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2017 | OriginalPaper | Chapter

6. Selected Sectoral Policies and Structural Transformation in Africa

Authors : Souleymane Abdallah, Medhat El-Helepi, Victor Konde, Ottavia Pesce

Published in: Macroeconomic Policy Framework for Africa's Structural Transformation

Publisher: Springer International Publishing

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Abstract

This chapter compliments the analysis in the previous chapters by examining the role of selected related sectoral policies, namely trade policy, agriculture policy and technology and innovation and how they impact structural transformation in Africa. Section 6.1 discusses the role of trade policy, focusing on the question of how to integrate trade and macroeconomic policies to ensure coherence in Africa’s structural transformation strategies. Following a discussion of the potential offered by trade policy, the section examines the channels of interaction between macroeconomic policy and trade policy and related African experiences. Section 6.2 discusses the role of macroeconomic policy in fostering sustainable agriculture for structural transformation, providing a brief assessment of the state of African agriculture and what is needed to transform this sector. The section concludes with a discussion of the institutional and macroeconomic policy landscape, necessary for promoting sustainable agriculture and structural transformation. Finally, Section 6.3 examines the role of technology and innovation in shaping policies for Africa’s structural transformation.

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previous chapter Monetary and Other Financial Policies for Africa’s Structural Transformation

next chapter Macroeconomic Policy and Pathways to Structural Transformation of African Economics

https://www.wto.org/english/res_e/booksp_e/anrep_e/wtr04_2a_e.pdf.

World Bank (2012).

The other key constraints identified were access to industrial land; access to finance; lack of entrepreneurial skills, both technical and managerial; lack of worker skills; and poor trade logistics.

See Norton (2004) and Eugenio Díaz-Bonilla (2015), for more in-depth understanding of the relationship between macroeconomic policy and agriculture. The sub section on macroeconomic policy framework (Section 6.2.3) is derived mainly from those two references.

This sub-section is based on and derived from two resources: ECA (2016) forthcoming Report; and ECA (2015).

The Tree Economic Reports on Africa (ERAs) have similar themes ECA (2013, 2014 &, 2015).

According to the World Bank, countries where agricultural GDP contributes 20 per cent and more of GDP are classified as agricultural based economies.

The share of agricultural and food exports to Africa’s total merchandise exports has declined from 20 to 12 per cent between 1995 and 2014. Author calculations based on UNCTADStat (2016).

Recent dwindling of fuel and mineral prices is a case at hand, where the price of oil, for example has tumbled by about 70 per cent since January 2014 up to February 2016.

NEPAD (2009).

World Bank (2016) data show that at 2005 constant USD, agriculture value-added per worker, for 2006 and 2013 except where indicated otherwise: For Africa excluding North Africa, it is 622 and 706 respectively; for North Africa and the Middle East, it was 2,551 and 3,264; over the same period, for South Asia, it was 580 and 711; for developing Asia and Pacific: 661 and 80 (2014). For the World Bank, the Africa Region refers to only “SSA” or Africa excluding North Africa. A country by country comparison shows there is much variation in agricultural value added per worker in Africa excluding North Africa. Available at: http://siteresources.worldbank.org/CSCARDEXT/Resources/8409798-1346384090608/8821711-1347908811406/123.pdf.

The deficit in Africa’s agricultural food trade rose from USD32 billion in 2008 to about USD39 billion in 2013. These figures are often misquoted as Africa’s food import bill, which is much higher. However, they represent the deficit in Africa’s total agricultural import.

It is worth noting that six countries contribute around 75 per cent of Africa’s total agricultural import bill.

For example Fan et al. (2009: Table 5) show that a 10 per cent of total spending may translate into a 5 per cent share of agricultural GDP for countries where the sector is large, and, therefore, important to the national economy. In other cases, the 10 per cent of total spending may translate into a 15 per cent share of agricultural GDP for countries where the agricultural sector is less important. Botswana, for example, has barely spent 5 per cent of total expenditures on the sector since 1980, yet it represents more than 31 per cent as a share of agricultural GDP.

This definition and the approach used in the above indicated ECA (2016a) Report are based on and presented in: Tsakok, Isabelle (2011).

Indeed, the share of manufacturing of Africa’s GDP has dropped recently (from 19 to 11 per cent between 1976 and 2014). Source: World Bank (2016).

ECA report adopts the approach used in: Tsakok, Isabelle (2011), which is referred to from herein as the “book”.

In Tsakok 2011, the first three countries looked at are England in the eighteenth and nineteenth centuries, Japan under the Meji Restoration (1868–1912) and up to the 1960s; and the United States of America in the nineteenth and twentieth centuries.

Thirty or so industrialized and developing countries were looked at. See Tsakok (2011:191)

Within ECA (2016a) report, agricultural transformation was assessed against the existence of the validated list of the five necessary conditions. Only one country, Mauritius, out of the six tested countries survived the transformation test with all the five indicated conditions being readily identified as necessary.

The nominal rate of assistance (NRA) is defined as the percentage by which government policies have raised gross returns to farmers above what they would have been without the government’s intervention. Similarly, the consumer tax equivalent (CTE) is the percentage by which policies have raised prices paid by consumers of agricultural outputs. Negative values imply net taxation of farmers or subsidies to consumers.

The present sub-section limits its focus on policies that are usually considered as macroeconomic policies. Other policies that, although crucial for the performance of the agricultural sector, are into the domain of economic policies in general are not considered.

Burkina Faso is good case at hand, whereby efficient, substantial, and sustained support to agricultural has yielded substantial change. Through a gradual reform in the cotton sector, Burkina Faso has maintained an average economic growth of 5.5 per cent over more than a decade seeing a whipping per capita income increase of around 40 per cent and a decrease in poverty head counts of almost 24 per cent between 2000 and 2007, and adding 235,000 new jobs (Moyo 2014).

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ECA analysis based on UN Comtrade (2016) database BEC group 4. Data for BEC 41 is limited to only a few countries.

In descending order Ethiopia (2.8 per cent), Congo, Ghana, Cote d’Ivoire, Tanzania, Libya, Zambia, Kenya, Namibia, Mozambique, Botswana and Uganda (1.0 per cent).

Latest more complete data for the continent but 2013 and 2014 is available for very few countries.

ECA estimates based on World Bank (2016).

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Title: Selected Sectoral Policies and Structural Transformation in Africa
Authors: Souleymane Abdallah
Medhat El-Helepi
Victor Konde
Ottavia Pesce
Publisher: Springer International Publishing
Book: Macroeconomic Policy Framework for Africa's Structural Transformation
Print ISBN: 978-3-319-51946-3

Electronic ISBN: 978-3-319-51947-0

Copyright Year: 2017
DOI: https://doi.org/10.1007/978-3-319-51947-0_6