Smart economic policies matter for African green revolution

Great ideas about driving an unprecedented revolution in Africa’s agricultural landscape, especially with regards to infrastructure, increased financing, or feritilizer provision may not materialise except smart economic policies are installed and implemented to support agriculture. In fact, if deliberate government efforts are not channelled towards ensuring that local demand is heavily reliant on local capacity, the continent may not be near addressing its age long setback in the agriculture sector.

These were the submissions of Donald Kaberuka, former president, African Development Bank (AfDB) at the 2018 African Green Revolution Forum (AGRF) in Kigali. In a live monitoring of the forum by business a.m., Kaberuka pointed out that the common economic policy, especially between the 1960s and 1970s was one tilted towards neo-liberaism, favouring importation and higher reliance on imports.

“In 1960, the population of Africa was 285 million people. So in every one of our countries, population is up once of four times. Economic policies matters. Even further, microeconomic policy was the number one problem African agriculture faced for a long time because it favoured imports. So Africans were eating the Vietnamese rice, Thailand rice, because the exchange rate policies of government favoured imports. It did not favour farmers. In the 80s, there was an attempt to correct that and in so doing correcting over-valued exchange rates vis-à-vis fiscal issues, there was an over-correction. So institutions that supported farmers, whether these agricultural banks or cooperatives were all disbanded in the name of a neo-liberal doctrine which has proven its limitations. Now tell me anywhere in the world where the farming had made progress, whether it’s taking of fertilizers, water irrigation, pesticides, without extensive government support? So we have to accept that economic policy matters and we have to say that all the things we have said here from infrastructure, financing, fertilizers will require a smart policy government support,” he said.

If the rejuvenation also means reintroducing the agricultural marketing boards, through a second generation agricultural support institutions, which eliminates the fiscal burden or undermines macroeconomic stability associated with the structure of old boards, Kaberuka unequivocally believes it should be done efficiently.

But a concept of smart subsidy, he said, must be given reconsideration to make that happen. In a marketing board setting, peasant farmers are connected to market, mainly licensed buying agents, at stable prices regulated by the government. However, the government subsidises the production process through provision of farming inputs or infrastructure to de-risk the process, boost profitability and overall efficiency.

“Subsidy is important. As a former head of development, you probably expect me to condemn subsidies, no. I condemn some type of subsidies but smart, targeted subsidies with a nexus strategy I fully support. What has undermined our agriculture was to say in the name of neo-liberalism doctorine, all subsidies are banned but yet we give subsidies to consumers; consumers of petrol, food which is imported. So I would rather we work together to figure out targeted subsidies, smart subsidies which have got a nexus strategy. It’s part of these second generation smart government in support of agriculture,” the former AfDB president explained.

For Frannie Leautier, founder and managing partner, the Fezembat Group, who highlighted the possible means to chart growth in African agriculture, getting the supply chain logistics remains a fundamental bolt in the engine of transformation as addressing the transportation challenege will invariably spur the youth interest in agriculture.

She lamented that self-suffiency in Africa may be mere rhetoric should the bulk of farming activities depend on the subsistent efforts of  aging men and women, whereas more young people can be attracted into farming, by making it actually more  lucrative not only financially but in terms of socio-value.

She said: “Growing up in the rural areas of Tanzania, when we harvested our products, we used to have to carry them to the cooperative where they got sold and they were shipped to the port and then exported. There were no roads or railways and it was very complicated and it took many days to get there. In today’s world we can actually make those even more attractive to young people because we can embed technology in them. When you look at e-commerce platforms, mobile payment systems, blockchain, that can allow us to open huge supply chain across the continent, not only for input but also for export and really add value to the sector. I think technology and how it interfaces with the supply chain and the hard infrastructure could be a huge opportunity for young people to get attracted to the sector.”

Speaking of sufficient mechanization, Leautier noted that there is the opportunity to think differently about technology and bringing in new ways of farming so that aging women will no longer have to continue feeding Africa.

“If we are to feed Africa and the world, we really have to put a lot of effort in this area. If I had one wish to make for the agricultural sector, it would be around innovation and how we can learn from failure and how we can engage in innovation ecosystems that help transform day-by-day so that that kale goes from being the poor person’s food to being the poor person’s nutrition and the global market and the pharmaceutical important product additive into the global supply chain,” she said.

That we can use innovation such that the solutions we have now that are working for us to talk to each other be it SMS or Whatsapp groups becomes the solutions by which we not only transform information and transmit it but from which we learn; so that we can have bottom-up systems that can communicate globally with our satellites. The World Bank can tell you today when we are going to have our farming, we should be able to know in advance that global farming is coming and this information tells us what to do with this particular piece of land, how much water, fertilizer or type of seed or crop.

She further harped on the need for African innovations to prop up saying that “it takes the rich socio-culture that we have on the continent and tradition and adds value, in a global space. Out of 600 molecules in a cocoa skin, 60 of them are now used in cosmetic products. So how much more science is hiding in our product out there and how can we use innovation that takes the tradition where a Ghanaian farmer was using cocoa skin for skin product to a place where it becomes a very high value added cream in the global supply chain but brings value back to that farmer because we got the science right, financing right and we got the supply chains right.”

But for Owusu Afriyie Akoto, Ghana’s minister for food and agriculture, it’s important to focus on smallholder farmers because they have been the backbone of a global cocoa industry for over 120 years.