008

1 Dollar a Day Poverty Rate (%) 51.1 39.1 27.0* 2008

Child Malnutrition Rate (%) 27.3 24.7 15.4* 2008

Undernourished Population (%) 37.0 15.0 7.0* 2008

Average GDP growth (%) 4.5 5.2 6.5 2008

Average Agriculture GDP growth (%) 2.9 3.2 8.4 2007

Agriculture Spending in National Spending (%) 4.1 2.4 10.3 2008

Agriculture GDP in Total GDP (%) 38.8 35.3 31.7 2007

Overcoming inequality in Ghana

• Many of the advantages of the high positive growth are accruing to urban and centrally located regions– These regions have benefited from higher prices for cocoa and other export

crops– Smallholders who grow staple food crops in the northern regions have been

left behind

• Poverty rates in the more remote northern regions range from 70 percent to 90 percent

• A more agriculturally focused, pro-poor investment strategy could help reverse this trend through: – Encouraging productivity growth in staple crops such as groundnut, cassava,

and cowpea– Staple-led growth, which is more pro-poor than export-led growth alone– Additional investments in infrastructure and institutions to encourage more

domestic and regional trade– Investments in research and extension to improve the potential of staple crops

in less productive areas

Source: Al-Hassan and Diao. 2007.

Niger• Niger’s economy is largely agrarian and serves as the main source of livelihood for

almost 90% of the country’s population• Poverty and hunger rates are high

– In 2008, an estimated 60.4% of the population lived below the international one dollar a day poverty rate

– This is a decline from the 1990 rate of 72.8%, but is insufficient to put the country on track towards achieving MDG1

– Approximately 46% of children under five years of age were estimated to be malnourished in 2008

– An estimated 26.3% of the population was undernourished in 2008



National Poverty Rate (%) 63.0 - -






Agriculture Spending in National Spending (%) - - 15.1 2006


Niger• The CAADP 6% agricultural growth target has not been recently met:

•In 2007, the annual agricultural growth rate was 1.8%•To achieve the CAADP 6% agricultural rate target, the government would need to nearly double current investments to the sector•To achieve MDG1, growth in the agriculture sector would need to surpass the CAADP target and reach an annual average rate of 10%

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ANNUAL AG GROWTH RATE (%) ANNUAL GDP GROWTH RATE (%) CAADP 6% TARGET

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Benin• Benin’s economy remains largely dependent on agriculture, particularly cotton

production• Agriculture is the source of livelihood for over 70% of the population and contributes a

large share of GDP• The sector remains largely underdeveloped, with most farmers producing on a

subsistence scale• Main food crops include manioc, yams, maize, sorghum, beans, and rice



National Poverty Rate (%) 26.5 29.0 31.0* 2008






Agriculture Spending in National Spending (%) - - 5.6 2008


Reaching MDG1 in Benin

• Despite impressive growth rates in the sector, the country is not on track towards achieving the first MDG

• Both national and international (dollar a day) poverty rates increased between the 1990s and 2000s, while hunger rates decreased only modestly

• Despite this, analysis by ReSAKSS shows that Benin can achieve MDG1 if agricultural growth accelerates– To do so, the agricultural sector would need to grow at an

annual rate of 7.6% under an optimistic scenario, or 8.5% under a conservative scenario

– These growth rates are feasible, as Benin has recently been able to achieve growth rates of above 7% in the past


Togo• Togo is primarily an agricultural country

– It contributes almost 35 percent to total GDP – It employs the majority (65 percent) of the population

• Overall and agricultural GDP growth rates have been relatively stable and positive since 1990– Since 2000, both rates have remained stable but at low levels, averaging 0.9

percent for agricultural GDP growth and 1.4 percent for overall GDP growth– In recent years, Togo has not been able to meet the CAADP 6 percent agricultural

growth target, but came close in 2008 with an annual agricultural growth rate of 5.2 percent



National Poverty Rate (%) 32.0 - -





Average Agricultural GDP growth (%) 3.8 0.9 5.2 2007

Agriculture Spending in National Spending (%) 3.5 1.7 8.0 2007


Reaching MDG1 in Togo

• Togo is not on track towards meeting MDG1– The proportion of malnourished children under the age of

five has increased since 1990 – Poverty was increasing throughout much of the 1990s. – Recent estimates from the UN show that the dollar a day

poverty rate dropped to 38.7 percent in 2006, down from 57.5 percent in 1990

– ReSAKSS analysis shows that Togo would have to surpass the CAADP 6 percent agricultural growth rate target reaching at least 9.1 percent in order to achieve MDG1 by 2015.

– Productivity growth in root crops has the potential to contribute more than one third to agricultural growth, thus making it a potential investment area


Burkina Faso

• Agriculture contributes about 31 percent to total GDP, employs over 80 percent of the population, and is the primary source of export revenues, mainly from cotton, groundnuts, and livestock

• In 2007, the sector grew at 3.6 percent, which is less than the average growth rate of both the 1990s and the early 2000s of 6.0 percent and 5.4 percent, respectively

• Agriculture in Burkina Faso is highly vulnerable to fluctuating world prices for cotton (Burkina Faso is the largest producer in West Africa), unfavorable weather patterns, poor soils, and inadequate infrastructure

• As a result, poverty and food insecurity are pervasive, particularly in rural areas– In 2008, an estimated 39.8 percent of the population lived under the

national poverty line, 44.7 percent on less than one dollar a day and 37.9 percent of children under five were malnourished

Reaching MDG1 in Burkina Faso

• Burkina Faso is one of the few countries in West Africa allocating 10 percent of the national budget to agriculture

• Yet agricultural growth rates have lagged behind the CAADP 6 percent target

• Even if 6 percent agricultural growth is achieved, the country will still slightly fall short of achieving MDG1

• Agricultural growth rates of at least 6.2 percent are necessary to halve poverty and hunger by 2015 in Burkina Faso

• Agricultural investments in Burkina Faso will need to target key staples such as millet, sorghum, and maize, in addition to livestock systems, that provide sustenance to the majority of the poor

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AGRICULTURE SPENDING AS A SHARE OF TOTAL SPENDINGAGRICULTURE SPENDING AS A SHARE OF AGRICULTURE GDPCAADP 10% TARGET

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ANNUAL AG GROWTH RATE (%) ANNUAL GDP GROWTH RATE (%)

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Technology

ReSAKSS Regional Analysis on Agricultural Expenditures and Agricultural Policy Bias: West Africa_2009