Summary Report of the Chairman

The Economic Committee of the Global Coalition for Africa (GCA) met in Pretoria, May 2-3, 2001 under the Chairmanship of Dr. Kwesi Botchwey. The meeting, which was co-organized with the Special Program for African Agricultural Research (SPAAR), had two principal agenda items: a) rationalization of integration institutions, and b) promoting agricultural productivity and competitiveness. Participants included a large number of African ministers, senior officials from Africa and partner countries and international organizations, members of parliaments, and representatives of sub-regional integration institutions. The Hon. Dr. Frene Ginwala, Speaker of the South African Parliament and GCA Co-Chairperson, opened the meeting on behalf of both the GCA and the Government of South Africa. The Executive Secretary of the GCA, Mr. Ahmedou Ould-Abdallah, as well as Dr. Botchwey thanked the Government of South Africa and welcomed participants. In subsequent sessions, the Hon. Thoko Didiza, the South African Minister of Agriculture and Lands added her own welcome, while Professor Wiseman Nkuhlu, Economic Advisor to the President of South Africa, made a presentation on the Millennium Partnership for African Recovery Program (MAP).

In his introductory remarks, Dr. Kwesi Botchwey, Chairman of the Economic Committee noted that sound policies, strong rural institutions, and investment in rural infrastructure all impact favorably on agricultural productivity. In his view, the meeting is expected to focus on these as well as other factors, including the need to maintain and replenish soil fertility. In addition, the requirements of improved competitiveness and sustained growth call for value-adding through agricultural processing. He also reminded participants of the impact of HIV/AIDS on agricultural production and productivity. As regards regional integration, Dr. Botchwey observed that open regionalism would help African countries to more smoothly integrate into the global economy. It is therefore necessary to remove the obstacles to regional integration and to rationalize the mandates of the various institutions and harmonize their regulations, rules and tariff structures.

In her opening address, Dr. Frene Ginwala referred to the pivotal role of both agriculture and regional integration in Africas development. However, agriculture is still accorded low priority and gets inadequate budgetary allocation, a reflection of how little influence poorly-organized farmers and the rural populations have on policy-making. Meanwhile, most African countries have been experiencing food insecurity and environmental degradation, a situation that will continue to deteriorate unless remedial action is taken. Because of the low resource allocation, services provided to farmers are neither adequate nor timely--and women farmers get the least attention. Agricultural services are not packaged to meet womens specific needs. Above all, women farmers face outright discrimination with respect to land ownership and access to credit. Dr. Ginwala also emphasized the need to facilitate further processing, as processed products fetch higher prices domestically as well as in sub-regional and world markets. African countries should encourage and promote regional economic integration to create larger and more competitive markets for their products. Such larger markets allow member countries to present themselves as more credible trade and investment partners. Regional integration should be seen not only as an economic endeavor, as it has political, security and social dimensions. In this context, she reminded participants that the African Union is in the final stages of establishment, and sub-regional integration institutions as well as the GCA should re-orient themselves to operate within the continent-wide framework that the Union envisions.

In his summary presentation of MAP, Prof. Nkuhlu recalled that the Presidents of South Africa, Nigeria, and Algeria initiated MAP and that it is now led by a steering committee composed of the three countries as well as Egypt and Senegal. The Steering Committee will present MAP to the forthcoming summit of the OAU for final adoption. The objectives of the Millennium Program is to help launch African countries on a sustained development path, by fully mobilizing the material and human potential of the continent. The key themes of the program encompass peace and security, sound economic governance, human development, infrastructure, product diversification, market access, and increased flows of external capital (aid and private investment). The short-term priority focus would be on infectious diseases, information and communication technology (ICT), strengthened regional integration, market access and increased aid. The success of MAP is dependent on the commitment of African leaders, as expressed in measures for ending conflicts, deepening democracy, promoting good governance and sound economic management while ensuring the active involvement of civil society. External partners can demonstrate their support by increasing aid and by facilitating the rapid expansion of ICT in Africa.

