Memorandum submitted by Harvesthelp, Farm Africa and Send a CowGovernments' and DFID's Support to Agriculture in Africa
Review of Progress Made TowardsFulfilling the Commitments
Executive Summary
1. Agriculture remains key to poverty reduction and achieving the poverty targets of the Millennium Development Goals (MDGs) in Africa. More than 75% of the populations in sub-Saharan African countries live in rural areas and directly depend on agriculture for their livelihoods. African countries, agreed through the New Partnership for Africa's Development (NEPAD), the continental development plan, to prioritize agriculture as extremely important for the continents development and poverty reduction. To realise this, several African governments committed themselves to allocating at least 10 percent of their national budgets to agriculture within five years. This was agreed at the African Union meeting held in Maputo in 2003.
2. The African government's also agreed on the need for Africa's external partners to allocate more of their assistance to the CAADP's four priorities. DFID being one of the largest bilateral donor to most sub-Sahara African countries recognises the important role of agriculture in growth and poverty reduction for the continent in its policy paper of 2005: Growth and poverty reduction: the role of agriculture and committed itself to support the sector.
3. This paper presents findings from the review of commitments and progress made by sub-sahara African government's and donors, particularly the Department for International Development (DFID) in supporting agriculture to achieve economic growth and poverty reduction in Africa. The review focused on seven countries namely Ethiopia, Kenya, Malawi, Rwanda, Tanzania, Uganda and Zambia. This review was jointly undertaken by Harvest help, Farm Africa, and Send A Cow, which are all UK based Charities supporting sustainable livelihoods in Africa.
The following were the conclusions made from the review: a) Despite agriculture being prioritised by most African countries as an engine for economic growth and poverty reduction in their various national pro-poor policies and strategies, it does not receive the levels of funding commensurate to its level of priority. There has not been a significant movement towards achieving the 10 percent target over the past three years as most countries have maintained fairly similar percentages (between 3 to 5 percent) since the Maputo Declaration in 2003.
b) Expenditures of most Ministries of Agriculture are directed towards financing administrative costs (staff salaries & emoluments), institutional support and subsidies at the expense of agriculture activities such as research, extension and marketing, which have high investment returns and are more sustainable.
c) DFID funding for agriculture and rural livelihoods is mainly channeled through Poverty Reduction Budget Support (PRBS), which allows governments in line with their national plans to determine how to best tackle poverty. This is with exception of Ethiopia, which had its PRBS suspended in 2005.
d) Overall DFID's support to agriculture and livelihoods in Africa has been steadily declining over the last five years. Furthermore, the level of financial support to the sector has been very low compared to other sectors such as education and health. This clearly shows that DFID has not been fully committed to supporting agriculture, which it recognised in its policy paper (2005) as key in economic growth and poverty reduction in Africa.
e) Although DFID recognises agriculture as important for growth and poverty reduction in Africa, it is not highly emphasised in the its Country Assistance Plans (CAPs) for most countries as compared to education, health, governance and public sector management.
4. Based on the conclusions above, FARM-Africa, send a Cow and Harvest Help call on the UK Government, through DFID, to consider the following actions:
a) DFID should ensure that bi-lateral agreements with the countries under consideration compels their government's to commit at least 10% of national budget to agriculture in accordance with the Maputo Declaration of 2003
b) DFID and other cooperating partners should ensure that future investment in agriculture in these countries is directed towards areas with high returns and greater sustainability than the current form of investment
c) Based on the lessons from Tanzania, DFID could continue supporting Agriculture through PRBS but should go a step further to clearly define or earmark support to agriculture as in the case of the education and health sectors.
d) In order to accelerate economic growth and poverty reduction in Africa, DFID should increase its support to agriculture and rural livelihoods from the current level of less than 2% to at least 10% of total aid
e) DFID should highly emphasise the agriculture sector in its CAP as a key sector in economic growth and poverty reduction in Africa in line with its policy paper of 2005: Growth and poverty reduction: the role of agriculture. Introduction
5. Agriculture remains key to poverty reduction and achieving the poverty targets of the Millennium Development Goals (MDGs) in Africa. More than 75% of the populations in sub-Saharan African countries live in rural areas and directly depend on agriculture for their livelihoods. Agriculture also contributes a significant share to the countries GNI in form of tax and foreign exchange. Therefore, agriculture is an important economic engine for most African economies.
