Agricultural Productivity in Resource-Rich African Countries

 

 Degol Hailu, Senior Advisor, UNDP

Chinpihoi Kipgen, Research Associate, UNDP

November 2016

 

 

It is a fair to assume agricultural productivity is higher in resource-rich countries. This is because revenues from the sale of oil, gas and minerals can finance the provision of equipment, fertilizer, irrigation, credit and seed to farmers. However, agricultural productivity continues to remain modest in many of Africa’s resource exporting countries. Why?

 

Between 2003 and 2013, agricultural output in resource-dependent countries in sub-Saharan Africa (SSA) actually grew at an average annual rate of 3.6%, slightly higher than the 2.7% growth rate experienced by the rest of SSA. Annual agricultural output growth rates in Angola, Cameroon and Zambia, for instance, averaged higher than 6% and were among the world’s highest growth rates.

 

A closer look at the use of production inputs, however, indicates that much of the growth in agricultural output has been achieved by increasing the size of cultivated land and not productivity. Cropland grew at an annual rate of 2.6%, reaching a total of 103 million hectares compared to 83 million hectares in the previous decade.

 

Although the stock of farm machinery (in 40-CV tractor equivalents) is estimated to have increased by 18.6%, farm machines per 1,000 hectares of arable land have remained at less than 4. This figure is about ten times lower than machinery use in non-resource dependent countries.

 

Similarly, average fertilizer consumption increased by about 8.5% per year. But, it remains at around 18 kilograms per hectare of arable land, compared to 27 kilograms in other SSA countries. In Angola, Cameroon, Congo Rep., Congo DRC, Gabon and Guinea, fertilizer consumption is lower than 10 kilograms per hectare of arable land.

 

The average share of arable land equipped with irrigation systems is 2.6%, compared to an already low 5% in the rest of SSA. The provision of credit to the agricultural sector is also not impressive. For instance, credit disbursed to the sector in Angola and Nigeria make up less than 5% of total credit.

 

Between 2003 and 2013, Agricultural total factor productivity (TFP) in resource-dependent countries grew at an average annual rate of 1 percent. Cereal yield has increased by 10%, compared to a 13% growth in the rest of SSA. Today, cereal yield stands at 1,213 kilograms per hectare, compared to an average of 1,412 kilograms for the rest of SSA, excluding South Africa.

 

The above findings are not surprising given that only four of the resource-dependent countries reached the Comprehensive Africa Agriculture Development Programme’s (CAADP’s) target of allocating 10% of public expenditure on agriculture, in one or more years since 2003.

 

The upshot of stagnant productivity growth has been the upsurge in imports of agriculture products. Imports increased from US$398 million in 2003 to US$1.4 billion in 2013. Currently, imports of food items by Angola, Guinea and Nigeria make up more than 13% of their total import bills.

 

The appropriate policy choice would be to spend the revenues from the sale of oil, gas and minerals on enhancing agricultural productivity through the provision of equipment, fertilizer, irrigation, credit and seed to farmers. Such policy choices are key: first, to feeding the 2.4 billion people that are predicted to inhabit the continent by 2050 and second, to fuel the continents’ industrialization agenda through agro-processing. Africa’s green revolution is long overdue!