Highlights of the Discussions and Conclusions

A. Regional Integration:
Participants felt that the benefits of and the rationale for regional integration were obvious. It is clear that African countries will gain by associating themselves into larger markets, as such groupings facilitate cross-border trade and investment as well as the free movement of people. Effective integration enables member countries to present themselves as attractive and credible partners for foreign investment and trade. The discussions thus mainly focused on identifying and addressing the constraints to integration, and on measures and follow-up actions to be taken to strengthen integration institutions and rationalize their mandates.

Constraints:
At the country level, a major impediment to regional integration is the lack of strong political commitment. At the same time, due to the absence of a clear focal department or ministry responsible for coordinating all integration-related matters, different ministries may support and promote a countrys membership in different integration groupings. The non-involvement of key stakeholders, including in particular the private sector, has precluded the emergence of a strong pro-integration domestic constituency. It was also agreed that conflict and political instability are obstacles to the strengthening and deepening of regional integration. A number of participants also indicated that, in less developed member countries, support for integration could be luke-warm as these countries believe that regional integration mostly benefits the relatively more developed member countries. For these and other reasons, countries exhibit differing levels of commitment to the integration agenda they have jointly endorsed.

Participants emphasized that regional integration is greatly hampered by the inadequacy of physical infrastructure in general, and transport and communication facilities in particular. The operational constraints facing the integration institutions themselves including those arising from inadequate financial resources and inappropriate recruitment policies were also discussed. In this regard, some participants wondered whether donor assistance to fill the financing gap might in the past have given the appearance of partiality toward some integration institutions, which several donor representatives emphatically denied.

Measures to Strengthen and Rationalize Institutions:
The meeting noted that there has recently been improved communication among integration institutions in the same sub-region. This has facilitated increased efforts at coordination and harmonization of the technical aspects of their programs, rules and regulations. The growing inter-secretariat collaboration needs to be complemented by equivalent commitment at the political level, if significant progress towards convergence of institutions and harmonization of policies and regulations is to be made. In this regard, participants underlined the importance of having realistic objectives and avoiding overly-ambitious goals and targets. The discussions also dwelt on the rationalization and strengthening measures to be taken at the country level, as well as at the sub-regional and Africa-wide levels. The support required and available from external partners was also reviewed.

At the Country Level: Based on stronger political commitment, full involvement of all stakeholders and coordination by a clearly-mandated focal department, each country should re-evaluate its own membership in several institutions and actively work for the rationalization of their mandates. It should meet its membership obligations by ensuring ratification and implementation of protocols and regulations, and by harmonizing its policies and reform agenda with those of other members, particularly with its geographic neighbors. With respect to trade, countries should work towards early harmonization of tariff rates and regulations, so as to facilitate borderless trade. Countries, particularly the less developed ones, must be assisted to fully develop their capacity to analyze and negotiate the terms for integration, including the depth and speed at which integration programs are implemented.

At the Level of Sub-Regional Integration Institutions: Many participants, including those representing integration institutions, observed that multiplicity of institutions may not be the real issue that needs to be addressed; it is rather the overlap and duplication of their mandates that raise problems. Furthermore, it was suggested that a more productive approach would be to focus on specific issues such as the harmonization of external tariffs (rates, nomenclature, classification and bands), rules of origin, and customs and transit regulations. In addition, in each sub-region, the step by step convergence between the integration institutions themselves as well as the merger of those of their subsidiary organs (and other intergovernmental organizations) pursuing similar objectives should be the way forward. The discussion also involved a review of actual progress in this direction in each of the three sub-regions studied (West, Central, and Eastern/Southern Africa).