6. Many problems facing Africa today are due to decreasing investment by donor and African governments in agriculture over the last 20 years[1]. According to 'id21 insights' the Organisation for Economic Co-operation and Development estimates that global financial assistance for African agriculture decreased from US$6.2 billion to US$2.3 billion between 1980 and 2002, with funding going to other sectors instead. The main reason for this downward trend in the support to agriculture was mainly because donors and governments felt that agriculture had failed to achieve sufficient progress towards food security.
7. However, most African governments including donor agencies recognize agriculture as an important engine to poverty reduction and the achievement of MDGs on poverty. This paper therefore, reviews various commitments and progress made by sub-sahara African government's and donors, particularly the Department for International Development (DFID) in supporting agriculture to achieve economic growth and poverty reduction in Africa. The focus of this review is mainly on governments' and DFID's spending on agriculture in seven African countries namely Ethiopia, Kenya, Malawi, Rwanda, Tanzania, Uganda and Zambia. This review would be used to provide input into a briefing paper that will be used by an MP to ask a question in the house about DFID's success in implementing its agricultural strategy.
Government's Commitments to Agriculture
8. Most sub-sahara African countries, agreed through the New Partnership for Africa's Development (NEPAD), the continental development plan, to prioritize agriculture as extremely important for the continents development and poverty reduction. This was based on the premise that Africa is largely a rural continent and that the agriculture sector accounts for about 60 percent of the total labour force, 20 percent of total merchandise exports and 17 percent of GDP. The Comprehensive Africa Agriculture Development Programme (CAADP) under NEPAD aims to address Africa's agricultural needs through the following four pillars of development:
- Extending the area under sustainable land management and reliable water control systems, for example by increasing access to irrigation; - Increasing market access through improved rural infrastructure and other trade-related interventions; - Increasing food supply and reducing hunger across the region by increasing smallholder farm productivity and improving responses to food emergency crises; - Improving agricultural research and systems of dissemination
9. To realise this, several African governments committed themselves to allocating at least 10 percent of their national budgets to agriculture within five years. This was agreed at the African Union meeting in Maputo in 2003. Furthermore, various government's have developed broad national polices and strategies for poverty reduction in which they have prioritized agriculture.
10. The African government's also agreed on the need for Africa's external partners to allocate more of their assistance to the CAADP's four priorities. DFID being one of the largest bilateral donor to most sub-Sahara African countries recognises the important role of agriculture in growth and poverty reduction for the continent.
DFID's Commitments to Agriculture
11. DFID, in its policy paper of 2005: Growth and poverty reduction: the role of agriculture, emphasises that Agriculture is a key part of its contribution to reduce global poverty and achieve MDGs. The policy also highlights DFID's commitment to improving agriculture performance particularly in Africa through the following actions:
i. Creating a supportive policy framework ii. Better focusing public spending in agriculture a. Help build capacity of and accountability of governments to direct public spending especially where it will have greatest impact on agriculture growth and poverty reduction. This may include spending on ministries other than agriculture. b. Where appropriate, encourage governments to allocate resources to rural infrastructure - particularly roads - and support efforts to involve the private sector in funding infrastructure iii. Making markets work better iv. Meeting the agriculture finance gap v. Realising the benefits of agricultural science and technology vi. Improving people's access to land and water vii. Making social protection complementary to agricultural growth viii. Making international agriculture trade benefit the poor
Progress made towards fulfilling the Commitments
12. The matrix in annex 1 provides a summary review of governments' and DFID's support to the seven African countries according to the following issues: - The percentage of national budgets spent on agriculture over the last five years; - How each country allocated its agricultural budget over the last five years; - How many countries receive Direct Budget Support (DBS) from the UK government; - DFID's spending on the agricultural sector over the last five years; and - Understanding of the prominence that DFID gives agriculture in its Country Assistance Plans;
13. Findings indicated in the matrix (Annex 1) clearly show that most countries were far below the 10 percent target of their national budgets going to agriculture in the period 2000 - 2005. Almost all the countries' budgets to agriculture between this period ranged between 3 to 5 percent of national budgets. The data in the matrix also shows that there has not been a significant movement towards the 10 percent target over the past three years as most countries have maintained fairly similar percentages since the Maputo Declaration. This is with exception of Malawi and Ethiopia, which allocated about 12.2% and 16% to agriculture in 2005/06 and 2004/05, respectively. However, it is worthy noting that allocations in most cases are higher than actual expenditures.
