Holger A. Kray, Head of Africa Agricultural Policy Unit at the World Bank. PHOTO | COURTESY IFPRI
The World Bank economist was in Uganda and spoke to Charles
Mpagi on the prospects for the sector in the face of oil discoveries in
Uganda, Kenya and South Sudan
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What are the challenges to commercialisation of agriculture in Africa?
The
greatest is how to take advantage of the tremendous opportunity
presenting itself right now across Africa because of the shift in
consumer behaviour and consumer demand globally towards higher quality
agricultural products.
This can potentially lift
millions of farmers out of poverty. This provides tremendous revenue
generation potential and job growth. So, the key challenge for
governments is how to support the agriculture sector to take advantage
of this.
In addition, you see many countries in the
region are focused on mineral resources but once the commodities’ super
cycle ends, agriculture will still be here.
This poses a
challenge because governments once had their eye on precious earths and
mineral oil and forgot the principles for inclusive growth. East Africa
must take advantage of this opportunity-based narrative.
The
second big challenge is, of course, how can countries position
themselves in the face of volatile environment in terms of climate and
international markets.
We live in an age of increasing
protectionism and with little regard for the principles of international
trade and that often leads to volatility rather than creating
solidarity among countries through trade.
How
about how Qatar, a desert country, which has reacted to its being
blockaded by its neighbours to the extent of importing cows so it can
become self-sufficient in milk?
This is a
reaction we would have recommended for small countries about 15 years
ago rather than strive for integration into international trade, because
that was a more efficient alternative then.
But in 2008/9 when the first global food price crisis set in, we saw some countries ban food exports.
The
main food exporters were Ukraine, Kazakhstan and Russia, but we saw
them impose grain export bans that led to grain prices spiralling so
that smaller countries like Tajikistan and Kyrgyzstan suddenly had no
trading partner.
Now we see more African countries also
imposing export bans on maize rather than seeking opportunities to
create trade. But I see hope and opportunity for Uganda.
Uganda has two seasons and harvests twice a year, just when other countries need the grain.
The
third challenge for these countries is how they can create a better
institutional regulatory policy environment to enable the sector to
grow.
One needs to define the role of the state first.
Is it to be an actor in the market, which means buying and selling? Or
procuring and handing out inputs? No. Their role is more that of a
facilitator, setting broad rules of the game and therefore, facilitating
private sector activity.
The focus over the
past decade by Uganda, Kenya, Tanzania and South Sudan has been on oil
and gas exploration and now exploitation, which could hurt their immense
potential in agriculture. How can they strike a balance?
Professionals
like to talk about global best practice, good experiences and
showcasing, but I think there are mistakes already made by others that
we need to learn from.
In this regard, finding oil
reserves comes with tremendous opportunities, including energy
independence, the promise of revenue for cashstrapped public budgets to
benefit health, education, infrastructure and agriculture. Such is the
promise that oil brings.
But what have we learnt is that about oil and its attendant riches can be negative.
First
there is the impact on the exchange rate. If not well managed a
country’s currency will appreciate, making import of food products
cheaper, which will appear very attractive for the urban population in
the short run. But in the long run, this can restrain the opportunity to
grow agriculture.
Second, oil revenue bears the risk of financial governance problems and opens the doors to poor money management.
If
public finance management systems are lacking in terms of transparency
and monitoring, there is a risk that some money ends up in pockets that
it was not meant for, rather than going into education, health and
infrastructure. But whether that risk manifests itself or not is a
national decision.
Countries could invest part of this
oil revenue in a sustainability fund to create a buffer for leaner times
and also increase sustainability in the use of natural resources,
including soil and water.
It would be tragic to ignore agriculture.
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