Public Expenditure Tracking in Africa_2009

Public Expenditure Tracking in Africa

Babatunde Omilola and Melissa LambertRegional Strategic Analysis and Knowledge Support

System (ReSAKSS)

African Union (AU) Ministers of Agriculture, Land and Livestock ConferenceAddis Ababa, Ethiopia

April 20-24, 2009

Outline

1. The importance of tracking public expenditures

2. Regional review of public expenditures: How is Africa performing compared to other regions?

3. Agriculture spending in Africa: Trends and Progress towards the Maputo Declaration target

4. Tracking progress of expenditures and other key targets directly from ReSAKSS website

5. Agriculture investment priorities in Africa

6. Conclusion and Q&A

1. The purpose of tracking public expenditures

• Public expenditures can be one of the most effective instruments for reducing poverty

• Close monitoring of investments allows for reevaluation and investment prioritization

• Can encourage investments to go to sectors with highest productivity and poverty reduction returns

2. Overview of public expenditures across the world

How does Africa’s public spending compare to public spending in other regions?

Public expenditures across world regions, 2000 international dollars, billions

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

SSA (13 countries) N. Africa (3 countries) LAC (16 countries) Asia (11 countries) Total (43 countries)

20

00

inte

rnat

ion

al d

olla

rs, b

illio

ns

1980 1990 2000 2005

Total spending increased by 6 percent from 1980-2005, the

majority of which was from Asia

Spending in SSA and N. Africa increased by 3.7 percent from 1980-

2005. In SSA alone, spending increased by 4.9 percent

Source: Calculated using data from International Monetary Fund’s (IMF) Government Financial Statistics Yearbook

Public expenditures across world regions, Percentage of GDP (%)

0

5

10

15

20

25

30

35

40

45

SSA (13 countries) N. Africa (3 countries) LAC (16 countries) Asia (11 countries) Total (43 countries)

Perc

enta

ge o

f G

DP,

%

1980 1990 2000 2005

Public expenditures as a percentage of GDP is a more useful measure of the amount a country spends relative to the size of its economy

Under this measure, Africa has spent the most, although in SSA

this share has declined since 1980.

Sources: Calculated using data from International Monetary Fund's Government Finance Statistics

How have governments allocated their total spending?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1980 1990 2000 2005 1980 1990 2000 2005 1980 1990 2000 2005

Shar

e o

f to

tal s

pen

din

g, %

OtherDefense Social Security T&C Health Education Agriculture

SSA Asia LAC

The share of spending on agriculture in SSA increased since 2000 but remains at the 1980 level

and below 10%.

Since 1980, the share of spending on health, education and agriculture in SSA has increased slightly while spending on defense has declined.


Agriculture expenditures across regions

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200

250

1980 1990 2000 2005

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inte

rnat

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al d

olla

rs, b

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ns

Agriculture expenditures by region, 2000 international dollars (billions)

North Africa SSA LAC ASIA TOTAL

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2

4

6

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12

14

16

1980 1990 2000 2005A

gric

ult

ure

exp

end

itu

re s

har

e o

f ag

ricu

ltu

re

GD

P, %

Agriculture expenditures by region as share of agriculture GDP

North Africa SSA LAC ASIA

The level of agricultural spending is much higher in Asia than in N. Africa,

SSA and LAC

Yet as a share of agriculture GDP, expenditures on agriculture are highest

in N. Africa – but still lowest in SSA.


Drawing conclusions from the figures

• Although SSA has increased total spending and agricultural spending, the levels are much lower than other regions of the world

• Therefore, SSA, as a region, will need to increase its level of public spending on agriculture in order to experience successful transformation that Asian countries did through the green revolution

3. Agriculture spending in Africa

Country Progress towards the Maputo Declaration target

2003 Maputo Declaration

• Recognized the importance of financing agriculture for Africa’s development

– High rural population and majority employed by sector

• Countries agreed to goal of 10% budgetary allocation to agriculture

• Is also goal of CAADP (along with 6% agricultural growth target)

Progress towards the Maputo Declaration target

• The African continent as a whole has not met the 10% target (current spending at 6-8 percent)

• But, this varies by country

0

5

10

15

20

25

Gu

ine

a B

issa

u*

**

Gab

on

**

*

DR

C**

Co

te d

'Ivo

ire

Mo

rocc

o*

*

Cen

tral

Afr

ican

…

Mau

riti

us*

*

Leso

tho

**

Rw

and

a

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t**

Cam

ero

on

**

Bo

tsw

ana

Bu

run

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Ken

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Swaz

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*Su

dan

***

Nam

ibia

**

Tan

zan

ia**

Mau

rita

nia

***

Be

nin

***

*

Tun

isia

**

Nig

eria

Zim

bab

we*

*

Zam

bia

*

Togo

Mad

agas

car*

*

Gam

bia

***

Mo

zam

biq

ue*

*C

had

***

Gh

ana*

**

*

Mal

i

Mal

awi

Eth

iop

ia*

*

Sen

egal

Gu

inea

***

Nig

er*

Bu

rkin

a Fa

so*

%

Agricultural Expenditures as a share of total (%), 2007

CURRENT, 2007 (Unless otherwise noted)

*=2006; **=2005; ***=2004; ****=2008 estimates

Sources: Various, compiled by ReSAKSS.

