Dr Thulasizwe Mkhabela is an agricultural economist and is currently the Group Executive: Impact & Partnerships at the Agricultural Research Council; mkhabelat@arc.agric.za. Picture: Supplied
Dr Thulasizwe Mkhabela is an agricultural economist and is currently the Group Executive: Impact & Partnerships at the Agricultural Research Council; [email protected] Picture: Supplied

African agribusiness needs to bounce back strongly post Covid-19

By Opinion Time of article published Jun 3, 2021

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By Thulasizwe Mkhabela

THERE is a real threat that the Covid-19 pandemic may have reversed progress made on the world’s efforts to combat food insecurity and hunger affecting 130 million or more people globally.

As the world clambers to rebound after the pandemic, this article outlines four policy levers that African leaders should pull for improved prioritisation and planning of food and agriculture policies in 2021 going forward.

There can be no disagreement to the commonly held view that agriculture has been a boon for economic and social development in developing countries, and yet it remains largely underfunded.

It has been almost 20 years since African countries pledged to spend at least 10 percent of public expenditure on food and agriculture at the 2003 Maputo Declaration, spawning the Comprehensive African Agriculture Development Programme.

However, only a few countries have managed to achieve this, with average spending hovering around 6 percent. Now the risk is that Covid-19 could exacerbate the pre-pandemic situation and may have led to further budget cuts and disruptions. The scary reality is that scarce resources are being diverted from agriculture to cover other government priorities such as healthcare and social welfare programmes, thereby supporting short-term-low-return investments.

It is imperative that the African continent rebounds stronger in the aftermath of the pandemic rather than shrink back and regress on previously gained progress. Policymakers in Africa ought to act fast and simultaneously adopt strategic interventions that make the best use of the meagre public purse.

The following four tools are propounded to achieve better spending while reducing hunger and protecting livelihoods.

1. Strengthen the way policies and budgets are implemented and monitored.

Smart spending is better, rather than more, especially in the face of dwindling financial resources.

It requires a clear understanding of how money is currently distributed. It is fundamental to monitor and analyse public expenditure constantly and be ready to adjust targets when needed.

Paradoxically, most countries track only agricultural spending as a whole and do not have monitoring systems in place that inform decision-makers on how the money is distributed along the agri-food value chain.

For example, producers versus consumer subsidies; private versus public goods; or general support such as research, extension and infrastructure. The lack of timely and updated information on the functional distribution of public resources undoubtedly hinders the capacity to invest in the most rewarding programmes and projects as well as to understand when there are important areas that are underfunded. Agricultural R&D is a case in point.

The post-pandemic landscape will require an active monitoring of the public expenditure on agriculture since the entire system of incentives for agricultural production will be under increased scrutiny. Therefore, datarich and evidence-based policies have become more important than ever.

2. Rethinking subsidies on agriculture to build healthier, more sustainable food systems. African governments

support their agricultural sectors in different ways, be it through trade policies, subsidies on agricultural inputs, or through investments in food reserves, agricultural research and infrastructure. However, policymakers have often neglected the impact of support on the environment and nutrition.

The aforementioned statement is buttressed by the fact that around 19 percent of people in Africa are undernourished and 70 percent cannot afford a healthy diet.

It is envisaged that there will be a huge policy push for sustainable subsidies for food systems with emphasis on repurposing and redirecting subsidies to incentivise the production of healthier foods and reduce land degradation and biodiversity loss.

3. Leverage potential in the African Continental Free Trade Area (AfCFTA). The year 2021 will mark the start of trading under the new AfCFTA agreement. This unified market of 1.3 billion

people and spanning 55 countries, is one of the greatest steps forward for the continent’s economic development and is set to revolutionise Africa’s agriculture. Through the removal of tariffs and other barriers, the agreement is expected to enhance food availability and stabilise prices as African farmers gain increased access to the continent’s growing urban population.

But to make the AfCFTA live up to its potential, policymakers will need to adopt and implement a large number of accompanying reforms – such as better technologies and technical assistance programmes for enhanced production. Fiscal incentives are required to increase value addition and accelerate the growth of home-grown African agribusinesses.

The right regulatory reforms are essential to boost quality standards to ensure food is safe and nutritious. Implementing such a reform agenda takes longer than a year.

Nevertheless 2021 will be critical for policymakers to demonstrate that they are committed to intra-African trade integration and willing to do what it takes to help Africa’s farmers reap the free trade area’s benefits.

A caveat is to guard against the growing tide of large multi-national agribusinesses acquiring and taking over, through mergers and acquisitions, of promising established local businesses in order to capitalise on the opportunities presented by the AfCTFTA.

4. Target those who need it most. Because of the Covid-19 pandemic, the number of people living in extreme poverty in Africa has risen by 8 percent between 2019 and 2020, to nearly 520 million people. Hunger, too, is on the rise, as the pandemic, climate change and conflict are putting the poor’s lives and livelihoods in danger.

Agriculture is the lifeblood of most African families living in poverty. In 2021, policymakers need to focus on those who are even further behind. The governments should favour the targeting of agricultural support policies on those households and regions that need it most. With public budgets under strain, governments will need to prioritise investments that yield the highest returns in terms of agricultural potential and poverty reduction and attainment of the 2030 sustainable development goals.

Covid-19 has brought the imperfections in the current food systems to the fore as never before. In recognition of this urgent task, the UN Secretary General will be convening the Food Systems Summit during the late half of 2021 and this will give impetus to the call for radical and global transformation in the way the world produces and consumes food.

Dr Thulasizwe Mkhabela is an agricultural economist and is currently the Group Executive: Impact & Partnerships at the Agricultural Research Council; [email protected]

*The views expressed here are not necessarily those of IOL or of title sites

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