[PPT] - OUSMANE BADIANE Director for Africa International Food Policy PowerPoint Presentation

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Thursday, July 08, 2010

AGRICULTURAL AND ECONOMC GROWTH RECOVERY IN AFRICA CURRENT TRENDS AND FUTURE PROSPECTS OUSMANE BADIANE Director for Africa International Food Policy Research Institute

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1

OVERVIEW OF RECENT GROWTH TRENDS IN AFRICA

3

THE IMPACT OF CHANGING GLOBAL FINANCIAL MARKETS

2

THE IMPLICATIONS OF CHANGING GLOBAL FOOD MARKETS

4

EMERGING AGRICULTURAL POLICY DEVELOPMENTS

AGRICULTURAL AND ECONOMC GROWTH RECOVERY IN AFRICA IN THE CONTEXT OF GLOBAL CRISES 5

SUSTAINING AND ACCELERATING THE RECOVERY PROCESS

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1

OVERVIEW OF RECENT GROWTH TRENDS IN AFRICA

3

THE IMPACT OF CHANGING GLOBAL FINANCIAL MARKETS

2

THE IMPLICATIONS OF CHANGING GLOBAL FOOD MARKETS

4

EMERGING AGRICULTURAL POLICY DEVELOPMENTS

AGRICULTURAL AND ECONOMC GROWTH RECOVERY IN AFRICA CURRENT TRENDS AND FUTURE PROSPECTS 5

SUSTAINING AND ACCELERATING THE RECOVERY PROCESS

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PRE-CRISIS ERA COINCIDED WITH LONGEST PERIOD OF SUSTAINED GROWTH SINCE 60S

3

3 6 9

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Percent (%) Agriculture, value added (annual % grow th) GDP grow th (annual %)

SOURCE: Badiane 2008: IFPRI Policy Brief No. 9

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THE GROWTH IS ACCELERATING AS WELL AS SPREADING GEOGRAPHICALLY

SOURCE: IFPRI / Badiane and Ulimwengu Data from national account s / UN database: http://data.un.org/Explorer.aspx?d=SNAAMA

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AGRICULTURAL TRADE PERFORMANCE HAS ALSO TURNED AROUND WITH THE NEW MILLENNIUM

95 100 105 110 115 120 125 2001 2002 2003 2004 2005 World Africa

95 100 105 110 115 120 125 130 135 140 145 150 155 160 2001 2002 2003 2004 2005 World Africa

AFRICAN vs WORLD EXPORTS (VOLUME) AFRICAN vs WORLD EXPORTS (VALUE) SOURCE: Badiane 2008: IFPRI Policy Brief No. 9

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3

3 6 9

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Percent (%) Agriculture, value added (annual % grow th) GDP grow th (annual %)

50 100 150 200 250 300 Price Index, 2005 =100

World Commodity Price Indices, 1980-2011

Wheat Maize Rice

WHAT ARE THE FACTORS BEHIND THE GROWTH RECOVERY?

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1

OVERVIEW OF RECENT GROWTH TRENDS IN AFRICA

3

THE IMPACT OF CHANGING GLOBAL FINANCIAL MARKETS

2

THE IMPLICATIONS OF CHANGING GLOBAL FOOD MARKETS

4

EMERGING AGRICULTURAL POLICY DEVELOPMENTS

AGRICULTURAL AND ECONOMC GROWTH RECOVERY IN AFRICA CURRENT TRENDS AND FUTURE PROSPECTS 5

SUSTAINING AND ACCELERATING THE RECOVERY PROCESS

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THE GLOBAL FOOD PRICE CRISIS OF 2007-08

25 50 75 100 125 200 400 600 800

US$/barrel US$/ton Corn Wheat Rice Oil (right scale)

Price spike

Source: J. von Braun; Data from FAO 2009 and IMF 2009.

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Source: IFPRI / M. Rosegrant (prelim. results with IMPACT-WATER).

