Africa Yet to Meet Target of 10% National Budget for Agriculture

17 JUNE 2021

The East African (Nairobi)

By Pauline Kairu

In 2003, the heads of state and government of the African Union recognised that greater public spending on agriculture was needed to eradicate hunger and poverty across the continent.

This prompted them to make a political commitment - the Maputo Declaration - to allocate at least 10 percent of their national budget to food and agriculture, under the Comprehensive Africa Agriculture Development Programme (CAADP).

Almost 20 years later, many countries, including 13 studied in a new research, have not yet reached the objective pledged in Maputo.

Despite sub-Saharan Africa registering currently recording lower Covid-19 infections and deaths than other regions in the world, the latest economic projections from the International Monetary Fund say it could experience a contraction in regional economies by about three percent, with an average GDP per capita drop of up to 5.4 percent - back to levels of the beginning of the decade.

Even before the Covid-19 pandemic, hunger in sub-Saharan Africa was slowly rising according to the United Nation's Food and Agricultural Organisation. In 2019, an estimated 690 million people suffered from undernourishment, 235 million of whom were in sub-Saharan Africa. In the region, agriculture remains the main source of employment and a critical sector in terms of economic development.

The continent is facing an unprecedented economic crisis that could push an additional five million to 29 million people into poverty, end up to 19 million jobs and raise the number of undernourished people in food-importing countries by an additional 14.4 million to 80.3 million people.

A new report titled Public expenditure on food and agriculture in sub-Saharan Africa: Trends, challenges and priorities, found few countries have met the 10 percent Maputo target, despite a renewed commitment in 2014 through the Malabo Declaration. Surprisingly research showed that on average, 21 percent of budgets devoted to food and agriculture in the region were not spent, often due to either funds being disbursed too slowly or complications in project implementation.

"This says that large financial commitments are not sufficient to enable a country to transform its agricultural sector," said the report, adding, "This is particularly true for donor-funded expenditures, where the share of unspent funds is substantially higher at around 40 percent." Overall, a number of sub-Saharan Africa countries still rely on donor funds for their agriculture sector, with the share of donor expenditure as a proportion of total agricultural spending averaging 36 percent.

In Burundi, for example, agriculture relies heavily on official development assistance (ODA), where donor allocations accounted for 70 percent of the agricultural budget.

Together with the high reliance on donor expenditures, another driver of low budget execution rate in agriculture is the slow disbursement of funds in such a highly seasonal business, which requires certain investments at a very specific time of the year.

"This not only delays the implementation of potentially transformative projects but may also jeopardise future donor allocations to the agricultural sector," said the researchers. "Also, the failure to spend the budgeted amounts may explain why finance ministries may be reluctant to allocate more financial resources to food and agriculture."

Execution of donor expenditure is particularly low and variable in Kenya, Burundi and Burkina Faso at about 61 percent on average, against an execution rate of 91 percent for national expenditure, meaning that a large proportion of the available funds are not used, thereby delaying or hindering critical investments.

The researchers found that typically, donors tend to fund agricultural infrastructure, such as roads and off-farm irrigation: An average 25 percent of donor funding goes to this category. On the other hand, national resources are mainly directed towards providing producer transfers, i.e. input subsidies. About 23 percent of budgets on food and agriculture in sub-Saharan Africa were spent on input subsidy programmes between 2004-2018.

Complexities in procurement, weak co-ordination with donors and with decentralised governments were identified as key constraints to the execution of donor support for the food and agriculture sector.

Salaries, wages and other recurrent expenditures are typically more predictable and are usually financed by domestic sources as opposed to donor-funded expenditures, which mostly fund capital expenditures that are more difficult to implement and more exposed to abrupt changes. While donor funds mainly finance investment projects which may require legislative approval (even when resources have been budgeted) and procurement plans may not be drafted before budgets are made available, delaying the implementation of projects and undermining execution of expenditure by donors.

"Given that a large proportion of donor funding for agriculture currently goes unspent, it is important that countries, together with their development partners, come up with solutions. These could include simplifying existing procedures, improving coordination, improving local capacities to manage and execute funds particularly among civil servants, or shifting to budget support as an aid modality," the researchers recommend.

"Addressing low execution rates could increase the level of actual expenditure, without additional resources and support potentially transformative projects."

The researchers call on the continent to improve public expenditure monitoring systems and to pinpoint how and where funds should be best disbursed for food security, nutrition and agricultural production.

It found that even though agriculture employs over half of sub-Saharan Africa's active labour force, the continent spends less per capita on agriculture relative to other regions in the world.

The publication by the FAO Monitoring and Analysing Food an Agricultural Policies Programme within the FAO Agrifood Economics Division said on average, the sub-Saharan Africa countries studied in this report spent around six percent of national budgets on food and agriculture, with Malawi being the only country that consistently met the 10 percent and Mali, in some years achieved the CAADP threshold/Maputo Declaration.

A declining share of total expenditure allocated to the sector was noted in Uganda, Tanzania, Ghana and Mozambique, whereas an upward trend was seen in Burundi and Senegal. In the remaining countries no clear-cut trend was observed as food and agricultural expenditures have been too volatile.