Grain, Fish, Money
Africa is a rich continent. Some of those riches – especially oil, gas and minerals – have driven rapid economic growth over the past decade. The ultimate measure of progress, however, is the wellbeing of people – and Africa’s recent growth has not done nearly as much as it should to reduce poverty and hunger, or improve health and education.
To sustain growth that improves the lives of all Africans, the continent needs an economic transformation that taps into Africa’s other riches: its fertile land, its extensive fisheries and forests, and the energy and ingenuity of its people. The Africa Progress Report 2014 describes what such a transformation would look like, and how Africa can get there.
Agriculture must be at the heart that transformation. Most Africans, including the vast majority of Africa’s poor, continue to live and work in rural areas, principally as smallholder farmers. In the absence of a flourishing agricultural sector, the majority of Africans will be cut adrift from the rising tide of prosperity.
To achieve such a transformation, Africa will need to overcome three major obstacles: a lack of access to formal financial services, the weakness of the continent’s infrastructure and the lack of funds for public investment. The Africa Progress Report 2014 describes how African governments and their international partners can cooperate to remove those obstacles – and enable all Africans to benefit from their continent’s extraordinary wealth.
Building on a decade of growth
Rapid economic growth in Sub-Saharan Africa over the past decade is worth celebrating. Growth has averaged 5 per cent a year or more, driven by domestic demand, foreign investment, strong commodity prices and improved economic governance. The ultimate measure of progress, however, is the wellbeing of people – and Africa’s current growth has not done nearly as much as it should to reduce poverty, hunger and child mortality, or to improve education.
This part of the report analyses why the benefits of growth are not being shared, and outlines the economic transformation that the continent needs to sustain long-term growth that improves the lives and prospects of all Africans.
Poverty is deeper in Africa than elsewhere: it takes more growth to lift the average poor person above the poverty threshold. High levels of initial inequality weaken the power of growth to reduce poverty. And much of Africa’s growth has been concentrated in sectors such as mining and petroleum that have little effect on rural areas, where the majority of Africa’s poor live.
Inclusive growth in agriculture holds the key to changing this picture, along with economic diversification, the spread of manufacturing and new technologies, and the development of a skilled workforce. Well-designed social welfare programmes can protect vulnerable households from shocks, support health and education, and contribute directly to growth.
Africa’s green and blue revolutions
If Africa is to achieve the transformative economic growth that it needs to reduce poverty, there is no alternative to the development of a vibrant and prosperous agricultural sector.
Smallholder farmers must play a vital role alongside medium-scale and large-scale farms. Both export and domestic markets can underpin agricultural prosperity. The policy challenge is to build dynamic links between the farm economy, the off-farm rural economy and markets in urban centres.
This part of the report looks at key conditions for success: boosting regional trade, linking farmers to markets, raising public spending, avoiding “land grabs” and helping farmers to cope with risk.
Africa’s US$35 billion market in food could be served by African farmers themselves, if they had access to the necessary infrastructure and financing – and to the markets in question. Governments need to cooperate to lower trade barriers created by transport cartels, poor storage and non-tariff measures. They also need to develop institutions that facilitate farmers’ participation in higher value-added markets, including export markets.
It is also crucial that governments keep their promises to increase public spending on agriculture, to meet the huge need for infrastructure and agricultural research. Farmers operating in high-risk environments – and who face increasing climate risk – need to have access to risk mitigation options such as insurance.
Fish and timber – the cost of mismanagement
Africa’s renewable fishery resources and forests are a potential source of wealth and opportunity. Governed wisely, they could support livelihoods, promote food security, generate export earnings and support vital ecological systems. Instead, Africa’s forestry and fishery resources are consolidating the power and personal fortunes of ruling elites, and enriching foreign traders.
As with oil and minerals, Africa has been integrated into global trading activities characterized by illegal and unethical practices. Governments have failed to develop accountable and transparent institutions, to share resource wealth equitably, and to publish the terms of mining and logging agreements – opening the door to corruption, opaque deals and large revenue losses.
At the same time, international cooperation on stopping the plunder of resource assets has been weak: countries have failed to coordinate legislative changes that would limit the extensive opportunities available for illegal practices. And authorities in Africa often lack the technological, financial and wider capabilities needed to manage forestry, fisheries and other resources, and to prevent tax evasion.
This part of the report sets out an agenda for managing Africa’s fisheries and forests better, including improving national and international monitoring and regulation, strengthening transparency, establishing a global register of fishing vessels, enforcing fishing zones and port measures, and improving international cooperation to stem illegal fishing and logging.
Building the bridges Africa needs: infrastructure and finance
If Africa is to make the transition from high growth to transformative growth described in this report, it must overcome three major obstacles.
The first is a lack of access to formal financial services. Two-thirds of adult Africans do not have a bank account, let alone access to savings, credit or insurance. The second obstacle is the weakness of Africa’s infrastructure: its poor roads and ports, its lack of electricity, sanitation and water. The third is the lack of funds for public investment. To close the region’s vast deficits in infrastructure, governments must mobilize the tax revenues and external finance needed to underpin public investment.
Overcoming these three deficits is a condition not just of rising prosperity but also of shared prosperity. Agriculture is the key to the kind of growth Africa needs, but no sector suffers more from financial exclusion, infrastructural weaknesses and lack of public investment.
This part of the report examines why Africa finds it so difficult to attract investment for infrastructure programmes that offer high returns, in a world awash with liquidity. It also shows that while external finance such as foreign direct investment and eurobonds can play an important supplementary role, no country can afford to neglect the development of domestic revenues and the accompanying social contract between governments and citizens.
While remittances play an important and increasing role in development financing, many of the benefits are lost because of high charges.
While each Sub-Saharan African country faces different challenges and opportunities, the Africa Progress Report 2014 identifies some broad principles that should guide the formulation of practical policies.
African governments must take action to spread the benefits of economic growth more equally, setting targets to reduce inequality. They should take steps to accelerate uniquely African green and blue revolutions, harnessing the power of agriculture and fisheries to drive the economic transformation the continent needs.
Governments must take every measure within their power to stop the plunder of natural resources and make sure resources are exploited on a sustainable basis for Africa’s development. Governments should invest in infrastructure and develop more inclusive financial systems, while developing policies and financing instruments that mobilize the full range of domestic and external resources to underpin inclusive and transformative growth.
This report lays out recommendations for the international community and the multilateral system, describing how they can support African efforts to reduce poverty, support sustainable resource management, and mobilize the resources needed to finance infrastructure investments on the scale required.
The private sector has a key role to play. Private corporations have everything to gain by acting as champions of transparency, supporting infrastructure development and helping African governments to create the conditions for inclusive growth.