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GREAT insights Magazine

Investment Priorities for the CAADP

The Eastern Africa Farmers Federation’s perspective

September 2012

Mugoya, M. 2012. Investment priorities for the CAADP: The Eastern Africa Farmers Federation's perspective. GREAT Insights, Volume 1, Issue 7. September 2012. Maastricht: ECDPM

From the onset, the Eastern Africa Farmers Federation (EAFF) has embraced the Comprehensive Africa Agriculture Development Program (CAADP) initiative. EAFF commends the African Union Heads of State for making bold commitments towards addressing food insecurity on the continent, and has taken an active role to contribute to the process.

Over the years, EAFF has made inroads into the various processes linked to CAADP at the continental, regional and national levels. EAFF is one of the signatory farmer organizations at the regional level for the Regional CAADP Compact for the Common Market for Eastern and Southern Africa (COMESA(1) and the East African Community (EAC). EAFF member organizations are signatories at the national level in Burundi, DRC, Djibouti, Kenya, Tanzania and Uganda. These are significant political achievements. EAFF now intends to translate this political opportunity into tangible investments and programs that have very clear direct impacts at the farm level.

Checking the 10% claims

To achieve this, in 2011, EAFF commissioned national studies to scrutinise the national budget allocations to the agricultural sectors in the five member states of the East African Community. The study revealed several interesting findings. Firstly, only Kenya has “supposedly” reached the CAADP target of allocating at least 10% of the national budget to agriculture. The calculation of the allocation to this sector in Kenya, and in all other EAC countries, is still questionable. This is because the calculation for the allocation does not follow the CAADP budget tracking criteria (2) for expenditure on agriculture. There is a need to review the budget amounts based on the CAADP criteria. The criteria clearly explain how to treat key expenditure items such as large government multi-sectoral projects, debt-service payments, and expenditure on agriculture-related public enterprises and state corporations. Overall, the study found that these criteria are not usually followed when calculating budget allocation to the agriculture sector.

Moreover, an increase in allocation to the sector does not necessarily translate to improved performance of the sector. This is due to various reasons. In some countries, a large portion of the budget is utilized as recurrent expenditure. For example in the 2008/09 financial year, Tanzania Ministry of Agriculture, Food Security and Co-operatives allocated 60% of the total budget toward recurrent expenditure, compared to only 18% for the equivalent Ministry in Uganda that year. Another reason is the low absorption rate of the funds that are allocated to the sector. The absorption capacities vary significantly in the region. In the 2009/2010 financial year, the Agriculture ministry in Tanzania absorbed up to 98% of the funds that were released by the Treasury. In 2009, the Ministry of Agriculture in Burundi absorbed about 25% of the development budget (sometimes called the investment budget). This rate – though significantly below the average absorption rate in the ministry with ranges between 80% and 95% – clearly signifies a big problem. This low absorption rate is explained by the lack of enough well-trained staff in the ministry, bureaucratic red-tape related to the release of the funds, and late release of the funds from the development partners.

Moreover, an increase in allocation to the sector does not necessarily translate to improved performance of the sector. This is due to various reasons. In some countries, a large portion of the budget is utilized as recurrent expenditure. For example in the 2008/09 financial year, Tanzania Ministry of Agriculture, Food Security and Co-operatives allocated 60% of the total budget toward recurrent expenditure, compared to only 18% for the equivalent Ministry in Uganda that year. Another reason is the low absorption rate of the funds that are allocated to the sector. The absorption capacities vary significantly in the region. In the 2009/2010 financial year, the Agriculture ministry in Tanzania absorbed up to 98% of the funds that were released by the Treasury. In 2009, the Ministry of Agriculture in Burundi absorbed about 25% of the development budget (sometimes called the investment budget). This rate – though significantly below the average absorption rate in the ministry with ranges between 80% and 95% – clearly signifies a big problem. This low absorption rate is explained by the lack of enough well-trained staff in the ministry, bureaucratic red-tape related to the release of the funds, and late release of the funds from the development partners.

Enabling farmers to shape the process

Producer organizations at all levels including national and sub-national level, have a key role to play in the budget-formulation and tracking processes. In most cases, the government opens up the process to the public, but due to lack of information and lack of capacity to formulate proposals, the participation of the farmer organizations in these processes is weak. EAFF’s strategy is now to build capacity of the farmer organizations at the national and sub-national levels to engage effectively in these processes. This capacity includes the identification of priorities, formulation of proposals in response to these priorities, and lobby and advocacy skills.

Defining priority investment areas

At the regional level, EAFF initiated a consultation process and commissioned a study to formulate proposals for regional investments for submission to the regional economic communities. This article highlights five key regional investment areas that were identified during the consultation exercise. These investment areas respond to a myriad of challenges that are inhibiting agricultural development in the region. These investment choices have been discussed and validated by EAFF member organizations. The next step is for the EAFF leadership and management to present these regional investment proposals to the relevant regional economic communities. EAFF is specifically targeting the EAC and COMESA.

