5.1 - Should the choice for urban supply be based on national, regional or international resources?
5.2 - The role of government and its institutions
5.3 - Devolution of power
5.4 - How to foster employment, and under what conditions
5.5 - The role of the financial institutions
5.6 - Information and information management
The debate may be set out in the following terms: how relevant is an approach to a food security strategy for the urban populations of Sub-Saharan Africa based solely on national resources, when globalization, or regionalization as a reaction to globalization are the order of the day?
There are three points to be borne in mind. Any regulation of food and agriculture on a purely national basis is not very effective and this is shown by the substantial informal cross-border flows which regulate supplies in the region, particularly to serve the towns. Regular intra-regional trade is very small because it represents only 5% of the total exports and imports recorded in the zone. This has not improved in twenty years, despite the creation of ECOWAS (the Economic Community of West African States) in 1975. A number of factors explain the weakness of this trade: poor communications and transport infrastructure, a lack of market information, commercial and monetary policies that fail to incentivate, a lack of consistent regulations, excessive costs, etc. Trade outside the continent remains dominant, particularly with their former colonial countries. This trade is responsible for a substantial part of budgetary revenues and above all valuable foreign exchange which is needed to pay for the imports needed to produce, process and distribute food.
The idea of regional integration in relation to food security dates back to the ‘80s but the implementation of the programmes is taking place very slowly. Integration can take different forms:
At the present time declarations of intent seem to be moving in the direction of an economic union, but the results are not consistent with the treaties.
Regional trade in food has every chance of success, because this trade is helped by a number of favourable factors:
The economic union should overcome a number of constraints, which demands a political will and takes time. We would like to mention in particular the constraints linked to the inadequacy of production, which curbs trade, the political fragmentation of the States, economic constraints which cause the operators to give pride of place to the most profitable crops rather than diversified food crops, transport and road and commercial infrastructure constraints, administrative constraints (different regulations, barriers, corruption), and socio-cultural constraints based on a “gerontocracy” (Terpend, 1993).
In view of the large amount of work needed to harmonize and coordinate everything in order to create this regional area at the service of food security, it is difficult to imagine it being possible in the short term. However, these areas could be conceived of as places for harmonization and the establishment of consistent food security policies.
Some writers quite rightly (Delorme, et al., 1995) consider that the total opening up of the countries in the region to the world market is not favourable for the food security of these populations in the medium and the long term. Despite all the free market talk, in practice protectionism underlies the implementation (particularly with regard to product quality standards) and the African countries cannot hope to be competitive, without increasing their impoverishment and exporting urban malnutrition. The international organizations, who appear to be indifferent to regionalization, actually conceal real opposition. In most countries in the area, the legitimacy of power comes only from the State structure, and it is quite unlikely that the political authorities will overstep the threshold of a profession of faith in economic union. Under these conditions it would appear to be wiser to view regional cooperation as a useful and necessary way of opening up to the world markets in the long-term.
Today, the ways of applying liberalization are still wide open. Government, which had formerly undertaken all the functions that are indispensable for guaranteeing food security, has withdrawn almost entirely from these functions, liberalizing production, trade, consumer prices, controls and supervision, etc. But it has not adopted measures regarding the maintenance and organization of the public services which are indispensable for the smooth running of the free market economy.
Government must change its approach by moving away from the role of an economic operator and taking on a supporting and accompanying role. This change of mentality is not easy. Governments are discovering, moreover, that their agents have not been really trained for these new duties. Lastly, since governments are concerned that they no longer control the operators they have retained a major key to the economy, namely credit. Without credit, or if credit and loans are not granted according to a planning logic or are only granted to serve the particular interests of specific lobbies or pressure groups, the economy cannot possibly be revived.
And this is precisely where the difficulty lies. How can food security be achieved in a free market environment? Private operators have no social objective, and they only go where their own interests are best served. The role of the government is to ensure that merchandise circulates freely, that the quality is good and the best final prices are charged. To do this it would seem important to pass legislation on land tenure and ownership, to invest in infrastructure (roads, water, electricity and markets) while leaving the management to the private sector whose existence it guarantees and to which it provides the information it needs for the purposes of competition, encouraging professional groups and consumer associations, and imposing regulations at every level of the food chain. The task is so huge that governments cannot do everything in the short term with the resources at their disposal. A palliative or an indispensable complementary activity would be to support the consumer, whose awareness must be enhanced.
The total withdrawal of government from intervention in the food sector is not desirable because although the recent economic turmoil has been a source of hope, it has also helped to increasingly marginalize certain areas and to impoverish certain sections of the population. The State has the duty to guarantee the food security of its people using known techniques, because if the people are not solvent the privatized system will not bother about them. They must also be localized, and their needs evaluated.
The decentralization of public services is the result of applying the recommendations of the structural adjustment programmes. The role of central government has therefore been slimmed down, and powers devolved to the local authorities (Gnammon-Adiko, 1997). Central governments have therefore divided up the country into various hierarchical levels, such as regions, departments or municipalities. Their powers and authority with regard to FSDS cover the implementation of infrastructure, facilities (markets and slaughterhouses) and urban roads and managing and maintaining them. They must also guarantee the smooth flow of merchandise to the points of sale, and also the health and hygiene status of the facilities. Product quality control is also their responsibility most of the time.