Participants from West Africa informed the meeting that convergence between ECOWAS and UEMOA is proceeding on a fast track, which includes the implementation of an ECOWAS-wide common external tariff (CET) by the end of 2001, and the achievement of a single monetary union within the first half of this decade. In Central Africa, the agreed division of work is for ECCAS to deal with conflict resolution and political issues while CEMAC will have responsibilities for strengthening economic integration. While monetary union already exists among CEMAC members, the more serious economic issue in the sub-region is the lack of adequate transport and communication infrastructure. In Eastern/Southern Africa the main sub-regional institutions SADC and COMESA should work more systematically towards cooperation and harmonization. It was agreed that SADC has made more progress in sectoral activities and COMESA need not duplicate these. On the other hand, COMESA has made more advances in the areas of trade and tariff, and SADCs programs in these areas should be harmonized with COMESAs existing rules and regulations rather than create totally new systems. The smaller integration groupings in the sub-region should similarly adopt and implement the existing programs of the relevant umbrella integration institutions.

Although the meeting did not go in detail into continent-wide integration issues, it was strongly suggested that the regional perspective should include the whole of Africa, and that, as the African Union proceeds from ratification to the operational level, it is important for countries and sub-regional institutions to take this into account and participate in shaping its evolution.

Role of External Partners: The representatives of external partners all indicated their commitment to support regional integration. The European Commission and the World Bank in particular presented in detail their expanded program of support encompassing technical and analytical work, financing of multi-country or cross-border projects as well as financing of country projects that have regional impact or synergy. Every effort will be made to ensure that in country programs and policy recommendations the regional dimension is taken into account. There was however a strong reminder that the adherence to sound policies and the achievement of conditions for sustained growth at the country-level are critical requirements for the strengthening and success of regional integration.

Proposed Follow-up and Action Plan

There was broad support, by participants, for a detailed action plan that may be used as a guide for the rationalization measures that need to be taken by various parties, in each sub-region. The following outline of such an action plan is based on suggestions made during the meeting particularly in the summing up of the session on regional integration.

1. Technical Issues: The harmonization of the tariff systems, rules of origin, other trade rules and transit regulations of integration institutions in the same sub-region, can be effected by joint committees of the Secretariats and/or convergence councils composed of Ministers where this is deemed necessary. Similarly the streamlining, coordination and eventual merger of sectoral intergovernmental and other subsidiary organizations can be accomplished by convergence committees.

2. Coordination and Harmonization of Economic Reforms and Policies: For its own sustained growth and to contribute to the strengthening of integration, each country needs to pursue sound policies. Initially, close coordination of macro-economic policies will be meaningful and useful for small groupings of neighboring countries such as those in the East African Community. These may be expanded in due course.

3. Matters of a Political Nature: Enhancing political commitment to integration, fuller involvement of the private sector and other key stakeholders, assistance to the less developed member countries, conflict resolution and management, promoting and encouraging improved and participatory governance are among the political-type issues that cannot easily be handled by the Secretariats alone, nor even by technical convergence councils. Issues of this nature will have to be handled by political leaders.

4. Addressing Infrastructural Constraints: The physical barriers to cross-border trade particularly transport and communication infrastructure can be overcome mainly by allocating necessary investment resources from national treasuries, external assistance, and by encouraging private sector participation in such investment.

5. Role of the GCA: The GCA may provide relevant information and prepare brief documents outlining the programs and regulations that need to be harmonized. It can facilitate action in the political areas by constituting and supporting an Eminent Persons Group that will have the task of taking up these issues, in each sub-region, with key African countries. In addition, the GCA may work with sub-regional parliamentary unions to promote convergence and harmonization.

Finally it was emphasized that regional integration groupings should set reasonable and realistic goals and targets. While they should be less ambitious than previously, they should at the same time be stricter in enforcing the timely fulfillment of membership obligations.

B. Agriculture

The meeting agreed that agriculture continues to be the key sector of the economy for most African countries. It was however noted that decision-makers usually fail to give the sector the political attention and budgetary allocation it deserves. This lack of support was one reason why African agriculture has been performing poorly, with crop yields remaining virtually stagnant over the last two decades. The exchange of views thus went into the principal factors accounting for the sectors poor performance, reviewed reform efforts and progress made in recent years, and discussed what more needs to be done to enhance productivity and competitiveness.

