Greening Africa: Public Expenditure for Agriculture Augustin K. FOSU UN University-WIDER and University of Ghana-Legon African Economic Conference (AEC)

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Presentation transcript:

Greening Africa: Public Expenditure for Agriculture Augustin K. FOSU UN University-WIDER and University of Ghana-Legon African Economic Conference (AEC) Addis Ababa October 2011

2 Outline Introduction Introduction Money matters for greening Africa: The CAADP 10 % pledge Money matters for greening Africa: The CAADP 10 % pledge Trends in public expenditure on agriculture, by region Trends in public expenditure on agriculture, by region % of agricultural GDP % of agricultural GDP In 2000 int’l $ In 2000 int’l $ Trends in public expenditure composition: SSA and Africa Trends in public expenditure composition: SSA and Africa Expenditure share for agriculture by African country Expenditure share for agriculture by African country Determinants of the agriculture expenditure share: a review and some current results Determinants of the agriculture expenditure share: a review and some current results Conclusion Conclusion

3 Introduction Money matters for greening Africa: The CAADP 10 % pledge Money matters for greening Africa: The CAADP 10 % pledge Is the pledge being fulfilled? Is the pledge being fulfilled? Is the pledge likely to be fulfilled? Is the pledge likely to be fulfilled?

4 Trends in public expenditure for agriculture (% agric GDP), by major global region Trends in public expenditure for agriculture (% agric GDP), by major global region Source: Fan, S. et al (2009): ReSAKSS WP #28; original data from IMF Gov’t Fin. Stats. Yearbook (various issues)

5 Trends in public expenditure for agriculture (% of agric. GDP), SSA vs. NA Trends in public expenditure for agriculture (% of agric. GDP), SSA vs. NA Source: Fan. S. et al (2009): ReSAKSS WP #28; original data from IMF Gov’t Fin. Stats. Yearbook (various issues)

6 Trends in public expenditure for agriculture, SSA & NA (2000 international dollars, bils.) Trends in public expenditure for agriculture, SSA & NA (2000 international dollars, bils.) Source: Fan, S. et al (2009): ReSAKSS WP #28; original data from IMF Gov’t Fin. Stats. Yearbook (various issues)

7 Trends in public expenditure composition (%): SSA and Africa Trends in public expenditure composition (%): SSA and Africa Source: Fan, S. et al (2009): ReSAKSS WP #28; original data from IMF Gov’t Fin. Stats. Yearbook (various issues) Note: T & C = Transport and Communications

8 Trends in agric’s public expenditure share (%): SSA and Africa Trends in agric’s public expenditure share (%): SSA and Africa Source: Fan, S. et al (2009): ReSAKSS WP #28; original data from IMF Gov’t Fin. Stats. Yearbook (various issues)

9 % Agric pub. expend. share by African country % Agric pub. expend. share by African country Source: Fan, S. et al (2009): ReSAKSS WP #28; original data from IMF Gov’t Fin. Stats. Yearbook (various issues). Note: 2005 is latest year with near-complete data.

10 % Agric pub. expend. share, ctry ordering % Agric pub. expend. share, ctry ordering Source: Fan, S. et al (2009): ReSAKSS WP #28; original data from IMF Gov’t Fin. Stats. Yearbook (various issues). Note: 2005 is latest year with near-complete data.

11 % change, agric pub. expend. share, ctry ordering % change, agric pub. expend. share, ctry ordering Source: Fan, S. et al (2009): ReSAKSS WP #28; original data from IMF Gov’t Fin. Stats. Yearbook (various issues). Note: 2005 is latest year with near-complete data.

African countries meeting the CAADP 10% target (source: see above) Burkina Faso (20.4%, 2006) Burkina Faso (20.4%, 2006) Ethiopia (13.7%, 2005) Ethiopia (13.7%, 2005) Chad? (9.7%, 2004) Chad? (9.7%, 2004) Ghana (10.3%, 2008) Ghana (10.3%, 2008) Guinea (14.0%, 2004) Guinea (14.0%, 2004) Malawi (12.2%, 2007) Malawi (12.2%, 2007) Mali (11.0%, 2007) Mali (11.0%, 2007) Niger (15.1%, 2006) Niger (15.1%, 2006) Senegal (13.9%, 2008) Senegal (13.9%, 2008)

Determinants of agric public expenditure share – Existing literature SAP decreased the agric expenditure share (Fan & Saurkar (?) and Fan & Rao (2003); also above graphs show declines during ) SAP decreased the agric expenditure share (Fan & Saurkar (?) and Fan & Rao (2003); also above graphs show declines during ) Note: Agric spending increased in real $ even during the SAP period (see above graph). Note: Agric spending increased in real $ even during the SAP period (see above graph). Fosu (2010, AfDR) from AEC!: sample Fosu (2010, AfDR) from AEC!: sample PCGNP had a weak negative effect on the agric expenditure share, GEAG PCGNP had a weak negative effect on the agric expenditure share, GEAG ODA’s effect was positive but insignificant ODA’s effect was positive but insignificant Most importantly, XCONST had a strongly positive effect on GEAG Most importantly, XCONST had a strongly positive effect on GEAG

Determinants of agric public expenditure share – Current regression results for ODA has a positive effect on GEAG ODA has a positive effect on GEAG The following variables have negative effects: The following variables have negative effects: Debt service rate (DSR) Debt service rate (DSR) Rural population share (RURPOP) Rural population share (RURPOP) Per capita GDP (PCGDP) Per capita GDP (PCGDP) and very surprisingly XCONST (perhaps due to strong executive branches being better able to adjust the budget to meet the requirements of the CAADP). and very surprisingly XCONST (perhaps due to strong executive branches being better able to adjust the budget to meet the requirements of the CAADP).

Conclusions Strong resurgence of public agricultural spending since 2000, perhaps due to CAADP, reversing the previous downward trend in the agric share, GEAG Strong resurgence of public agricultural spending since 2000, perhaps due to CAADP, reversing the previous downward trend in the agric share, GEAG Better governance represented by XCONST favored relative agric spending in the past, while the reverse seems to be the case currently following CAADP Better governance represented by XCONST favored relative agric spending in the past, while the reverse seems to be the case currently following CAADP Rising ODA and falling debt-service favor GEAG, but rising PCGDP and increasing XCONST tend to reduce GEAG for post-CAADP Rising ODA and falling debt-service favor GEAG, but rising PCGDP and increasing XCONST tend to reduce GEAG for post-CAADP Conjecture: The 10% GEAG target may not be achieved, as XCONST is likely to increase with improving governance, while PCGDP is likely to rise, neither favoring GEAG (ODA and DSR unlikely to change much; indeed, ODA could fall and DSR rise!) Conjecture: The 10% GEAG target may not be achieved, as XCONST is likely to increase with improving governance, while PCGDP is likely to rise, neither favoring GEAG (ODA and DSR unlikely to change much; indeed, ODA could fall and DSR rise!)

Thank you! 16