Urban management is concentrated primarily on actions which do not relate to food. Today, supplying sufficient food, at the lowest cost, to the towns is a priority which the authorities have not always sufficiently realized. It is true that they have often been faced with a fait accompli: managing flows of merchandise, markets, health and hygiene on the sites and in respect of the products, with responsibility for control and supervision, without any training being given to the staff to carry out these new tasks, and without any awareness of the great issues at stake and the difficulty of implementing new policies, and particularly without a pilot strategy.
However, while the decision to guarantee the food security of the urban populations is a declared priority, the decentralization or devolution of power and authority would appear to be necessary so that the decision-makers and managers are given the closest possible contact with the information and the beneficiaries of the FSDS policies. However it is still necessary to clarify the powers of the local authorities in respect of the central government authorities in order not to put into place contradictory measures and to avoid laisser-faire, with everyone thinking that the problem that arises is not their responsibility.
One of the great dilemmas facing African societies is whether to dismantle or to support the informal sector. Faced with a government monopoly and its inability to guarantee food security to all the people, a dynamic parallel economy has been created which has made it possible to provide food to backward areas and has been able to adapt extremely well to the conditions of the marginalized populations. Today it is estimated that at least half of all business activity is in the informal sector. In addition to its abilities in the area of food security, this sector has the advantage of being highly labour intensive. If rationalization is taken too far, as has happened in the developed countries, or if regulations are too severe, there is a risk that some of the flows will be eliminated and unemployment will be created.
Yet the informal sector has its own system and its own wealth, thanks to the lack of transparency of the market and disinformation, which are unsustainable conditions for any free market economy. The wide variety that exists in the informal sector extends the food chain and burdens down the end price of food. The ideal would seem to be to set up formal services which the informal sector would find beneficial to join in.
Some claim that the informal sector has given proof of its efficiency, effectiveness and adaptability. It is also highly labour-intensive. They say that it would damage food security if this were to be destructured, and that the informal sector should be supported in order to enable it to thrive. Others, however, think that no consistent system offering the best prices to consumers and producers can be set up in the informal sector. Sustaining the informal sector should not be an objective, because information, the economy and finances can never be controlled in such a system. It permits all manner of abuses and avoidance of the law. The real issue is that the system has been, and still remains, a useful means of making up for government shortcomings with regard to policies for employment, infrastructure investment, the organization of the food system and of information, and at all events government officials make a great deal of profit out of this informal system.
The most effective policy would be to make use of the organization of the informal sector in order to exploit its ability to adapt to the environment, while laying down attractive legislation and regulations while leading it to formalize itself, without taking systematically repressive measures to achieve this. This is the price to be paid for maintaining employment in the towns.
The sound operation of any FSDS depends on two basic trading resources: information and credit. In view of the great shortcomings in both of these areas, producers and traders have developed a very dense network of informal relations in order to guarantee access to these resources. The result is what we might call “financial dualism”.
In theory, the formal sector is related to an organized system, hinging around the urban areas, which is capable of meeting the financial requirements of the modern economy. The informal, non-institutional sector, is, in theory reserved for the rural areas with a traditional economy and practising only marginal economic activities. The actual situation, however, seems more complex than this, and it is difficult to draw a borderline between these two sectors.
The development of the informal sector, with regard to finance, can be explained in terms of two factors:
In the particular case of FSDS, donors are frequently wholesalers who have more financial resources available to them. The second type are within the group sharing the same features as the loan applicant (the same ethnic group, from the same rural origin and even the same professional activity). The third type may be an organization based on rules set down by joint agreement among the membership: an organization for collecting savings and distributing credits, such as mutual aid associations, tontines, etc.).
All the FSDS sectors will find it impossible to develop if the financial sector is unable to ensure that the institutions comprising it provide their support to a large number of private sector operators instead of merely serving a small number of organizations, mainly in the public sector.
Setting up a dynamic and innovative system for providing marketing finance is a vital problem for the formalization of the private sector. The purpose is to adapt the financing system to meet the specific features of the food trade (Terpend, 1993). What is needed is to develop financial instruments within a banking network, such as short-term, seasonal and storage loans, and medium-term loans to purchase equipment, or for constructing or improving storage facilities, etc. Their specific nature must be based on the fact that they are geared to the local situation: funds must be available as and when required at sale times, repayment conditions must be linked to sales, guarantee and collateral systems must be linked to products and not to assets or wages, and they must be based on African cultural systems (social pressure).
One of the main shortcomings in the urban supply system is the lack of information throughout the food chain. The lack of market transparency encourages abuse and corruption. Information circulates through the informal sector, and is highly compartmentalized.
In Burkina Faso the information systems are fairly well-developed compared with other countries, and there are five information monitoring groups:
These elaborate systems are certainly interested in becoming acquainted with the food chain, but their objective is not always clear: the information is not fed back to the people working in the circuits, and only seem to be for the exclusive use of government in order to take emergency measures, which suggests to the operators that it is solely used as a means of controlling them. Consequently, parallel private information networks are being created, which inspire greater confidence in the operators (the SIM information broadcast by radio is only listened to by 15%). Furthermore the information is supplied raw, without any analysis.
Thus the information must pass through the markets (this is one of the main functions of market price lists) but in order to be taken as a benchmark, a certain critical mass is needed. It must be organized in such a way that negotiations can take place on the markets and they can therefore become more effective. This is the area which falls within the scope of government, so that it does not become an object of power. But it must be designed for the operators, and not solely for the government.