100 200 300 2000 2005 2010 2015

Rice Wheat Maize Oilseeds Soybean

US$/ton

LONG TERM WORLD FOOD PRICE TRENDS AND GROWTH RECOVERY IN AFRICA

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PRODUCTIVITY TRENDS AND FUTURE COMPETITIVENESS OF AFRICAN AGRICULTURE

RISING AFRICAN AG PRODUCTIVITY DECLINING WORLD AG PRODUCTIVITY

0.5 1.0 1.5 2.0 2.5 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 Index (1970=1) Value of Ag Inputs TFP

1 2 3 4 5 6 1963 1967 1971 1975 1979 1983 1987 1991 1995 1999 2003 Average annual growth rate (%)

maize rice wheat

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1

OVERVIEW OF RECENT GROWTH TRENDS IN AFRICA

3

THE IMPACT OF CHANGING GLOBAL FINANCIAL MARKETS

2

THE IMPLICATIONS OF CHANGING GLOBAL FOOD MARKETS

4

EMERGING AGRICULTURAL POLICY DEVELOPMENTS

AGRICULTURAL AND ECONOMC GROWTH RECOVERY IN AFRICA CURRENT TRENDS AND FUTURE PROSPECTS 5

SUSTAINING AND ACCELERATING THE RECOVERY PROCESS

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THE IMPACT CHANNELS

1

RECESSION – EXPORT DEMAND - TERMS OF TRADE AG. REVENUES

3

FOREX AND FISCAL DEFICITS AG EXPENDITURE / INVESTMENT

2

LIQUIDITY TRAP – FDI – REMITTANCES -TRADE CREDIT AG. FINANCE

4

DOMESTIC AND ASSISTANCE POLICY RESPONSES SECTOR RESPONSE

IMPACT OF THE FINANCIAL CRISIS ON AGRICULTURE

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50 100 150 200 250 300 2000M1 2000M5 2000M9 2001M1 2001M5 2001M9 2002M1 2002M5 2002M9 2003M1 2003M5 2003M9 2004M1 2004M5 2004M9 2005M1 2005M5 2005M9 2006M1 2006M5 2006M9 2007M1 2007M5 2007M9 2008M1 2008M5 2008M9 2009M1 2009M5 2009M9 Price Index, 2005= 100

Commodity Fuel Index Food Index Index of Agricultural Raw Materials Index of Industrial Inputs 500 1000 1500 2000 2500 3000 3500 4000 20 40 60 80 100 120 140 2000… 2000… 2000… 2001… 2001… 2001… 2002… 2002… 2002… 2003… 2003… 2003… 2004… 2004… 2004… 2005… 2005… 2005… 2006… 2006… 2006… 2007… 2007… 2007… 2008… 2008… 2008… 2009… 2009… 2009…

Cocoa, US $/ton Coffee, Cotton , US cents/ pound Coffee, Robusta Cotton Cocoa

IMPLICATIONS OF THE FINANCIAL CRISIS DEMAND, PRICES, AND AFRICAN EXPORTS

94.00% 96.00% 98.00% 100.00% 102.00% 104.00% 106.00% 108.00%

2007 2008 2009 2010 2011 2012 Recession + Finance constraints + stronger Finance constraints

IMPACT ON AGRICULTURAL EXPORTS 95.00% 96.00% 97.00% 98.00% 99.00% 100.00% 101.00% 102.00% 2007 2008 2009 2010 2011 2012

Recession (decline in demand) + Finance constraints (actual country estimates) + stronger Finance constraints (+2.66xestimates)

IMPACT ON OVERALL AFRICAN EXPORTS Source: IFPRI/Estrades and Laborde Price data from IMF World Economic Outlook

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Algeria Angola Benin Botswana Burkina Faso Burundi

