Addressing the impact of the crisis on food security, agriculture and sustainable development

Your Excellency Mr Jean Ping, Chairman of the African Union Commission
Your Excellency Mr Abdoulie Janneh, United Nations Under-Secretary-General and  Executive Secretary of the Economic Commission for Africa
Your Excellencies,
Ladies and Gentlemen,

I am delighted to take part in this important conference and to have the honour of addressing this 2nd Joint Annual Meeting of the Ministers of Finance of the African Union and the Ministers of Finance and Economic Planning of the United Nations Economic Commission for Africa.

As this is the first African Ministers meeting I am addressing since I was elected in April of this year as President of the International Fund for Agricultural Development (IFAD), allow me to take this opportunity to thank you and your governments for the universal support I received from Africa for my candidacy. It is indeed a deep honour to have been elected as the President of an international institution dedicated to reducing hunger and to fighting rural poverty – IFAD.

In my address today, I would like to share with you my thoughts on the impact of the global financial crisis on food security and agricultural development in Africa. I would also like to advance, for your consideration, a number of policy measures that I believe are critical for ensuring food security for the people of Africa.

Impact of the Crisis on African Food Security and Agriculture

Your Excellencies,

The impact on most African countries of the food and fuel crisis last year, as you are all aware, was quite profound. The unprecedented rise in global food prices – exceeding 50 per cent in some instances -- resulted in huge increases in the prices of imported cereals such as rice and wheat. We all remember how the high prices of food last year led to social unrest and political tensions in several African countries. The high costs of food imports also put enormous strains on foreign exchange earnings and reserves.

As a consequence, the affordability of important staples became a critical issue for many countries, as high prices often took such staples out of the reach of poor and low-income consumers. Poor people had to eat less or limit themselves to lower quality food, contributing to an increase in malnutrition. The World Bank estimates that the combined fuel and food crises last year pushed over 120 million people in Africa and in other developing countries into poverty and malnutrition. And according to FAO, 21 out of 36 countries affected by increasing food insecurity are in sub-Saharan Africa.

And while food prices have declined from the levels reached last year, they still remain high by historical standards. We are also observing a high volatility in such prices, reflecting continued production and availability concerns. The crisis also meant that the prospects of African countries for reaching the first Millennium Development Goal – that of halving the number of people living in poverty and hunger by 2015 – will be delayed further.

An interesting impact of the food crisis last year and the threat it posed to the availability of food for importing countries was the interest shown by a number of countries, particularly those in the Middle East, in acquiring large tracts of land in Africa for the production of food crops for their domestic markets. While some have labelled such foreign investment as ‘land grabs’, I believe a ‘win-win’ situation – that is, one that benefits all parties – can be crafted, if appropriate policies and legal frameworks are put in place.

As other speakers have noted, Africa has not been spared the impact of the current financial crises and global recession, as some observers had hoped. On the contrary, the sharp decline in the demand for export commodities is beginning to have a noticeable impact on domestic production and income.  Recent IMF projections of GDP growth for sub-Saharan Africa expect it to fall to 1.5 per cent in 2009 – well below the population growth rate.

Africa is also being affected by a significant decline in remittances – an important lifeline for many on the continent. Undoubtedly, this will have an impact on poor people’s consumption, resulting in many cases in the actual deterioration of food security.

 In the current global crisis, a major cause of concern about the prospects for food and agricultural production in Africa is the serious fiscal crisis that many governments are beginning to feel. Pressure is mounting for governments to cut back government expenditures because of declining revenues.

This poses a real danger to essential investments in the agricultural sector. Should this occur, there is a possibility that production capacities and food security could be adversely affected in the coming years. It is therefore my hope that African countries will protect core expenditures in agriculture and seek to fulfil the commitment they made in Maputo in 2003 to raise investment in agriculture to at least 10 per cent of national budgets.

And in the light of the increasing fiscal crisis that many African governments are facing, I would like to use this opportunity to call on the international donor community to fulfil the pledges it made to Africa at Gleneagles to double ODA and improve access to markets.

Policies to Develop African Agriculture and Enhance Food Security

Your Excellencies,
Ladies and Gentlemen,

Looking ahead, an essential question we need to ask is: In the light of the clear threats posed by recent global developments, what should African countries do to develop their agriculture and enhance their food security? It is evident that after being neglected for a long time, the issue of food security is back on national agendas, as both the availability of food and its affordability have become major national security concerns.