Explaining Poor Performance:
Inappropriate policies and weak institutions were identified as significant contributors to Africas lag in agricultural productivity and competitiveness. Overall, macro-economic policies as well as pricing and marketing policies were unfavorable to agriculture. Even after years of reform, the bias against agriculture has not been totally corrected. In some cases, reforms and liberalization measures, particularly those that were put in place hastily and without the involvement of key stakeholders, were themselves hurtful to the interest of farmers. Centralization of decision-making on budgetary, personnel and other issues affecting agriculture is another problem area. Participants also noted that public service-delivery systems including linkages between research and extension services, rural institutions and farmers organizations all need to be further strengthened. Moreover, it was agreed that the failure of farmers to establish themselves as well-organized interest groups accounted for the low priority policy-makers continue to attach to the sector. Women farmers in particular face additional disadvantages and discrimination in service delivery, in access to land and credit. Weak institutional capacity is further compounded by the lack of skills, and by the growing havoc that HIV/AIDS is inflicting on the rural population, including farmers in the most productive age group.

Inadequate infrastructure is also a major factor in explaining the poor performance of agriculture in Africa. Investment allocations for transport, communication, rural schools and health services continue to be well below what is needed. Low investment together with poor maintenance of rural infrastructure adds significantly to the cost of whatever little produce is marketed. Land and water management was also another issue of focus during the discussions, given that the maintenance and replenishment of soil fertility and the increased use of irrigation are key components of a productivity-enhancing package.

While competitiveness is affected by all the factors that depress productivity, it is also determined by the adequacy and efficiency of transport and communication systems, and by other transit and handling activities that form part of the transaction costs for export marketing. Poor marketing skills, failure to maintain high quality standards, and long delivery chains are among other weaknesses adversely impacting the competitiveness of agricultural exports. Equally significant are the heavy subsidies OECD countries grant to their own farmers and the market barriers that they impose on African exports.

Measures to be Taken

There was general agreement that agriculture-led development is the most viable option for the majority of African countries. Participants thus focused on the key requirements that will promote the revival and sustained growth of agriculture. Improving farmers access and uptake of proven results of agricultural research is an important factor. The opening up and development of rural Africa will depend on the priority given to investment in rural infrastructure and the maintenance of existing roads and other infrastructure. The rural population can contribute to this effort if it was vested with decentralized power to raise its own revenues. For the most part though, the public sector would be the main source of finance for rural infrastructure as well as the main formulator and implementer of infrastructural projects. While some participants expressed their concern that allocations to agriculture and rural development from both domestic revenue and external assistance have been inadequate, other participants including representatives of external development partners claimed that if support given to rural programs through other departments/ministries were taken into account, the picture would be more positive. In the view of the latter, what may be lacking is closer coordination among all the government departments with rural mandates. Such coordination would enable more effective packaging of support services and investment earmarked for the rural population. More concerted efforts must be made to ensure widespread application of proven research results.

Countries need to make long-term investment to reverse the degradation of the natural resource base. Re-afforestation and the development of the forest industry will both contribute to the rehabilitation of degraded land and have a direct economic benefit. Increased use of fertilizers will help restore soil fertility and thereby enhance production and productivity. Improved water management and increased use of irrigation will have a similar beneficial effect. Full involvement of communities in land and water management, including through recognition of traditional land holding systems will ensure the conservation of natural resources and contribute to the sustainability of production. A number of participants called for support of the proposed Soil Fertility Initiative and the Integrated Land and Water Management scheme as the implementation of the initiatives will advance the goals of replenishing soil fertility and improved water management in Africa.

