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EXECUTIVE SUMMARY


1. Under its Comprehensive Africa Agriculture Development Programme (CAADP), the New Partnership for Africa's Development (NEPAD) seeks to reverse Africa's agricultural crises in the short-term by fostering economic growth in agriculture rooted in increased output productivity and efficiency and boosting its otherwise untapped comparative advantage. To allocate scarce financial resources efficiently under CAADP, agricultural products with a comparative advantage need to be identified, developed and traded with relatively little effort inside and outside Africa. Investments must have a high probability of commercial success, expected positive returns and economic viability.

2. Facing the growing importance of an integrated global and regional economic and trade system, Africa's sub-regions and countries need to promote their respective comparative advantages jointly. With this requirement in mind, this study is intended to:

3. To take advantage of economies of scale and reach a critical mass that would drive productivity and income growth at both country and regional level, the identification of potentially competitive agricultural products was made by the main (five) agro-ecological sub-regions. These approximately coincide with the territories of the existing Regional Economic Groupings throughout Africa.

4. The present study is based on the stock of technical knowledge and experience accumulated by the FAO in Africa. In order to estimate the needed screening parameters of the potentially competitive agricultural products, FAO time-series country data over the period 1996-2000 were used for land use, animal stocks, production and productivity, trade and producer prices for the products under analysis. The concepts of comparative advantage and competitiveness served as the basis for the analysis and the selection of individual product's income-generation and export potential.

5. The selection of potentially competitive sub-regional crops/animal types was based on the production-cum-trade-opportunities criterion. This selection reflected not only each product's significance in production structure but also its trade potential. The relative importance (i.e. over five percent of each crop/animal type in the sub-region's total output expressed in world trade unit values) has been the screening indicator. Potentially competitive crops/types of animals that account for less than five percent of sub-regional total production but exceed five percent of a country's total output trade value, were designated potentially competitive 'country specific' crops/animal types. The comparison between the current production pattern at both sub-regional and country levels and that resulting from the screening against production-cum-trade-opportunities criterion was sometimes surprising. It is recognised however that there are other reasons that could lead to prioritization of a product for investment. Prolonged heavy dependence on imports could be one, e.g. rice in West Africa.

6. Because of inaccessible and/or incomplete time-series data for forestry/fisheries products by category, the natural endowment in forestry and fishery resources (by sub-region and country) has been the screening parameter. The identification of the potentially competitive sub-regions/countries for forestry development and wildlife conservation has been made based on the respective share of forests and woodland area in Africa's total. The area of a sub-region or country that lies within the Exclusive Economic Marine Zone (EEMZ) has been taken as a proxy indicator for the potential for marine fishery development.

7. An attempt was made to estimate both the technological and cost-competitiveness of crops. Because complete production - cost data were unavailable, producer price was used as a proxy indicator for assessing crop cost-competitiveness at the present technological level. Producer price is an appropriate proxy indicator because it is the observed revenue per unit of output received by farmers and it incorporates the underlying production cost. For export crops, world prices (expressed by FOB export prices) represent the benchmark that governments consider stimulating domestic production and exports. The difference between producer prices and world prices simultaneously incorporates the effects of a host of domestic factors that impacts crops and causes producer prices to diverge from world export prices. The lack of historical and more recent data on producer prices for crops in FAO Statistical Databases (FAOSTAT) constrained the price deferential analysis to the period 1991-1995.

8. The screening process led to the following potentially competitive crops at the sub-regional level. As expected, traditional export crops have high competitive potential for the respective sub-region (coffee for East Africa, cocoa and yams for Coastal West Africa and groundnuts for both Central and Sahel West Africa). Olives and wheat were selected as some of the potentially competitive crops for North Africa. Grapes, maize, sugar cane, vegetables and tobacco hold promise for expanding production and trade in Southern Africa. Millet, sorghum and groundnuts were identified as potentially competitive crops for Sahel West Africa.

9. The designation of potentially competitive crops differs, sometimes remarkably, from their actual share of land cover (indicating 'naturally suitability') at the sub-regional level. For instance:

10. Potentially competitive country-specific crops were selected when crops had a significant role in a country's (though not in the sub-regional) economy and trade. These crops are detailed below and require attention by the respective national governments.

11. Potentially competitive sub-regional animal types were selected according to the relative importance of a given animal type in the total sub-regional output (expressed in world export unit value). All animal types have comparative advantage to various degrees across sub-regions. Therefore, they warrant investment under NEPAD-CAADP. Potentially competitive country-specific animal types that have an important share in country's production (expressed in world export unit value) follow. Sheep were chosen for Lesotho, Namibia, South Africa, Zambia, Cameroon, Democratic Republic of Congo and the Republic of Congo, Equatorial Guinea and Gabon. In addition, chicken was selected as a country-specific animal type for Equatorial Guinea, Saõ Tomé and Principé, Gabon, Liberia, Mauritius and Zambia. Similarly, pigs were selected for Côte d'Ivoire, Guinea-Bissau, Seychelles and Liberia. Because cattle raising is prevalent in the Sahel, dry southwest Africa, the Ethiopian highlands and East Africa, the continuation of measures to improve husbandry management and animal products market development is appropriate.

12. Potentially competitive sub-regions that should place high priority for investing in forestry development under NEPAD-CAADP are East Africa, Coastal West Africa, Central Africa (excluding Chad) and Southern Africa. Nearly every country in each sub-region has forest covering more than five percent of the sub-region's forest and woodland area and should intensify efforts to exploit the natural comparative advantage. However, South Africa's leading position in exporting high-value forest products originating mainly from plantation forests is a real world irony that undermines the concept of comparative advantage based on natural resource endowment.