C. Africa Rep.
C. Ivoire

Cameroon Cape Verde Chad Comoros Congo Congo (DRC) Djibouti Egypt

Eq. Guinea

Eritrea Ethiopia

G. Bissau

Gabon Gambia Ghana Guinea Kenya Lesotho Liberia Madagascar Malawi Mali Mauritania Mauritius Morocco Mozambique Niger Nigeria Rwanda

S. Leone
S. Tome and Principe

Senegal Seychelles Somalia South Africa Sudan Swaziland Tanzania Togo Tunisia Uganda Zambia Zimbabwe

4
2

2 4 2 4 6 8 Log of Net FDI

FDI AND AGRICULTURAL SECTOR GROWTH IN AFRICA

Source: IFPRI/Badiane and Ulimwengu

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FINANCIAL CRISIS, DEVELOPMENT ASSISTANCE AND AGRICULTURAL GROWTH

Algeria Angola B. Faso Benin Burundi

C. African Rep.
C. Ivoire

Cameroon Cape Verde Chad Comoros Congo DRC Djibouti Egypt Gambia Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritania Morocco Mozambique Namibia Niger Nigeria Rwanda

S. T.and Principe

Senegal Sierra Leone Somalia Sudan Swaziland Tanzania Togo Tunisia Uganda Zambia Zimbabwe

5

5 10 50 100 150 Per capita aid (us dollar)

1970-1980

Algeria Angola

B. Faso

Benin Burundi

C. African Rep.
C. Ivoire

Cameroon Cape Verde Chad Comoros Congo DRC Djibouti Egypt Gambia Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritania Morocco Mozambique Namibia Niger Nigeria Rwanda

S. T.and Principe

Senegal Sierra Leone Somalia Sudan Swaziland Tanzania Togo Tunisia Uganda Zambia Zimbabwe

5

5 10 50 100 150 200 250 Per capita aid (us dollar)

1981-1990

Algeria Angola

B. Faso

Benin Burundi

C. African Rep.
C. Ivoire

Cameroon Cape Verde Chad Comoros Congo DRC Djibouti Egypt Gambia Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritania Morocco Mozambique Namibia Niger Nigeria Rwanda

S. T.and Principe

Senegal Sierra Leone Somalia Sudan Swaziland Tanzania Togo Tunisia Uganda Zambia Zimbabwe

10
5

5 10 100 200 300 400 Per capita aid (us dollar)

1991-1999

Algeria Angola

B. Faso

Benin Burundi

C. African Rep.
C. Ivoire

Cameroon Cape Verde Chad Comoros Congo DRC Djibouti Egypt Gambia Ghana Guinea Guinea-Bissau Kenya Lesotho Liberia Madagascar Malawi Mali Mauritania Morocco Mozambique Namibia Niger Nigeria Rwanda

S. T.and Principe

Senegal Sierra Leone Somalia Sudan Swaziland Tanzania Togo Tunisia Uganda Zambia Zimbabwe

5

5 10 15 50 100 150 200 250 Per capita aid (us dollar)

2000-2006

Source: IFPRI/Badiane and Ulimwengu

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MACROECONOMIC RAMIFICATIONS OF THE FINANCIAL CRISIS IN AFRICA

10 20 30 40 50 60 70 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

(%)

Africa: Inflation and External Debt as Share of GDP

Inflation, average consumer prices External debt, as share of GDP

4
3
2
1

1 2 3 4 5 6 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

(%)

Africa: Current Account Balance as Share of GDP

5 10 15 20 25 30 35 40 45 50 1998- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 billions of US $

Private Financial Flows to Africa

6
4
2

2 4 6 1997-2002 2003 2004 2005 2006 2007 2008 2009 2010

Overall Fiscal Balance, Including Grants (as %

f GDP)

Source: IMF World Economic Outlook

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2
1

1 2 3 4 5 6 7 8 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Annual Percent Change (%)