The meeting also agreed on the need to continue and deepen reforms, both to enhance the incentive structure for farmers and to reinforce the environment for private sector investment. Such an improved business climate would encourage increased private sector activity in input supply, and agricultural marketing and processing. However, it was also pointed out that deregulation and the replacement of marketing parastatals may leave farmers in less accessible localities without alternative private marketing channels. As increased domestic processing would add value to agricultural products, it is obvious that such processing together with more efficient marketing will contribute to the international competitiveness of agricultural exports both in sub-regional and overseas markets. Countries should, individually and via their regional integration schemes, encourage and facilitate intra-regional trade in agricultural products.

The discussion emphasized the importance of raising the skills of both farmers and agricultural extension agents. It was suggested that exchange visits among African farmers, in particular visits to South Africa, will contribute to this process. Strengthening the capacity of public institutions and farmers organizations will also have a strong impact on productivity. Decentralization and empowerment of local authorities are equally important. Many participants also underlined that women farmers need to gain equal access to agricultural services, land ownership, and credit facilitates. While the major reforms and investments needed to revitalize African agriculture mainly to be undertaken by African countries, development partners can take measures in support of African agriculture. Donors should refrain from imposing their own priorities and support Africa in implementing their own strategies and programs. Effective support can be provided by increasing ODA assistance, facilitating and encouraging foreign investment in agriculture and agro-industry, and removing remaining barriers to African agricultural (including processed) exports. Participants in particular called for reduction and phasing out of the heavy farm subsidies prevalent in OECD countries.

Prior to the conclusion of the meeting, two brief presentations were made. The first presentation was on pilot agricultural development strategies for Malawi and Ghana which were prepared as follow-up of a previous GCA meeting on agriculture. Each study reviewed past performance, analyzed major constraints, established a growth target for the sector within the overall economic development goals and targets, identified the reforms, policy changes, and investment commitments needed to meet the target, and proposed an action plan for implementing the strategy. The second presentation was by an FAO representative on a document on agriculture prepared for the UN Conference for the Least Developed Countries which was to be held in Brussels, May 1420, 2001. In brief interventions, participants affirmed that both presentations were useful and complemented the earlier extensive discussions on agricultural productivity and competitiveness.

As articulated by the chairman in his closing statement, an Action Plan for promoting agricultural productivity and competitiveness could include the following elements:

1. At the Country Level: Each African country should draw up or update its own agricultural development strategy, consistent with its overall development strategy. The strategy should re-establish the importance of agriculture, underscore the need for sustainable natural resource management, seek allocation of adequate resources to the sector including resources for essential agricultural support services as well as for investment in rural infrastructure, and ensure that sound policies and strengthened institutions evolve to facilitate the attainment of the objectives of the strategy. Because of their implications for sustaining productivity, soil fertility and sound land and water management deserve special attention. Agricultural strategies should also encompass processing, value-adding, and market-development as well as quality standards. Countries must also take serious measures to counter the impact of HIV/AIDS on the rural economy and in general intensify their campaigns on the HIV/AIDS pandemic, with a long-term focus on preventive measures.

2. At the Level of Sub-Regions: Expanded regional trade in agricultural products can be promoted within the framework of regional integration groupings. At the same time the sectoral intergovernmental organizations (including the conference of Ministers of Agriculture) should more reorient their activities to ensure that the respective regional integration institutions coordinates the overall sub-regional agenda. Moreover, the networks of agricultural policy analysts should be further strengthened and work more closely with integration institutions. Sub-regional collaboration on agricultural research also needs to be promoted. Similarly, cooperative arrangements at the sub-regional level can be productively pursued with respect to land and water management.

3. By External Partners: Africas external partners need to continue to support the efforts of African countries in agriculture and rural development by facilitating unimpeded market access for African agricultural and agro-industry products, encouraging their private sector to partner with African counterparts in investment and export ventures, providing expanded ODA assistance to the sector including for research and generation of appropriate technology and for rural infrastructure.

4. By the Global Coalition for Africa: In association with SPAAR and others, GCA will be available to further promote agricultural productivity and competitiveness, to monitor the performance of and progress made by all parties in the implementation of the action plan, and when appropriate organize review meetings.