1. Theme 1: Sustainable Financing of African
Agricultural R&D
Gert-Jan Stads
ASTI program | International Food Policy Research Institute
Keith Fuglie
Economic Research Service | United States Department of Agriculture
- the views expressed are the authors’ own and not necessarily those of ERS or the USDA.
IAAE Symposium on Improving Returns to Agricultural
Research in Sub-Saharan Africa
Foz do Iguaçu | 20 August 2012

2. Outline presentation
• How much and how well do African governments
and donors invest in agricultural R&D?
- Options for improving efficiency of R&D investment
• Is agricultural R&D in Africa paying off?
- R&D, technological change, and productivity growth
- Productivity growth and poverty reduction
• Future prospects for agricultural growth

3. Africa’s investment challenge: Uneven growth
20% growth in SSA public agricultural
R&D spending, 2000-08
2.0 • Growth driven by only
a few countries
SSA Agricultural R&D spending
1.5
• Growth not always
sustainable
(biilion 2005 PPP $)
1.0
• Region-wide growth
masks severe declines
in many other (mainly
0.5
francophone West
African) countries
0.0
1971
1979
1983
1987
1991
1995
1999
2003
1975
2007

4. Africa’s investment challenge: Fragmentation

5. Africa’s investment challenge: Underinvestment
• Common target: Allocation of at least 1 % of GDP to R&D
• In 2008, Africa spent $0.61 for every $100 of AgGDP on
agricultural R&D
• Despite an overall increase in recent years, Africa is widely
underinvesting in agricultural R&D

6. Africa’s investment challenge: Volatility
40 Burkina Faso
• Agricultural R&D spending in
30
20 Africa has been more volatile
Agricultural R&D spending (miilion 2005 PPP $)
10
0 than in other regions
1981 1985 1989 1993 1997 2001 2005
440
330
Nigeria • Volatility more pronounced in
220
110
donor-dependent low-income
0
1981 1985 1989 1993 1997 2001 2005
countries
4
3
Gabon
• Stable and sustainable
2
1 government funding is key,
0
1991 1994 1997 2000 2003 2006 not just towards salaries but
40
30
Niger
also to enable necessary
20
10 nonsalary expenditures
0
1981 1985 1989 1993 1997 2001 2005

7. Africa’s investment challenge: Donor dependency
100 • Many countries are
Share in total funding, 2001-08 (%)
extremely dependent
80
on donor funding and
Spread of
60 donor share development bank
loans
40
• Donor funding is
20
Average donor
share
generally short-term
and ad-hoc, adding to
0 the volatility
Madagascar
Togo
Mauritania
Eritrea
Benin
Tanzania
Zambia
Mauritius
Namibia
Senegal
Gambia
Mali
Kenya
Niger
Côte d'Ivoire
Burundi
Uganda
Botswana
Burkina Faso
South Africa
Ghana
Guinea
• Increased funding
from World Bank
(loans) in recent years

8. Funding Agricultural R&D through
Commodity Levies
Current: $127 million; Potential: $500 million
Country Product R&D Industry Product R&D All Public R&D
spending value intensity intensity
Million $PPP Million $PPP % %
Ghana Cocoa 33.25 757 4.4 0.9
Côte d’Ivoire Multiple 42.60 7,847 na 0.5
South Africa Sugar 18.59 673 2.8 2.0
Kenya Tea 3.10 369 0.8 1.3
Kenya Coffee 5.78 45 12.8 1.3
Malawi/Zimbabwe Tea 2.42 65 3.7 0.7
Mauritius Sugar 9.89 149 6.6 3.9
Tanzania Coffee 3.43 46 7.4 0.5
Tanzania Tobacco 0.06 81 0.1 0.5
Tanzania Tea 4.10 37 11.1 0.5
Uganda Coffee 4.75 228 2.1 1.2
Source: Byerlee 2011 and ASTI

9. Agricultural total factor productivity (TFP)
has picked up, but still lags

10. Increase in output growth has been primarily resource-led
with some rise in TFP growth
Data &
Statistics
Source: Fuglie and Rada (forthcoming)

11. Diffusion of new agricultural technologies in SSA
picked up after 1980
Source: Fuglie and Rada (forthcoming)

12. Policy reforms since mid-1980s improved incentives
for agriculture
Source: Kym & Anderson (2008), World Bank

13. Drivers of agricultural TFP growth in SSA
(from regression analysis)
• Technology policy
– R&D investment main driver of TFP growth
• Economic reforms
– Raised TFP by 5% (out of 35% growth since mid-1980s)
• Low returns to schooling
– Reflect countries still in ‘traditional agriculture’
• Armed conflict stops growth
• HIV/AIDS suppresses TFP growth
– 5% of population infected reduces TFP by >2%
• Road data too limited to draw inference
Source: Fuglie and Rada (forthcoming)

14. Returns to Agricultural R&D in SSA
• Returns higher for larger countries
• CGIAR complements national agricultural research
investments
• Aggregate impact limited by low investment
Research System Returns to Research
B/C ratio IRR (%) IRR (%)
w/ CGIAR w/ CGIAR w/o CGIAR
Nigeria, Sudan, Ethiopia,
Large Kenya, Côte d’Ivoire, Ghana
4.4 43 36
Uganda, Senegal, Mali
Mid-size Mozambique, Madagascar
2.6 29 23
Gabon, Burundi, Gambia,
Small Botswana, Swaziland
1.6 17 13
CGIAR In SSA only 6.2 58 --
Source: Fuglie and Rada (forthcoming)

15. How does Agricultural R&D Affect Poverty?
• Poverty head count impact lower in SSA compared
with other developing regions
• Poverty gap impact likely to be much larger
Relation Elasticity
Poverty head count and output -0.220
Output and R&D +0.049
Poverty head count and R&D -0.011
Source: Nin-Pratt and Fan (2010)

16. New Directions and Prospects for Future
Reasons for optimism Reasons for pessimism
• Better macroeconomic • Private sector technology
management transfer still low
• Strong demand growth • “Small country” problem
• Renewed interest by and inefficient R&D
governments & donors in • African farmers still face
agriculture very low incentives
• Policy reform
Source: Binswanger (2011)

17. Ways of Moving Forward
• Mobilize greater government support for agricultural
R&D
• Better coordinate donor support with national priorities
• Promote regional cooperation
• Reform policy to facilitate private-sector participation

18. THANK YOU