World Africa

THE IMPACT OF THE FINANCIAL CRISIS ON GROWTH TRENDS IN AFRICA

Source: IMF World Economic Outlook

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1

OVERVIEW OF RECENT GROWTH TRENDS IN AFRICA

3

THE IMPACT OF CHANGING GLOBAL FINANCIAL MARKETS

2

THE IMPLICATIONS OF CHANGING GLOBAL FOOD MARKETS

4

EMERGING AGRICULTURAL POLICY DEVELOPMENTS

AGRICULTURAL AND ECONOMC GROWTH RECOVERY IN AFRICA CURRENT TRENDS AND FUTURE PROSPECTS 5

SUSTAINING AND ACCELERATING THE RECOVERY PROCESS

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THE COMPREHENSIVE AFRICA AGRICULTURE DEVELOPMENT PROGRAMME (CAADP)

PILLAR FRAMEWORKS SECTOR COMPACTS KNOWLEDGE SYSTEMS

BETTER POLICY, GROWTH, POVERTY, AND FOOD SECURITY OUTCOMES

STRATEGIC ISSUES SUCCESS FACTORS BEST PRACTICES POLICY ELEMENTS LT INVEST. OPTIONS COMMITMENTS

SECTOR POLICIES
BUDGET POLICIES
DEV. ASSISTANCE
POLICY DIALOGUE

BENCHMARKING PEER REVIEW MUTUAL LEARNING SHARED LT FRAMEWORK FOR ACTION DEVELOPMENT PARTNERSHIP AND ACCOUNTABILITY EVIDENCE/OUTCOME BASED PLANNING AND IMPLEMENTATION

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CREATING THE CONDITIONS FOR BETTER DEVELOPMENT OUTCOMES

I. DEVELOP COMPREHENSIVE AND OBJECTIVE DRIVEN STRATEGY

FRAMEWORK WITH LIMITED SET OF CLEAR TARGETS

II. EVALUATE COUNTRY EFFORTS AGAINST DEFINED TARGETS

SHARED INVESTMENT AND PARTNERSHIP FRAMEWORK

III. SPECIFY ALTERNATIVE ACTION SCENARIOS AND OUTCOMES

BASELINES - MILESTONES - ACTION TARGETS - TOOLS

IV. SET UP BENCHMARKING AND LEARNING MECHANISMS

KNOWLEDGE SYSTEMS INFRASTRUCTURE

V. ESTABLISH POLICY REVIEW AND DIALOGUE PLATFORM

INCLUSIVE FORA AT COUNTRY LEVEL AND BEYOND

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1

OVERVIEW OF RECENT GROWTH TRENDS IN AFRICA

3

THE IMPACT OF CHANGING GLOBAL FINANCIAL MARKETS

2

THE IMPLICATIONS OF CHANGING GLOBAL FOOD MARKETS

4

EMERGING AGRICULTURAL POLICY DEVELOPMENTS

AGRICULTURAL AND ECONOMC GROWTH RECOVERY IN AFRICA CURRENT TRENDS AND FUTURE PROSPECTS 5

SUSTAINING AND ACCELERATING THE RECOVERY PROCESS

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10 20 30 40 50 60 70 80 90 100 Malawi Mozambique Rwanda Uganda Benin Niger Zambia Burkina Faso Ghana Kenya Togo (%)

2015 Target Poverty Rate

Projected 2015 Poverty Rate under CAADP 6% Growth Rate

Target Poverty Rate in 2015 Actual Poverty Rate in 1990

LONG TERM CHALLENGE NO. 1 BRIDGING THE GROWTH GAP TO ACCELERATE POVERTY REDUCTION

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10 20 30 40 50 60 70 80 90 100 Malawi Mozambique Rwanda Uganda Benin Niger Zambia Burkina Faso Ghana Kenya Togo (%)

2015 Target Poverty Rate

Target Poverty Rate in 2015

Projected 2015 Poverty Rate under CAADP 6% Growth Rate Projected Required Spending Growth to Achieve CAADP 6% Growth Rate

