Inclusive Agricultural and Rural Development in Sub-Saharan Africa Chris Barrett Cornell University November 16, 2004 USAID BASIS CRSP Policy Conference Combating Persistent Poverty in Africa Washington, DC

1) Huge numbers need help: >500 mn Africans live on $2/day or less … to grow to >610 mn by ) The aggregate $2/day poverty gap for SSA ~$190 bn/yr or about 62% of gross income (PG ~ 38%) … or leverage through high return investments 3) Overwhelming majority live in rural areas and depend – directly or indirectly – on agriculture 4) Ag productivity stagnated for a generation Must re-ignite rural farm/non- farm productivity growth! The Daunting Challenge

How To Meet This Challenge Context-specific, multi-dimensional asset thresholds that separate growth / decline Climbing out of poverty traps and keeping the non- poor out of poverty traps requires: - increase productivity of assets (markets/technologies) - facilitate asset building and protection (cargo/safety nets) - remove exclusionary mechanisms (finance/social networks) Start with the familiar, then move to more novel …

Familiar 1: Increasing Asset Productivity Improve agricultural technologies and uptake: - renew investment in NARES (incl. universities) - integrate three methods of agricultural TFP growth: ▪ Traditional GR methods (maize, cassava, etc.) ▪ Biotechnology (NERICAs, DRVs, etc.) ▪ Agro-ecological methods (SRI, agroforestry, etc.) - one-off stimuli (starter packs, FFW) Improve terms of trade for poor - reduce costs of mkt participation (roads, ICT, contracts) - level playing field (farmer groups, outgrowers, business skills and support services) Improve non-farm productivity - stimulate private sector investment, esp. in post-harvest processing (labor demand, K deepening)

Familiar 2: Facilitate Asset Building Human capital (labor primary asset of poor): - Education: key to remunerative non-farm employment and to technology uptake /agricultural intensification Natural capital (one of two legs for ag growth): - soil and water conservation (crowding-in investments) - soil nutrient replenishment (IFs, bulk phosphate, etc.) - water management (harvesting, small-scale irrigation) Physical capital; - minimum scale of non-farm capital (“micro” finance?) Cargo net strategies for those seemingly trapped in persistent poverty

Novel 1: Safety Nets for Asset Protection Human capital (labor primary asset of poor): - Health and nutrition: preventive health care and ensuring adequate nutrition … keys to avoiding falling into long-term poverty traps (Kenya, Madagascar, Zimbabwe) - Workfare schemes to avoid asset liquidation responses Livestock: - animal disease control, restocking projects Keys: 1) Multidimensional asset protection essential 2) Need to set safety nets at critical asset thresholds 3) Beware trying to do too much with safety nets

Novel 2: Remove Exclusionary Barriers Financial services (exchange across time): - In order to make time work for the poor, must be able to borrow, insurance and save (SRI, dairy, tea) - Micro-finance sometimes promising, but beware (KDA) Socio-political exclusion: - public goods access (roads/electricity … argan case) - racial, gender, religious, ethnic, caste barriers (traders, information, safety nets, occupations, finance): need to do more than tear down formal barriers … need to bridge the divides those barriers create(d)

Conclusions and Policy Implications 1) Many familiar: improve productivity and build assets... But need to fund and prioritize these longstanding prescriptions 2) Poverty traps imply some more novel approaches: safety nets and removing exclusionary institutional mechanisms 3) Need progress on multiple fronts … will require significant resources (financial, human and technical) … but alternatives are continued deepening persistent poverty ~$190 bn/year and growing

Thank you!