Promoting Regional Integration and Food Security in Africa

Sub-Saharan Africa continues to be a region facing deep structural economic problems. The current economic downturn renewed focus on the vulnerability of Africa's economies which rely largely on outside aid. Food shortages in 2008 and donor preoccupation with securing their own economic security has put a renewed emphasis on dealing with Africa's structural deficiencies and building a strong foundation for sustainable growth. On March 2, 2010, the Africa Program hosted a conference on food security and regional integration in Africa in conjunction with the Partnership to Cut Hunger and Poverty in Africa, the German Marshall Fund, and the International Food & Agricultural Trade Policy Council. Speakers came from several different organizations, sectors of society, and geographical locations broaching topics such as infrastructure and development and how it relates to regional integration and food security in Africa.

John Sewell, Senior Scholar from the Woodrow Wilson Center moderated the conference, and keynote speaker Ann Tutwiler from the US Department of Agriculture (USDA) presented the Obama administration's policy on food security. Promoting regional integration is the key focus of the administration's policy to address food security in Sub-Saharan Africa. The policy approach concentrates on five main factors: addressing the underlying causes of hunger by increasing agricultural production and increasing the effectiveness of emergency assistance; investing in country led plans; improving strategic coordination amongst all stakeholders; leveraging multilateral institution to ensure an efficient utilization of resources; and ensuring long term commitment to investment. Improving trade between regional partners will ensure the government's strategic objectives will be achieved. Objectives include streamlining customs procedures, lowering tariffs (while addressing the revenue challenges of governments) and strengthening regional economic communities (RECs) to address regulatory and standardization measures. However, the US government faces challenges such as weaknesses in regional coordinating structure and inadequate adaptation of a "whole of government approach" by the various government stakeholders.

Dr. Mime Nedelcovych of the Schaeffer Global Group moderated the first panel, opening with a brief discussion of the unpredictability of infrastructural investments in Africa and the differential cost he called the "malefactor" of investments. An additional 10% cost for Schaeffer on a specific investment in Liberia wouldn't have been incurred in South Africa because of relative availability of anchor infrastructure. Paul Jourdan of the South African Regional Spatial Development Program discussed the potential for development corridors in sub-Saharan Africa. He pointed out that the outlook for Africa in terms of development indicators is rather dim; however, the natural resource potential of Africa according to the United States Geological Survey (USGS) is above any other region. Hence, Jourdan believes high differential rents and resources can finance infrastructure and foster Public Private Partnerships (PPP). On a general scale, regional spatial corridors need to be complimented by a feeder infrastructure to the rural hinterland, enabling development of sustainable sectors and employment generating sectors.

Vivien Foster of the World Bank addressed the challenge of rural infrastructure and how it relates to food security. She pointed out the high cost in establishing and sustaining rural infrastructure; the hinterland accounts for 85% of crop production, however, and needs to be linked to urban areas. One third of rural Africa has access to all season roads, and increasing the rural road network by 500,000 kilometers will reach 80% of high value existing agricultural production, additional 500,000 kilometers of all season roads would cover 80% of potential high value agricultural production thus reducing total costs by $2.5billion. On irrigation infrastructure, Vivien pointed out that there are 7 million hectares of new irrigation potential, most small scale in nature, with a higher initial return to scale. Information and Communication Technologies (ICT) infrastructure has been successful, with a coverage gap representing 7.2% of Africa's population, 95% of which can be financed privately. Rural electrification covers only 5% of the rural population in most countries with a growth rate of a mere 0.5% per annum. The overall cost of reaching infrastructure targets on universal ICT coverage, irrigation, electricity for 2.5 million users, roads and water and sanitation targets of the MDG will amount to $25 billion over a decade.

Bill Lane of Caterpillar, Inc. brought some sobering realities to the discussion, relating to his practical experience from the private industrial sector. 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, infrastructure needs to become the main focus and many Africa policy makers lack the focus to make effective decisions on infrastructure problems. Conversely, new trends in Washington show both enhanced collaboration between the private sector and the development community and a growing bipartisan agreement on development policies. On the jobs front, the US can benefit enormously by investing in developing countries; the resulting export growth can be highly lucrative for multinationals, providing opportunities for domestic job creation.

Aly Abou-Sabaa is the director of Agriculture and Agro-Industry Department for the African Development Bank (AfDB). Africa lags behind in all sectors of infrastructure development. compared to Asia where the AfDB estimates that the area of irrigated land grew from 25% to 40%, Africa is stagnated at 4%; poor water governance means that half of farmers travel five hours or more to the nearest market compared to one hour for Asia and South America; input costs are 40% to 60% higher than in South America or Asia; and transport costs are highest in Africa compared to other regions around the world. The commodity market structure generally characterized by market linkages, losses 40% across the value chain. The solution according to Abou-Sabaa is to encourage all stakeholders to utilize their comparative advantages to create synergies, thus creating efficiencies within the system and getting a greater return from the limited investment capital. Ten billion cubic meters of water, or 1% of irrigation needs, together with a 3% investment in post harvest loss reduction mechanisms have reduced the food gap by 10%. Rural access road networks have increased by ten thousand kilometers through PPP mechanisms.

The second session was moderated by Katrin Kuhlmann of the US German Marshall Fund. Kuhlmann discussed a demand driven approach to trade and the need to improve governance. Accessing what the market wants, the needs on the ground, and identifying both opportunities and barriers, will allow policymakers to tailor policy to facilitate economic development. Coordination means combining aid, trade and investment policies and adapting a unified approach, ensuring that international policies reinforce national and regional policies. Lanette Chen, the CEO from 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 be able to compete with emerging market forces. She pointed out that 80% of African agriculture is subsistence level farming. However, there has not been an effort to integrate these farmers into the real market and no introduction in the commercial value chain. TFA has setup a transformation fund of $50 million to invest in small farmers. The organization also helps farmers to understand policy and regulatory issues. TFA is also investing in the Beira corridor which has huge potential - 10.4 million hectares of arable land and very fertile soil.

Anne Mbaabu of the Alliance for a Green Revolution in Africa (AGRA) Market Access Program discussed how to make agricultural markets work by tying small market farmers into larger national and regional systems. Mbaabu mentioned the key issues impeding small holder farmers including lack of infrastructure, poor agronomy, lack of market access and constant government intervention in pricing. Areas that do need strong policy attention are the main staples: maize, rice, cassava and millet, crops that provide an average of 10% of calorific value to the population. According to Mbaabu, these are low value commodities and provide low profit margins, transaction costs are high and thus farmers are required to make huge concessions. AGRA's interventions include a seed program (value chain intervention), a soil health program policy and partnership, and a market access program. Their fundamental approach is to encourage farmers to improve quality and in some instances to eliminate the middle men in transactions, thus increasing both income and profit margins.

Charlotte Hebebrand from the International Food and Agricultural Trade Policy Council discussed the international perspective, customs and trade facilitations and how effectively to integrate them. According to Hebebrand, a lack of effective facilitation measures accounts for up to a 15% cost increase of products, and an increased incidence of informal cross-border trade. This could be ameliorated by simplifying and reducing documentation requirements across borders, enhancing transparency, 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, small modest reform can bear results. The OECD estimates that two thirds of the gains of trade facilitations globally will go into developing countries. AGOA modernization program increased revenue by 150% and reduced border time by twenty-four hours. Hebebrand noted that the WTO has entered into negotiations to provide assistance to facilitate border crossings as part of the negotiations in Doha. The tentative agreement states that any commitment taken will be matched by funding and if a country doesn't have the capacity to implement a commitment it doesn't have to do it. 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. 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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