AFRICA AGRICULTURE STATUS REPORT 2016

Table 3.7: Agriculture budget allocation by programs (2000–2014; percent)
Programs Zambia Malawi Tanzania South Africa
2000 2014 2000 2014 2000 2014 2000 2014
Input Subsidy Program 10.9 16.2 8.3 35.8 26.2 8.2 0.0 0.0
Agricultural support
- - - - - - 8.4 21.2
program
Research and
1.3 0.9 6.6 1.4 0.04 0.5 40.7 21.2
Extension
Infrastructure Development
0.02 7.5 4.2 52.2 51.4 6.3 7.1 10.6
program
Price Support Programs
0.0 34.9 8.6 3.5 n.a. n.a. 0.0 0.0
Other programs 87.8 40.5 72.4 7.1 22.4 85.0 43.7 47.0
Source: Authors on calculation based on national budget expenditure data. Zambia (GRZ, various years; Govereh, et. al., 2006; Govereh, et. al., 2009);
Malawi (Ministry of Finance, various years; SARPN, 2015; World Bank, 2013); Tanzania (Ministry of Finance, various years; ASDP; World Bank, 2013);
South Africa (National Treasury, various years)
income and consumption of meat among the growing middle
class rises. Policy makers could help unlock the potential
gains from these trends to foster economic transformation by
instituting well designed policies to increase productivity in
the domestic agri-food supply chains and put local producers
and agribusinesses on a competitive footing with imports.
Such policies may include strategies that promote on-farm
productivity growth to expand domestic farm production, and
facilitate the development of well-functioning markets with
efficient packaging and distribution channels. In addition,
the policy may also promote the domestic processing of
traditional export commodities like cotton, cocoa, and coffee,
where Africa has demonstrated its global competitiveness
in production, and facilitate entry of local businesses into
global markets. Doing so would enable local producers to
recapture the domestic market currently being lost to imports
and generate employment in both upstream (agro-input
supply) and downstream (agri-food trading and processing)
for the workforce.
c. Develop and implement industrial policy aimed at
reducing costs, improving competitiveness and diversifying
the economic base
Reaping the greatest benefit from agricultural growth
requires strengthening its linkages with other sectors of
economy. Hence, efforts promoting on-farm productivity
increases the need to be complemented with increased links
with other sectors of the economy through the development
of agro-based industries and/or investments in programs that
increase farmers’ access to local and regional markets for
their agricultural products. To this end, African governments
may need to institute an industrial policy that promotes
private investment and job growth in the non-farm sectors,
which simultaneously acts as a stimulus to investment in
local agri-food systems (see EIU, 2008; Hausmann,Rodrik,
& Sabel, 2008; Rodrik, 2007a). Of particular importance
are those policies that reduce the cost of doing business
(e.g., improvement in physical infrastructure to link rural
hinterland to secondary towns and cities; provision of lowcost
and reliable supply of energy, streamlining property
right regimes especially those concerning land) and improve
competitiveness of local industry (e.g., remove or reduce
trade restrictions and taxes on imports of inputs to the industry
and service sectors such as trucks, tractors, and spare parts,
and minimize border-crossing bottlenecks). Improving the
quality of infrastructure is crucial. Not only is the coverage
and quality of much of Africa’s transport, communications
and energy infrastructure deficient, the costs paid to access
services are very high compared to those in other regions
(Kormawa & Jerome, 2015). Rodrik (2007b) proposes a
model of industrial policy as a collaborative process in which
governments and the private sector work to identify barriers
to new activities and formulate policies and investments
to address them. Because entrepreneurs who undertake
new activities face private costs and risks but provide
a public benefit by demonstrating their feasibility, these
activities should be subsidized or otherwise encouraged.
New activities can be incentivized with subsidies, trade
protection or venture capital, and governments can also
assist by playing a coordinating role. Because not all new
activities have the potential to be profitable, performance
requirements and phase-out plans should be built into all
incentives (Rodrik, 2007b).
Furthermore, such industrial policy intervention should
ensure that incentives and/or public goods aimed at
improving the function of markets are equally available to
both formal and informal sectors and provide a level playing
field for both sectors to promote competition and growth.
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