Investment in agricultural inputs: There is need for a regional investment in fertilizers, seed and other improved agricultural inputs. This is because the utilization of improved inputs in the region is significantly low. With the exception of parts of Kenya, fertilizer usage in the region ranges between 5kg/ha to 20 kg/ha, which is far lower than the minimum target of 50 kg/ha that was set during the Abuja summit.

Investment in regional agro-industry: There is a significantly low degree of value addition and processing of agricultural commodities in East Africa. A good example of this shortcoming can be seen in the coffee industry. Coffee is an important regional crop as most countries in Eastern Africa grow it. In 2007, the five countries of EAC accounted for about 5% of global coffee production. One of EAFF’s member organizations from Uganda, the National Union for Coffee Agribusinesses and Farm Enterprises (NUCAFE) estimates that coffee farmers who sell their coffee as red cherries receive one hundredth of the price of that coffee after it has been roasted and is ready for sale. The price they receive can increase two-fold if the farmers dry their coffee before selling it; ten-fold if they grade the coffee before selling it; and forty-fold if the coffee beans are roasted before being sold. There is need to identify commodities for which value can be added in various ways, and invest in a regional facility that can add value to these commodities. Such an investment would be most appropriate for commodities that are produced by several countries in the region.

Investment in training/capacity strengthening for farmers on sustainable agri-business enterprises: Agriculture is the most important economic activity in Eastern Africa, contributing up 80% of direct employment in some countries in the region. There is a need to invest in the capacity of farmers and farmer organizations to improve their engagement in sustainable agribusiness enterprises. A large number of farmers in the region are engaged in their trade at a subsistence level. This is because of the weak infrastructure and facilities that inhibit the commercialization of the sector. Farmers need to be trained and exposed to opportunities that will trigger a business mind-set at the rural farming house-hold level. These opportunities exist through effective collaboration with private sector enterprises. The horticulture industry in Kenya has demonstrated that small farmers in the rural areas can produce high quality products that meet international standards, and receive a fair reward for their work. This model is sustainable and should be replicated in other locations and for other commodities.

Investment in climate-smart agricultural practices: Unpredictable changes in the climate have had adverse effects in the region in terms of reduced yields due to prolonged droughts, shifts in the cropping cycles, high incidence of pests and diseases due to warmer conditions, shifting of pests and diseases to areas that are now warmer than before, and reduced water for production as a result of drying up of rivers. There is an urgent need to identify new production models and options for farmers that are appropriate for the various agro-ecological zones in the region. The benefits of such interventions have been demonstrated by one of EAFF’s member organizations, Ligue des Organisations des Femmes Paysannes du Congo (LOFEPACO), a women farmer organization located in Butembo in the Democratic Republic of Congo (DRC). Women farmers received training on integrated soil fertility management for application on their rice farms. As a result, the rice yields increased three-fold leading to improved food security at the household level.

Investment in regional food reserve facility: Eastern Africa is one of the regions in the world that faced the most severe food shortages and famines. Yet, the region has also demonstrated that it has the potential to significantly increase food production. In Uganda, rice production has increased by 100% from 109,000 metric tonnes in 2000 to 218,000 metric tonnes in 2010. This increase has been a result of a deliberate government awareness strategy to farmers to start cultivating upland rice. There is need for a regional facility that will absorb bumper harvests from surplus areas in the region and sustainably distribute those surpluses to food deficit regions. This facility is intended to reduce vulnerability and exposure to future food security shocks. The overall goal is for the region to transition from emergency food security responses to long-term economic development strategies.

Conclusion

In summary, the Eastern Africa Farmers’ Federation has embraced the CAADP initiative at both the regional and national levels. Findings from recent research clearly indicate that there is still a lot of work to do at the governmental programming level to ensure that funds allocated to agriculture are effectively utilized to realize benefits for the stakeholders. In addition, there is a significant amount of work that needs to be done by the farmer organizations at all levels to ensure that they are effectively participating in the CAADP process as well as the budget-making processes at their respective levels. This is only way that the political will triggered by the AU Heads of State will translate to tangible improvements in the food security situation in Africa.

Mainza Mugoya is Policy and Advocacy Officer at the Eastern Africa Farmers Federation

Footnotes
1. Together with the Southern Africa Confederation of Agricultural Unions (SACAU)
2. NEPAD. 2005. Guidance Note for Agriculture Expenditure Tracking System in African Countries. Midrand: NEPAD Planning and Coordinating Agency

This article was published in Great Insights Volume 1, Issue 7 (September 2012)

 

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External authors

Mainza Mugoya