14. Furthermore, expenditures of most Ministries of Agriculture are directed towards financing administrative costs (staff salaries & emoluments), institutional support and subsidies at the expense of agriculture activities such as research, extension and marketing, which have high investment returns and are more sustainable. For example, Zambia, had more resources (74%) financing the Fertilizer Support Programme in the 2006 budget. According to DFID 2004, about 75% of public spending in agriculture in Kenya is absorbed by parastatals, to perform functions which have been designated by the Govenment as "non-core" functions. In addition, extension consumes most of the budget in form of salaries amounting to US $50 Million per annum to staff who have no operating funds. However, the pattern of expenditure is different with Tanzania, which spent more than 37 % of its total budget in 2002/03 to finance research & extension and 9 percent as institutional support.
15. This review also indicates that DFID has been committed to supporting agriculture and livelihoods to many African countries mainly in areas of policy formulation and implementation e.g. Agriculture, land and forestry policies including natural resources development and food security (see Annex 2). Others include support for renewable rural service-delivery and financial management and HIV/AIDS as a cross cutting issue. This support has been channelled mainly through Poverty Reduction Budget Support (PRBS). However, PRBS to Ethiopia was suspended in 2005. In some countries, PRBS represents up to 70% of DFID's bilateral programme. In future DFID intends to increase its overall aid and Direct Budget Support to many countries e.g. PRBS is projected to double to around £1.2 billion by 2007/08 in the case of Tanzania. However, lessons from Tanzania (DFID 2004, Official Assistance to Agriculture) indicates the limitations of DBS which included greater relative ease of channeling funds to other well defined sectors, such as health and education. The other lesson learnt was that Poverty Reduction Budget Support (PRBS) tended to result in a shift in decision-making processes and resource allocations that work against investments in agriculture. It was also learnt that Ministries may not be capable of making a convincing case with the Finance Minister for scarce budgetary resources to Agriculture. Decisions about resource allocation are increasingly left in the hands of ministries of finance. Ministries of agriculture are invariably the weakest of the sectors.
16. Figures 1 and 2 below indicate that the proportion of DFID funding for rural livelihoods through DBS channels is low and has been steadily declining compared to other sectors over the period 2000/01 and 2005/06. Support to agriculture as a percentage of total aid/expenditure to Africa declined from 4.72% in financial year 2003/04 to 1.37% in financial year 2005/06. Even in the year 2005/06 when DIFID developed its policy paper on agriculture the trend in figure 1 on support to rural livelihoods shows a downward trend. Despite experiences of increases in DFID's agriculture support to Zambia and Rwanda as indicated in Figure 2, the total level of investment is far below average of other countries to make meaningful contribution to sustainable agriculture growth and productivity. Source: Data from SRSG database
Source: Data from SRSG database
Conclusions17. Despite agriculture being prioritised by most African countries as an engine for economic growth and poverty reduction in their various national pro-poor policies and strategies, it does not receive the levels of funding commensurate to its level of priority. Most countries are far below the 10 percent target of their national budgets financing agriculture in the period under consideration. Almost all the countries' budgets to agriculture between this period ranged between 3 to 5 percent of national budgets. There has not been a significant movement towards the 10 percent target over the past three years as most countries have maintained fairly similar percentages since the Maputo Declaration.
18. Most countries do not follow their poverty reduction strategies in allocating resources in various sectors, especially in agriculture. Expenditures of most Ministries of Agriculture are directed towards financing administrative costs (staff salaries & emoluments), institutional support and subsidies at the expense of agriculture activities such as research, extension and marketing, which have high investment returns and are more sustainable.
