Leveraging investment impacts

Any initiative whose aim is to reduce poverty in Africa should focus first on agriculture. But what kind of investment has the greatest impact? The use of scientific criteria provides some answers.

(c) Kate Holt / AusAID, Katharina Zinn/ZEF
Burkina Faso: Rice farmers threshing in Bobo-Dioulasso. (c) Eli Wortmann-Kolundžija/ZEF

Heike Baumüller

Dr. Heike Baumüller

Dr. Heike Baumüller is a Senior Researcher at the Center for Development Research (ZEF), University of Bonn, operates and coordinates the accompanying research for agricultural innovation (PARI).

Christine Husmann

Dr. Christine Husmann

Dr. Christine Husmann works as Senior Researcher at the Center for Developmental Research (ZEF) University of Bonn.

Oliver Kirui

Dr. Oliver Kirui

Dr. Oliver Kirui from Kenya is a senior researcher at the Center for Developmental Research (ZEF) at the University of Bonn.

Julia Machovsky-Smid

Julia Machovsky-Smid

Julia Machovsky-Smid is a project administrator for agricultural research (PARI) at the Center for Development Research (ZEF), University of Bonn.

Justice Tambo

Dr. Justice Tambo

Dr. Justice Tambo from Ghana is a Senior Researcher at the Center for Development Research (ZEF) at the University of Bonn.

Center for Development Research of the University of Bonn

Brot für die Welt

In Africa, most people’s livelihoods are heavily dependent on agriculture, so the returns on investment in terms of poverty reduction effects are often highest in this sector. Food insecurity can also trigger violent conflicts and cause refugee flows. Innovation in the agricultural sector, then, can do much to sustainably increase African productivity while enhancing food security, preventing conflict and maintaining environmental quality and resources.

 

This complex nexus is being investigated by the partners in the Program of Accompanying Research for Agricultural Innovation (PARI), a research project involving institutions in Africa, India and Germany. They have identified which specific conditions need to be in place for investment to have maximum impact. 

 

Investing in research and development

(c) Fuglie, K. et al. (2013), von Braun (2016)
Figute 1: How innovation creates growth. Sources: Fuglie, K. et al. (2013); von Braun (2016)

The current growth in agricultural production in Africa can be supported through investment in research and development. In the past 15 years, sub-Saharan African countries have experienced the longest period of economic and agricultural growth since independence – a good starting point for successful investment. Despite this positive growth trajectory, per capita agricultural production and the productivity of capital and labour in many African countries are still trailing behind 1960s levels. Enhanced investment in research and development is essential in improving this situation (see Figure 1). Furthermore, labour is in many cases the predominant asset of the poor, so improving labour productivity is a key factor in achieving sustainable and equitable agricultural growth.

 

 

Tailor-made innovation

(c) 2014 / Dixon, Garrity, Boffa
Figure 2: Agricultural diversity in Africa (with PARI partner countries marked). Data source: Dixon, Garrity and Boffa (2014). Cartography: Christine Husmann.

Innovations must be tailored to the specific conditions in place in the region’s agricultural sector. In sub-Saharan Africa, many diverse types of farm exist, with their own specific potential and challenges, which also vary considerably within countries (see Figure 2; for further details, see the Africa-wide PARI Study and the PARI Country Dossiers). The majority of farmers are still operating on farms with less than two hectares. Innovation for agricultural growth must therefore take account of the challenges and potential of these diverse but mainly small farms. The ‘sustainable intensification’ paradigm which supports progress towards environmental and socioeconomic goals while preserving agricultural diversity is significant in this context. 

 

Agriculture and food security are high on the African political agenda. African agricultural policy has reduced its exposure to external influences, and the development of this sector is now a key priority for the African Union. With their endorsement of the Comprehensive Africa Agriculture Development Programme (CAADP) in 2003, the African countries committed to achieving an annual agricultural growth rate averaging six per cent while reducing poverty and improving food security. Many of the continent’s countries are making significant progress in these areas.

For the past decade or so, African agriculture has progressed along a positive development trajectory – one which, however, must continue over the longer term if it is to qualify as sustainable. While there is growing political support for innovations in agriculture – for example, through the Science Agenda for Agriculture in Africa (S3A) and the Science, Technology and Innovation Strategy for Africa 2024 (STISA-2024) – this has not been matched by sufficient increases in R&D investment.

 

Within the PARI framework, criteria and principles to map out the strategic direction for development investment in Africa – meaning investment which supports sustainable growth in line with good development practice – have been proposed. They place emphasis on partner country leadership and also consider the high expected returns on investment for sustainable agricultural growth and food security.

 

 

a) Development investment must focus on results

Development investment must bring benefits for the hungry and have positive impacts on jobs and incomes for small businesses and rural areas, with a particular focus on women and young people. It must also yield comparative advantages in production and offer scope for upscaling. 

 

b) Development investment must link to the existing set of political initiatives

This is important in ensuring policy coherence, particularly with CAADP. Investment must also be harmonised with the African initiatives mentioned above, which promote innovation in agriculture.

 

c) Investment should focus on the countries and regions with the greatest potential

The most suitable countries for development investment can be identified by analysing the past performance of all sub-Saharan African countries over the last 10 years, based on the following criteria:

  • Was agricultural growth achieved (comparative advantages, sustainability, nutrition-sensitive agriculture)?
  • Is innovation encouraged (productivity, research, farmers’ education)?
  • Does policy-making support the process (participation in CAADP)?
  • Is hunger being reduced (current status and trends in malnutrition)?

Substantial progress on CAADP and improvements in productivity serve as an indication of political support and are a sign that good investment conditions are in place in the country concerned. Cooperation with countries which have not begun to develop a strategy should therefore be viewed critically. Investment needs to be targeted towards countries where hunger is still a major challenge. Recent successes in combating hunger may be regarded as a good indicator of political support.

If these criteria are applied, Ethiopia, Mozambique, Sierra Leone, Kenya, Niger, Malawi, Senegal, the Republic of the Congo (Brazzaville), Mali and Zambia are among the ‘top ten’ countries where development investment makes good sense.

(c) 2016 / Torero, Maruyama
Figure 3: Sub-national analysis of potential: Ghana. Source: Torero and Maruyama (2016)

Furthermore, an analysis of in-country potential is essential in order to identify regions where investment aimed at increasing agricultural efficiency can have the greatest impact on poverty. PARI produces these data by analysing information about the potential and efficiency of the agricultural sector and poverty figures for the country concerned (see Figure 3 on Ghana, Progress Report).

 

d) Investment should be based on sound principles

Investment should be guided by principles of good governance and a commitment to low transaction costs. Partnership principles need to be accompanied by strong monitoring and evaluation systems that assess progress towards the goals set. There are many lessons to be learned from existing initiatives: the Alliance for a Green Revolution in Africa (AGRA), for example, has established independent evaluation panels that assess potential investment projects. It would also be desirable to link with the country level review and dialogue processes to facilitate learning and develop the partnerships needed for scaling up innovations.

Joint engagement for agriculture and food security should leverage the characteristic strengths of development partners, such as Germany, in response to Africa’s needs. In this way, development investment can make a major contribution to the implementation of the wider African agenda in line with the United Nation’s Sustainable Development Goals.

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