Promoting Regional Integration, Food Security in Africa

Centerpoint, May 2010

May 03, 2010

A renewed focus on Africa's economies, partly spurred by the onset of the global economic crisis and the subsequent tightening of foreign aid budgets, has also drawn attention to the importance of food security and sustainable growth of the agricultural sector. The nations of sub-Saharan Africa in particular continue to face deep structural economic problems. While international donors in recent years were preoccupied with securing their own economic survival, food shortages have revived the emphasis on dealing with Africa's structural deficiencies and building a strong foundation for sustainable growth.

In early March, the Africa Program hosted a conference on food security and regional integration in Africa, focusing largely on infrastructure and development. The conference was co-sponsored by the Partnership to Cut Hunger and Poverty in Africa, the German Marshall Fund, and the International Food & Agricultural Trade Policy Council. John Sewell, a Wilson Center senior fellow and former president of the Overseas Development Council, opened and moderated the conference.

To help address food security in sub-Saharan Africa, the Obama administration's key focus is on promoting regional integration, said keynote speaker Ann Tutwiler, coordinator of the Feed the Future Initiative at the U.S. Department of Agriculture (USDA). The first step is addressing the underlying causes of hunger by increasing agricultural production, linking farmers to strong markets, increasing incomes, reducing under-nutrition, and increasing the effectiveness of emergency assistance. Tutwiler said policy approaches should include tailoring assistance to the specific needs of individual countries, improving coordination among stakeholders, leveraging multilateral institutions, and setting benchmarks to measure long-term progress.

Improving trade among regional partners is critical, she said, citing such important steps as streamlining customs procedures, lowering tariffs, and strengthening regional economic communities. Helping the African continent accomplish these goals, Tutwiler said, requires participation from all related U.S. government agencies, or, she explained, a "whole of government" approach.

Building the Infrastructure
Infrastructure investments in Africa are unpredictable, said panel moderator Mima Nedelcovych of the Schaeffer Global Group. Paul Jourdan of the South African Regional Spatial Development Program said although development indicators for Africa look dim, its natural resource potential, according to the U.S. Geological Survey (USGS) is higher than any other region. Therefore, he said, high differential rents and resources could finance infrastructure and foster public-private partnerships (PPP).

Vivien Foster of the World Bank discussed the impediments of existing rural infrastructure in fostering food security. The hinterland accounts for 85 percent of crop production but needs to be linked to urban areas. She pointed out the high cost in establishing and sustaining rural infrastructure. Only one third of rural Africa has access to all-season roads. Increasing the rural road network by 500,000 kilometers will reach 80 percent of high-value existing agricultural production, she said, thus reducing total costs by $2.5 billion.

On irrigation infrastructure, Foster said there are 17 million acres of new irrigation potential. Rural Information and Communication Technologies (ICT) infrastructure, most of it financed from the outside, reaches only 7 percent of Africa's rural population. Electrification reaches only 5 percent of the rural population in most countries and has a growth rate of a mere 0.5 percent annually. The overall cost of reaching infrastructure targets on universal ICT coverage, irrigation, and electricity for 2.5 million users is estimated at $25 billion over a decade.

Addressing some of the realities of working with the private sector, Bill Lane of Caterpillar, Inc. said the absence of strong trade liberalization mechanisms, such as a leaner tariff system and a rigid customs sector, is a major impediment to investment. However, he said, many African policymakers have failed to make infrastructure development a priority. Conversely, new trends in Washington show improved collaboration between the private sector and the development community and a growing bipartisan agreement on development policies. On the job front, the United States can benefit by investing in developing countries, he said. The resulting export growth can be highly lucrative for multinationals, providing opportunities for domestic job creation.

Africa lags behind in all sectors of infrastructure development, said Aly Abou-Sabaal director of the agriculture and agro-industry department for the African Development Bank in Tunisia. Poor road infrastructure means that many farmers travel five hours or more to the nearest market and transport costs are higher in Africa compared with other parts of the world. Abou-Sabaal said the solution is to encourage all stakeholders to become involved, thus creating efficiencies within the system and getting a greater return from the limited investment capital. Some 10 billion cubic meters of water, or 1 percent of irrigation needs, together with a 3 percent investment in post-harvest loss reduction mechanisms, have reduced the food gap by 10 percent.

Facilitating Trade
African governments, the private sector, and the donor community all can play a role in integrating African economies at a sub-regional and regional level. Accessing what the market wants, the needs on the ground, and identifying opportunities and barriers will allow policymakers to tailor policy to facilitate economic development. Katrin Kuhlmann of the U.S. German Marshall Fund defined coordination as a combination of aid, trade, and a unified approach to investment policies, which would ensure that international policies reinforce national and regional policies.

Lanette Chen, CEO of the Business Foundation of the New Economic Partnership for African Development (NEPAD), discussed the work of a partner organization, TransFarm Africa. TFA looks at the shortfalls of African agriculture and how to strengthen Africa's agricultural markets to make them competitive. She said 80 percent of African agriculture is subsistence-level farming, but efforts are lacking to integrate these farmers into the real market or to introduce them into the commercial value chain. TFA has established a transformation fund of $50 million to invest in small farmers with a plan that includes helping farmers understand policy and regulatory issues. TFA is also investing in the Beira corridor in Mozambique—25 million acres of arable land—that offers huge potential.

One way to make agricultural markets more productive is to tie small market farmers into larger national and regional systems. Anne Mbaabu of the Alliance for a Green Revolution in Africa (AGRA) cited several problems impeding small-holder farmers. She said a lack of infrastructure, poor agronomy, lack of market access, and constant government intervention in pricing all play a huge role. Strong policy attention is needed on main diet staples such as maize, rice, cassava, and millet—crops that provide an average of 10 percent of calorific value to the population. Mbaabu said these are low-value commodities and provide low profit margins while transaction costs are high and thus farmers are required to make huge concessions.

AGRA's interventions include a soil health program and a market access program. The Alliance encourages farmers to improve quality and in some instances to eliminate the middlemen in transactions, thus increasing income and profit margins.

Discussing how to integrate customs and trade, Charlotte Hebebrand from the International Food and Agricultural Trade Policy Council said a lack of effective facilitation measures accounts for nearly a 15 percent cost increase of products, and an increased incidence of informal cross-border trade. To improve transaction processes, she recommended simplifying and reducing documentation requirements across borders, and enhancing transparency. She also suggested expediting the release of goods from customs, standardizing trade-related regulations, and improving border agency coordination within and across nations.

Although adopting these measures can be costly, modest reform can bear strong results. The OECD estimates that two-thirds of the gains of trade facilitations globally will go into developing countries. AGOA modernization programs increased revenue by 150 percent and reduced border time by 24 hours. Hebebrand said the WTO has entered into negotiations to provide assistance to facilitate border crossings.

Julie Howard, executive director of the Partnership to Cut Hunger and Poverty in Africa, closed the conference by detailing the concrete approaches to the problems addressed by panelists. She said organizations on the ground are ready to work and governments are willing to engage so that there can be an implementation of sustainable regional and country-driven approaches.

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