In considering future policy options, I believe it is critical that we keep in mind that despite rapid urbanization in recent years, Africa is still a predominantly rural society, and the agricultural sector continues to play a critical role in most economies. Agriculture accounts for about 30 per cent of sub-Saharan Africa’s GDP, at least 40 per cent of its export values, and approximately 70–80 per cent of employment.^1/

Agriculture in Africa is also predominantly small-scale, with some 80 millionsmallholder farmers providing up to 80 per cent of agricultural production. Efforts to develop agriculture must therefore necessarily focus on smallholder agriculture, as it is the major sector in almost all countries.

In the light of today’s challenges, my principal message is therefore clear: resolving the food crisis, resuming economic growth, and tackling the challenge of poverty must necessarily be based on creating a dynamic smallholder agriculture sector. In addition, given the many social problems that the current crisis has created, we should not forget that investing in smallholder agriculture is undoubtedly the most sustainable safety net for societies.

The priority areas of investment that we should consider are:

• investment in agricultural research to create a new green revolution in Africa. In this regard we need – and can -- replicate the success we have had in developing new varieties such as the New Rice for Africa (NERICA) that has doubled rice yields
• investment in key agricultural services such as extension services, to ensure that the latest technologies are disseminated to farmers
• investment in local infrastructure – irrigation, communications, power and transport.  In particular there is a need to invest in the “last mile” rural roads – to ensure that what is produced by poor rural people can actually reach the markets and fetch a good price
• investment in rural financial services, markets and linkages so that smallholder farmers can buy fertilizer and better seeds, gain more control over when and where to sell their produce, and insure themselves against risks such as drought. I would like to note, in this regard, that IFAD has pioneered the development of rural microfinance and today provides about US$200 million each year to help build microfinance institutions that serve poor farmers, especially women
• investment in agro-processing to add value to primary products and to reduce post-harvest losses and improve quality. An IFAD-funded project in Uganda, for example, has linked smallholder producers of palm and oil seeds with an agro-processor who has invested over US$40 million in a processing plant. The farmers now have secure markets at good prices. And the agro-processor has an assured supply – to the benefit of both.

Your Excellencies,
Ladies and Gentlemen,

While a clear priority must necessarily be given to smallholder agriculture, I believe that African countries can also advance the development of their agriculture and enhance food security by promoting public/private partnerships in large-scale commercial agriculture. In particular, I believe there is much potential in the interest shown by a number of countries in acquiring land in Africa to grow food crops for their domestic markets. Clearly, the number of suchland deals is increasing.

I believe that when properly handled, such large foreign investments have the potential to support broader agricultural development in African countries, as they can mobilize resources for investments in roads, irrigation, technology and training. If done the right way, land deals can improve the lives of poor rural women and men. They can create jobs and market access and help poor rural people lift themselves out of poverty.

I should, however, caution that for this to take place the partnership between countries and such foreign investment needs to be structured properly. In particular:

• The voices of poor rural people must be heard – including the most vulnerable, whose land tenure is often insecure. 
• Governments need to provide a clear legal and regulatory framework in which foreign investors operate, and through which land deals can be monitored.
• Innovative forms of collaboration between large commercial farms and smallholder farmers should be encouraged. In this regard, I should add that IFAD is supporting a pilot initiative along these lines in Ghana. Its lessons could serve as a model that could be replicated and scaled up in other countries.

Your Excellencies,
Ladies and Gentlemen,

Permit me to conclude by adding that in discussing the prospects for agricultural development and food security, let us not forget that despite the difficult situation that many African countries face today, Africa, fortunately, has enormous potential – both in terms of its human and natural resources – to lay the ground for a vibrant agricultural sector.

It has the potential to develop an agricultural sector that not only meets its own food and raw material needs but also those of other regions of the world. Our sister agency in Rome, FAO, estimates, for example, that with the right inputs such as appropriate irrigation and fertilizer, the amount of arable land available in sub-Saharan Africa could be increased four to five times.

I should, however, warn that this immense potential will remain unrealized unless we put our political and economic house in order and create the proper conditions for growth. For growth and development are intrinsic and endogenous processes. As I noted on a recent occasion, I know no nation, no people whose development was dependent solely on external support. Every tree, every plant must be fully rooted in its own soil for it to fully enjoy the resources of its external environment.

I thank you for your attention.

6-7 June, 2009 Cairo - Joint Annual Meeting of the
African Union (AU) Conference of Ministers of Economic and Finance and the Economic Commission for Africa (ECA) Conference of African Ministers of Finance, Planning and Economic Development

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1/ African Green Revolution