26. Over the past four decades Africa has suffered severe marginalization in the global marketplace. The continent now has the world's largest number of least developed and indebted countries with populations that face low incomes and food deficits. Much of Africa's agricultural sector has experienced slow and often negative growth in productivity and trade. To make matters worse, the continent has lost a significant share of the market for most of its major commodities (cocoa, coffee and palm oil) to the benefit of Asian and South American countries. Africa's average annual agricultural trade balance fell from a positive US$2.6 billion in the 1960s to a negative US$5.3 billion in the 1990s.
27. If dramatic and immediate changes are not initiated, Africa will find it more difficult to meet its growing number of basic needs. It is predicted that child malnutrition will worsen by another 20 percent, leaving 39 million children malnourished or even more by 2020 if political turmoil and other conflicts are included in the equation. Without major intervention, it is projected that more than 200 million Africans will go hungry in 2015. Significant food importation will be needed by 2020. The degradation of natural resources will worsen, and land productivity will continue to decline in many areas. Crises and conflicts will increase, leading to escalating demands and costs for relief.
28. In this connection, African leaders have formulated and adopted a new development framework - the New Partnership for Africa's Development (NEPAD) - that seeks to reverse the demise of the African economy in less than one generation. Under NEPAD, an annual economic growth rate averaging over 7 percent is required during the next 15 years to enable the continent to meet the Millennium Development Goals by 2015, including halving the number of people suffering from hunger and reducing poverty. NEPAD commits African leaders to establishing conditions for sustained development through: (a) adhering to principles of good governance, rule of law and democracy; (b) encouraging private initiatives alongside state efforts; (c) utilizing African resources more effectively; and (d) being selective and focused in action and investments.
29. Policy debate in regional and national fora frequently points to problems that impede product competitiveness, namely high transaction costs. They are a consequence of the long-lasting policy bias against agriculture coupled with weak national and mid-level public institutions that are unable to provide necessary public goods and services to producers. Therefore, African leaders are becoming ever more aware of the importance of creating an enabling environment for a growing private business sector in agriculture. The importance is becoming more evident especially with respect to upgrading market infrastructure and marketing services for both agricultural inputs and outputs.
30. Under its Comprehensive Africa Agriculture Development Programme (CAADP), NEPAD seeks to reverse the agricultural crisis over the short term. The CAADP is expected to bring about accelerated agricultural growth. To increase aggregate agricultural income, the allocation of scare resources should reinforce the comparative advantage in production and trade determined by differences in production costs, which are primarily influenced by input prices, the quality of technology and economies of scale in production.
31. The CAADP identifies three areas for priority action that can help mitigate the agricultural crisis. The first area of action involves the extension of farmland under sustainable management and reliable water-control systems. The second area aims at improving rural infrastructure and trade-related capacities that are deemed vital for raising the competitiveness of local products on both domestic and foreign markets. The third area of concentration targets an increase in food supply and a reduction of hunger through productivity-enhancing policies and investments.