Only 8 countries have met the 10%

target

Have countries increased their spending in response to the 2003 Maputo Declaration?

• At the continental level, agricultural spending nearly doubled between 2000 and 2005

• In 2003, only 3.2% of countries allocated 10% or more of their budgets to agriculture– This increased to 33.3%

in 2006 before slightly falling to 25% in 2007

• 9 countries increased their allocations from less than 5% spending to 5-10% spending

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

2002 2003 2004 2005 2006 2007

% o

f re

po

rtin

g co

un

trie

s

Level of agricultural spending as a share of total spending, 2002-2005

Less than 5% 5%-10% More than 10%


Agriculture expenditures as a share of agricultural GDP

• Measures government spending on agriculture relative to the size of that country's agriculture sector

• Under this measure, more countries fall into the category of low budget support to agriculture

0

20

40

60

80

%

Agricultural expenditures as a share of agricultural GDP, 2007

CURRENT, 2007 (Unless otherwise noted)

*=2006; **=2005; ***=2008 estimates

The range is considerable

(1 to 60%)

On aggregate , Africa spends between 5-7% of agricultural GDP on agriculture,

compared to 15% in Asia during its Green Revolution


Development Assistance for African agriculture

Since 1995, official development assistance (ODA) to agriculture in Africa has fallen and has been less than ODA to emergency relief and food aid

Sources: OECD statistical portal, accessed November, 2008.

Agricultural aid to Africa, by country

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1

2

3

4

5

6

7

8

9

10

Agr

icu

ltu

ral a

id a

s a

shar

e o

f to

tal a

id, %

2002 2003 2004 2005 2006

All countries spent less than 10% of aid

budgets on agriculture

• Agriculture has not been prominent on the donor agenda, perhaps not because of any conscious decisions but due to pressure to broaden the aid agenda• It is crucial for development agencies to also commit to the 10% budgetary allocation to agriculture Source: OECD statistical portal, accessed November, 2008.

4. Tracking progress of expenditures and other

CAADP/MDG targets directly from ReSAKSS website

ReSAKSS Website:www.resakss.org

http://www.resakss.org/

Users can customize the map

and charts based on the specific

information they are looking for, whether that be

regional information…

The new ReSAKSS website allows users to easily track

progress against the CAADP and MDG

targets while also accessing a wealth of knowledge and

data on agricultural development in Africa

When a country is selected, the map, charts and bottom

narrative change to provide all available information on that

country.

…or country-specific information.

By zooming out, users can select

another country…

…thereby enabling cross-country comparisons over

time.

Downloadable Data

All data can be easily exported:

- An image file of a color-coded Africa Wide map for one indicator and one year at a time

- A bar chart of all indicators for one country in one year

- A line chart of all countries for one indicator

- An excel file (spreadsheet) of all data on the selected indicator OR all data for the selected country. Example of image export for population in 2000.

5. Agriculture investment priorities in Africa

Which sub-sectors should investments target?

Prioritizing agricultural investments

• Simply increasing resources is not enough – spending must also be efficient, well-targeted and supplemented by investments in non-agricultural sectors

• Pro-poor investment areas include: – Staples and livestock subsectors have large domestic demand

and share of value addition– Irrigation: During the Green Revolution, Asia irrigated an

average of 30-50% of total arable land. Today, Africa irrigates 3-4%

– Rural Infrastructure has high poverty reduction effects per unit of investment and links farmers to inputs and markets• Africa’s current road density is low at 26 km per 1000 km2

– Agricultural research and development (R&D): every 1% increase in yield from agricultural R&D can lift 2 million Africans out of poverty

Agricultural R&DSSA’s agricultural R&D expenditure declined by 0.2%

Source: Beintema and Stads (2008)

•The agricultural R&D spending ratio to agricultural GDP is lower in 47 out of 53 African countries than the developing world average of 0.56•If Africa doubled its budgetary allocation to agricultural R&D in 5 years, the poverty rate would decrease from 48 percent to 25 percent

Regional share of global agricultural R&D spending

Conclusions

• Compared to other regions, spending on agriculture as a share of total spending and as a share of agricultural GDP is lowest in Africa

• Spending levels have increased in many countries, but governments will need to continue this trend to fulfill CAADP and Maputo commitments and achieve poverty reduction

• Likewise, development assistance to agriculture should also increase – “10 for 10”

• Investments to agricultural R&D are particularly low in Africa and could have huge impacts if scaled up

• Complementary investments in rural infrastructure are also crucial

Thank you!

Public Expenditure Tracking in Africa_2009

Technology

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