LONG TERM CHALLENGE NO. 2 BRIDGING THE EXPENDITURE GAP TO ACCELERATE GROWTH

Actual Poverty Rate in 1990

Source: Dollar a Day Poverty Rates from World Bank, PovCal Net, 2008 [poverty line $1.25]; Projected CAADP Poverty Rates from various IFPRI country CAADP Growth Simulation Studies

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100 200 300 400 500 600

Agriculture Education Health Social Security

THE GROWTH-POVERTY CONVERGENCE AGENDA: MAXIMIZING SYNERGY BETWEEN GROWTH AND SOCIAL INVESTMENTS

Sources: Government spending: Global database on public spending, DSGD, IFPRI, 2009; and ODA: OECD, 2008

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HEALTH SERVICES EDUCATION SERVICES

EFFECT OF 10% INCREASE IN SERVICES EXPENDITURE ON SOCIAL OUTCOMES, AGRICULTURAL EFFICIENCY, AND POVERTY

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BASIC STRATEGIC QUESTIONS

1

HOW TO MAXIMIZE LONG TERM GROWTH WHILE MEETING SHORT TERM SOCIAL NEEDS

2

HOW TO MAXIMIZE SYNERGY BETWEEN SOCIAL SERVICES AND PRODUCTIVITY ENHANCING INVESTMENTS

MEETING THE DOUBLE CHALLENGE OF GROWTH ACCELERATION AND SOCIAL PROTECTION

3

HOW TO EXPLOIT GROWTH EXTERNALITIES OF SOCIAL SERVICES

4

HOW TO IMPROVE CONSIDERATION OF GROWTH SYNERGIES IN BUDGET PLANNING AND NEGOTIATIONS

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Page 28 CONCLUSIONS AGRICULTURAL AND ECONOMC GROWTH RECOVERY IN AFRICA CURRENT TRENDS AND FUTURE PROSPECTS

 HAS REMARKABLE RECOVERY COMPENSATED FOR THE 2.5 DECADE ECON. STAGNATION? NO

STILL LARGE POCKETS OF POVERTY
PROGRESS TOWARDS POVERTY MDG PICKED UP PACE BUT

NOT ENOUGH FOR MOST

NEED TO ACCELERATE AND BROADEN GROWTH TO REDUCE

POVERTY FASTER

1

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Page 29 CONCLUSIONS AGRICULTURAL AND ECONOMC GROWTH RECOVERY IN AFRICA CURRENT TRENDS AND FUTURE PROSPECTS

 GLOBAL CRISES ARE A THREAT BUT ALSO FULL OF OPPORTUNITIES FOR AFRICAN ECONOMIES  AFRICAN ECONOMIES HAVE SHOWN GREATER RESILIENCE THAN DURING PAST CRISES  AFRICAN AGRICULTURE IS WELL POSITIONED TO COMPETE AND BENEFIT FROM LONG TERM GLOBAL PRICE TRENDS  UNPRECEDENTED CONTINENT WIDE EFFORTS UNDER CAADP TO:

IMPROVE POLICY PLANNING / IMPLEMENTATION
RAISE GOVERNMENTS INVESTMENT IN AGRICULTURE.

2

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Page 30 CONCLUSIONS AGRICULTURAL AND ECONOMC GROWTH RECOVERY IN AFRICA CURRENT TRENDS AND FUTURE PROSPECTS

 THE RECOVERY OF LAST 15 YEARS HAS CREATED A STRONG FOUNDATION TO BUILD UPON  BETTER CONDITIONS FOR HIGHER RETURNS TO INVESTMENTS IN AND ASSISTANCE TO AFRICA  UNPRECEDENTED CONTINENT WIDE EFFORTS UNDER CAADP TO:

IMPROVE POLICY PLANNING / IMPLEMENTATION
RAISE GOVERNMENTS INVESTMENT IN AGRICULTURE
AND SUSTAIN / DEEPENTHE RECOVERY PROCESS