AFRICA AGRICULTURE STATUS REPORT 2016

expenditure (research, extension, irrigation,
marketing, infrastructure, farm support
subsidies) and growth and other development
outcomes is summarized in Table 2.2 (for
detailed discussion,see Benin 2015a, 2015b).
It shows that different types of agriculture
expenditure are positively and significantly
related to agricultural growth and many other
development outcomes.
However, it is difficult to identify and prioritize highimpact
components of agricultural expenditures
in a comprehensive and consistent manner. This
is because the underlying studies vary in many
aspects (including methodology, country and
time-series coverage, and level and measure of
expenditure and impact indicators), which limits
their comparability for ranking different types of
expenditures, and for understanding how the
impacts have evolved over time.
A study by Fan, Gulati and Thorat (2008) in
India provides an example of the nature of
evidence that is extremely useful for prioritizing
investments. In that study, they estimate the
returns in terms of agricultural GDP and poverty
reduction to public expenditure in agricultural
R&D, irrigation, and fertilizer and credit subsidies
as well as expenditure on rural roads, education,
and power. The returns are estimated for different
periods of time, 1960s-1970s, 1980s, and 1990s.
The results thus offer a rich comparative analysis
of temporal returns to expenditure within and
across agricultural and non-agricultural sectors,
with the inter-temporal differences suggesting
a shift in priorities over time. For example,
expenditure on roads, education, and R&D have
the largest returns, whereas expenditure on
fertilizer and power subsidies have the lowest
returns; subsidies on credit outperform subsidies
on irrigation, fertilizer and power. Subsidies on
credit are among the top two or three highest
ranked within the agriculture expenditure
portfolio, suggesting that some forms of subsidies
are indeed favorable.
Effect of CAADP on Agricultural Spending,
Growth, and Other Outcomes
How has CAADP contributed to the above trends
and performance in the different indicators?
Answering this question fully is beyond the
scope of this paper. Preliminary results of
ongoing analysis to address this question show
that CAADP has made significant contributions
to the achievements described above (Benin,
2016). In this section, we use analysis of means
and variances in several of the above indicators
across different groups of countries categorized
according to two definitions of CAADP
implementation: (1) three groups of countries
depending on when they signed their CAADP
compact, whether in 2007–2009, 2010–2012,
or 2013–2014, as opposed to those that had not
signed a compact by the end of 2014; and (2)
five groups of countries depending on the level
of implementation reached by 2014, those yet to
start or at the pre-compact stage—level 0, those
that have a compact only—level 1, those that
have a NAIP but have not secured any external
funding—level 2, those that have a NAIP and have
secured external funding from one source only—
level 3, and those that have secured external
funding from more than one source—level 4
(see Table 2.3) 3 . This method is a simplified
difference-in-difference approach in which the
basic result is interpreted as the percentage
change in the outcome in countries that are
implementing CAADP compared to the general
change in the outcome in countries that are not
implementing CAADP. For countries that are
implementing CAADP, the result is differentiated
and interpreted as the relative effect of signing
a compact in the different periods or reaching
different levels of implementation 4 . Because
the implementation of CAADP involves several
processes that take time to be institutionalized,
whose effect in turn take time to materialize, we
expect the effect of CAADP to be larger for those
that signed their compact earlier than later and,
similarly, for those that have reached higher than
lower levels of implementation.
Tables 2.4 and 2.5 show the average annual
percentage change in the value of different
indicators over the 2003–2014 period and the
two nested sub-periods of 2003–2008 and 2008–
2014. We observe several patterns, but highlight
two major ones. First, the changes are generally
larger for countries that are implementing
CAADP than for those that are not, which is
consistent across the two definitions of CAADP
implementation and measurement periods.
More importantly, the differences are statistically
significant, especially when comparing changes
for countries that signed their compact in
2007–2009 versus changes for countries that
have not signed (Table 2.4), and for those that
3
The analysis is
based on Benin
(2016), which
uses data on 46
countries that
have adequate
time-series data on
all the indicators
analyzed. The
excluded countries
are the Comoros,
Equatorial Guinea,
Gabon, Libya, São
Tomé and Principe,
Seychelles,
Somalia, and
South Sudan.
There are three
external funding
sources used
here—New Alliance
Cooperation, Grow
Africa, and GAFSP.
4
Because the effect
of CAADP on the
various outcomes
is manifested
via multiple
pathways—see
CAADP Monitoring
and Evaluation and
Results Framework
(AU-NEPAD, 2015;
Benin, Johnson, &
Omilola, 2010)—it
is important not
to control for
any intermediate
transformations,
outcomes, or
processes that
are influenced by
CAADP to get a
reliable estimate of
the total effect, i.e.,
direct and indirect
effect. Factors that
affect a country’s
decision to
implement CAADP
as well as the
outcomes must be
controlled for, which
is not done here
(see Benin, 2016).
34 AFRICA AGRICULTURE STATUS REPORT 2016