19. DFID funding for agriculture and rural livelihoods is mainly channeled through Poverty Reduction Budget Support (PRBS), which allows governments in line with their national plans to determine how to best tackle poverty. This is with exception of Ethiopia, which had its PRBS suspended in 2005. Therefore, current support is through Protection of Basic Services Grant.
20. Overall DFID's support to agriculture and livelihoods in Africa has been steadily declining over the past five years (2000/01-2005/06). Furthermore, the level of financial support to the sector has been very low compared to other sectors such as education and health. This clearly shows that DFID has not been fully committed to supporting agriculture, which it recognised in its policy paper (2005) as key in economic growth and poverty reduction in Africa.
21. Although DFID recognises agriculture as important for growth and poverty reduction in Africa, it is not highly emphasised in the its Country Assistance Plans (CAPs) for most countries as compared to education, health, governance and public sector management.
Call To Action
Based on the conclusions above, FARM-Africa, Send a Cow and Harvest Help call on the UK Government, through DFID, to consider the following actions:
a) DFID should ensure that bi-lateral agreements with the countries under consideration compels their government's to commit at least 10% of national budget to agriculture in accordance with the Maputo Declaration of 2003
b) DFID and other cooperating partners should ensure that future investment in agriculture in these countries is directed towards areas with high returns and greater sustainability (research, extension and support services to smallholder farmers etc) than the current form of investment
c) Based on the lessons from Tanzania, DFID could continue supporting Agriculture through PRBS but should go a step further to clearly define or earmark support to agriculture as in the case of the education and health sectors.
d) In order to accelerate economic growth and poverty reduction in Africa, DFID should increase its support to agriculture and rural livelihoods from the current level of less than 2% to at least 10% of total aid
e) DFID should highly emphasise the agriculture sector in its CAP as a key sector in economic growth and poverty reduction in Africa in line with its policy paper of 2005: Growth and poverty reduction: the role of agriculture
November 2006
References
1. DFID (2004) Official Development Assistance to Agriculture, Agriculture and Natural Resources Team of the UK
2. DFID (2005) Growth and Poverty Reduction: The Role of Agriculture
3. DIFD (2004) Country Assistance Plan: Kenya
4. Ministry of Agriculture, Tanzania: http://www.agriculture.go.tz/Projects/ASDP/Financing-Estimates.htm
5. http://www.internationalbudget.org/resources/newsletter28.htm
6. International Monetary Fund (2006) Rwanda: Letter of Intent, Memorandum of Economic and Financial
7. Joint Statement of Development Partners for the Kenya Consultative Group; Agriculture Donors Group: http://siteresources.worldbank.org/INTKENYA/Resources/donor_statement_agriculture.pdf
8. Mick Foster and Peter Mijumbi (2002) How, When and Why does Poverty get Budget Priority: Poverty Reduction Strategy and Public Expenditure in Uganda, Overseas Development Institute, 111 Westminster Bridge Road, London, UK
9. Republic of Rwanda (2004) Ministry of Agriculture and Animal Resources: Strategic Plan for Agricultural transformation in Rwanda
10. Tegemeo Institute of Agricultural Policy and Development/Egerton University Kenya Agricultural Research Institute, Michigan State University: Kenya Agricultural Marketing and Policy Analysis Project: Contemporary Issues Determining the Future of Kenyan Agriculture: An Agenda for Policy and Research
11. Sustainable Development and Poverty Reduction Program (SDPRP): Retrospective and Way Forward, June 2005. Website: http://www.ethioembassy.org.uk/links/links.htm, Ministry of Finance and Economic Development Publications
Annex 1 Governments' and DFID's spending in Seven African Countries
Annex 2 DFID Rural Livelihoods spend in designated African Countries for years 2000-2005 (in £ '000)
Source: SRSG[3] database (Date: 30 October 2006)
[1] www.id21.org/insights, Institute of Development Studies University of Sussex
[2] Conclusion based on expenditure analysed at two time points, which are year 2000 and 2005 [3] Statistical Reporting and Support Group, is a Department within DFID. The SRSG database is where DFID maintains and store Aid spending for publication of Statistics in International Development (SID). |