13. Potentially competitive coastal sub-regions for marine fishery development were also selected. Due to the lack of comprehensive statistics in particular on the aquaculture subsector's current economic performance, only the marine fishery sector and its potential for development have been examined. Sub-regional potential for marine fishery development has been judged using the size and share of EEMZ in Africa's total as a screening indicator. The share of EEMZ varies widely among sub-regions, from 720 thousand square miles in Central Africa (5.5 percent) to 5.8 million square miles in Southern Africa (44 percent of Africa's total). All of the shares representing more than five percent of the total EEMZ have been designated for further investment under CAADP. In general countries contribute disproportionately to the sub-region's total marine production with respect to their share of EEMZ in the sub-region's total.

14. The empirical results of the sub-regional - world and leading countries' productivity differentials suggest that the large majority of crops (including fruit, vegetables, cassava, maize, millet, olives, rice, grapes, groundnuts, seed cotton and wheat) are not technologically competitive. Only coffee, cocoa, sugar cane, tobacco and yams are globally competitive sub-regional crops in terms of productivity. Therefore, a combination of two differentiated strategies, depending on the country's actual land productivity should be pursued: (1) substantial investment in production technologies and/or (2) substantial investment in value-addition technologies. In addition, development of political support to enhance trade between African sub-regions would also be beneficial, particularly for staple food crops. More analysis of the pattern of trade flows within Africa (among countries and sub-regions themselves) would therefore be instrumental to depict agricultural products that may be more easily and/or cheaply traded among African countries. In addition, regional policies, mechanisms and relevant institutions to enhance sub-regional and regional trade flows should be strengthened and implemented.

15. The empirical results of producer - world price divergence analysis confirmed that in most cases African producers receive very little compared with the prevailing world price and their competitors. The African producers of cocoa, coffee (except Liberia), groundnuts (except Gabon), maize (except Namibia, South Africa, Kenya, Somalia and Ethiopia), olives, rice (except Gambia and Liberia) and sunflower have received only a small fraction of the world prices. Cassava producers (in all Coastal West African countries except Liberia and Nigeria) have also been 'taxed' to various degrees. Although their competitors have obtained a price somewhat inferior to the world price, most of these competitors have been much more profitable primarily because of their higher productivity and economies of scale in production, marketing and trade. The 'taxation' level, however, varies widely among crops and countries alike.

16. In reality, producer productivity and efficiency are not the sole ingredients of competitiveness. The analysis of constraints to sustained agricultural output growth and dynamic trade emphasized that the low level of competitiveness in African countries (despite rich natural endowments) is principally the result of the precarious state of the prevailing economic, social and political conditions. The main characteristics of these conditions under which African farmers operate and trade, include the following:

17. The diversity of Africa's sub-regions owing to variations in resource endowments, levels of economic and social development, challenges and opportunities makes it impossible to prescribe a homogeneous approach to upgrade competitiveness in agriculture. To address the issues of low productivity and efficiency in agriculture, it is essential, therefore, to highlight the elements of sub-regional differences in terms of their resource base and to identify key land and water constraints to development specific to each sub-region. These key constraints are summarized below.

18. The major cross-cutting challenges to the economic growth of the forestry and wildlife sector, which are relevant across African sub-regions, are the following:

19. The main issues, threats and opportunities for forestry and wildlife development that are specific to sub-regions are summarized below according to the main forestry agro-ecological zones.

20. Marine fisheries remain very important as a source of food, employment and revenue in many countries and communities in Africa. Fish proteins are essential and critical especially for the diet of inhabitants in densely populated countries, where the total protein-intake level may be low. The number of under-exploited and moderately exploited resources continues to decline as fishing demands increase. Interest is growing about the impact fishing may have on ecosystems, their structure and function. Contemporary small-scale fishing communities predominantly practice artisanal-level exploitation of fish resources and share serious obstacles to development. They usually share the following characteristics across Africa's marine ecosystems:

21. Two major classes of constraints would need to be addressed for marine fishery development. They are summarized below.

22. In order to improve competitiveness and investment profitably in agriculture throughout the continent under CAADP, major cross-cutting directions of priority action that apply to all African countries (together with specific sub-regional actions) were identified. These are summarized below.

23. Broad sub-regionally specific areas of intervention aimed at alleviating land and water constraints in crop and animal production are summarized below.

24. Forestry on its own has shown limited effectiveness in alleviating poverty. Instead, forestry might be a component of wider production efforts to address poverty eradication and environmental stability. Reversing the current trends in forest-resource depletion and degradation is vital, especially through protecting and improving watersheds, combating desertification, preventing land degradation and conserving biological diversity. The biological richness of the humid African forests also requires critical attention in economic development planning. With appropriate development and marketing, forests may be able to generate more value per unit area from 'niche-markets' for important crop varieties. It is necessary to identify and exploit commercial and local economic opportunities based on 'niche products', while making industrial harvesting and forest regeneration compatible with biodiversity protection. Export of forest products as unprocessed logs may also be exporting jobs and future prosperity. Future research studies should lead to:

25. Marine fishery development could be facilitated in many ways. In this connection, the close monitoring of the impact fishery-management measures have on the economic performance of the fishery sub-industries is important. In addition, a careful observation of the impact of subsidies, economic incentives and fiscal policies and measures should be made. Furthermore, the design and implementation of special efforts to protect the artisanal fishery sector should be carried out. Increased community participation in artisanal fisheries development (from planning to financial aspects) is vital to these efforts, as is improved handling and processing technologies. Finally, conflict resolution between industrial and artisanal fleets and strengthening regional fishery-management organizations, as well as making them more efficient, are important aims.


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