Spending on NAADS in Uganda: Is it Worth the Shilling? Adapted from: Benin et al. (2011) “Returns to Spending on Agricultural Extension: the Case of the National Agricultural Advisory Services (NAADS) Programme of Uganda” Agricultural Economics, 42(2), pp Nassul Kabunga, PhD Presentation and Discussion of UPW Policy Briefs Uganda Evaluation Week, Silver Springs Hotel, Kampala, Uganda, June 13-17, 2016 Office of the Prime Minister (OPM), Government of Uganda

Research Question NAADS started in 2001 as a new model of public-private agricultural extension to improve incomes and welfare of the active poor through market-oriented agric. production As NAADS came towards the end of phase one (I) of implementation in 2008, it was imperative that a rigorous impact assessment be done to inform progress This study assessed two aspects: 1.Whether beneficiaries of NAADS had improved their incomes as set out in Whether there were benefits to spending/investment in NAADS by the end of the first phase in 2008

Intervention NAADS is a 25-year national programme aiming at increasing incomes and quality of life of farmers in Uganda It was envisaged that If ‘poor but active farmers’ take up new agricultural technologies, they would improve their production and increase the share of marketed produce NAADS would reduce poverty through two mechanisms: 1.Grants to poor people, which would relax access constraints to physical and financial resources, enabling farmers to take up new enterprises/technologies 2.Provision of extension information and training on profitable enterprises/ technologies would improve their uptake, leading into increased productivity and marketed output Through these mechanisms, farmers would be empowered to demand and control private-sector led agric. advisory services

Intervention At the onset in 2001, NAADS was piloted in 24 subcounties By 2007:  UGX 110 billion had been spent to extend NAADS to 545 subcounties  83% of all subcounties at the time  NAADS had signed 1,622 contracts with private-sector agencies to provide advisory services on more than 40 enterprises DIRECT BENEFICIARIES  NAADS had ~700,000 farmers who were affiliated to and can access direct grants from ~40,000 NAADS farmer groups, attend trainings and set up technology development sites  DIRECT BENEFICIARIES  INDIRECT BENEFICIARIES  There were also a fair number farmers who, irrespective of their NAADS affiliation status, could access information from fellow farmers, service providers  INDIRECT BENEFICIARIES

Methods The study uses household and subcounty level data that were collected in 2004 and 2007 across sub-counties that had received or had not received NAADS by 2007 Household data:  conducted interviews with randomly selected households—900 in 2004; 1,200 in 2007  at each round of household visits, data were sought on the use improved technologies and practices, value and frequency of input use, earning from agricultural production, etc.  for comparison, interviewed households were selected from NAADS participating and non-participating subcounties that had similar agricultural potential and market access  Analysis is based on 719 households that appear in both 2004 and 2007 household visits

Methods Subcounty data:  collected only in NAADS participating subcounties  information was obtained on various aspects on NAADS, including on programme expenditures At analysis stage, potential effects of modification due to learning as programme expanded to new areas are accounted for using the 2004 round of household visits  households were classified according to the year when NAADS was first implemented in the subcounty as follows: 2001/02 1.Households with NAADS beginning 2001/ /03 2.Households with NAADS beginning 2002/ Households with NAADS between WITHOUT 4.Households WITHOUT NAADS by 2007 with NAADS without NAADS

Methods Various methods of data analysis were used account for bias and attribute observed changes in income to NAADS, e.g. comparing and matching income changes over time DIRECT BENEFITS  Results were compared across farmers who directly benefited from NAADS (DIRECT BENEFITS) and those that only benefited indirectly through interactions with direct beneficiaries (INDIRECT BENEFITS)  To assess if NAADS benefited the active poor, further analysis considered how derived effects play out with respect to gender, assets and access to credit, road and markets To assess if NAADS was worth government spending, the present and future costs associated with NAADS were compared with the present and future benefits to society, expressed in monetary terms (e.g. using benefit-cost analysis)  To cater for inflation, all monetary values were standardised to the value of the same goods and services in year 2000

Findings Households living in subcounties where NAADS was implemented, improved their agricultural income measured by agricultural revenues:  Depending on estimation method, households in NAADS subcounties increased agricultural income by 32-63% DIRECT beneficiaries (those affiliated to NAADS groups) benefited more from NAADS than INDIRECT beneficiaries  Depending on estimation method, DIRECT beneficiaries increased agricultural income by 27-55% due to NAADS  DIRECT beneficiaries gained from NAADS via increased uptake of pesticides while INDIRECT beneficiaries gained by enjoying high market prices offered through group marketing.

Findings Assessment of distributional effects shows that NAADS was NOT as effective for women as it had been for men  possibly because majority (88%) of extension workers even under NAADS are men! NAADS effects were also greater among young people (less than 40 years) and households with large families  possible that NAADS strategy of targeting the youth was effective  also, labour access constraints could have hindered wider uptake of labour-intensive technologies promoted by NAADS NAADS was more effective at improving incomes of poorer households i.e. the active poor  Those with small pieces of land (<1 acre) and those that lived further away from financial institutions, all-weather roads and markets, as well as those from Eastern and Northern Regions

Findings  With respect to programme performance for , NAADS had realized direct and indirect benefits estimated at UGX billion in 37 NAADS subcounties under study For the same period, the sum of all costs including possible payments to local voluntary staff (CBFs) in 37 subcounties was UGX 14 billion Based on this, investment in NAADS is JUSTIFIABLE, even after considering:  costs associated with the relative importance of the programme to society for now and the future  costs associated with farmer operational costs e.g. buying inputs  costs of raising public funds and costs on borrowed money, and  alternative opportunities for government investment

Findings Specifically:  NAADS is still be profitable for farmers’ participation costed them 35-50% of their agricultural earnings!  A UGX 1 spent on NAADS generated between UGX 8-49 by the end of financial year 2006/07 Even after taking into account the cost of borrowing money by government/mobilising funds, the possibility of investing in alternative avenues, there were still benefits to spending on NAADS!

Recommendations NAADS achieved its maiden goal of increasing incomes in phase I of its implementation for DIRECT and INDIRECT beneficiaries. As women play an important role in agricultural production and household welfare, it is imperative that future waves of NAADS implementation target more women farmers NAADS improved incomes through increased uptake of pesticides and marketing.  it is sensible that government promoted NAADS beyond the initial pilot sites  Increasing women membership in NAADS farmers’ for a could push for women interests within NAADS  For best results, future NAADS should address a wide range of production constraints beyond provision of extension messages