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Efficiency of Public Spending will Enhance Agriculture Productivity for Poverty Reduction in Africa

March 23, 2017

WASHINGTON, March 23, 2017—Reforms in public spending would boost agricultural productivity in Sub-Saharan Africa, raising farmer’s incomes, and promoting broader economic growth, says a new World Bank report released today. Reaping Richer Returns: Public Spending Priorities for African Agriculture Productivity Growth explores the performance of agricultural spending in Africa, and presents a wealth of important lessons from which African policy makers and development practitioners, and academics can draw options for reform.

“A vibrant, sustainable and resilient agriculture sector is vital for Sub-Saharan Africa’s economic future,” said Makhtar Diop, World Bank Vice President for the Africa region“To make a significant dent on poverty, enhancing the productivity and competitiveness of African agriculture must become a priority. Reforming the design and implementation of public spending programs while rebalancing in favor of high-return public goods could produce significant gains.”

According to the study, the challenge is not only that agricultural public spending in Sub-Saharan Africa lags behind other regions. Its impact is also vitiated by subsidy programs and transfers that tend to benefit elites to the detriment of poor people and the agricultural sector itself. Shortcomings in the budgeting processes also reduce spending effectiveness. In light of this scenario, addressing the quality of public spending and the efficiency of resource use becomes even more important than addressing only the level of spending.

The dividends from investments to strengthen markets, soil and water management, and develop and disseminate improved technologies can be enormous. In addition, improvement of the policy environment through trade and regulatory policy reforms complements spending, by enhancing the incentives for producers and innovators to take advantage of public goods that crowd in private investment.

The study recommends specific areas where African governments can prioritize spending to reap richer returns, including implementing smart subsidies, boosting spending on research and development and eliminating barriers that impede rapid uptake of new technologies, and investing in market access and land governance.

Improved public spending is only one ingredient of a strategy for agricultural transformation, and must be complemented by a host of additional policies. In a poor policy environment, even spending in areas that otherwise have high returns will be unproductive or counterproductive. The efficient use of public funds has laid the foundation for transformation in other parts of the world, and can play that role in Sub-Saharan Africa as well.

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