In most sub-Saharan African (SSA) countries, population growth (3.1%) has consistently outstripped growth in food production (2.1%) in the last three decades. This has translated into a vicious cycle of widespread malnutrition, hunger and poverty and a progressive degradation of the natural resource base. Much of the growth in food production in SSA has in recent years come through soil nutrient mining and extensification. There is an ever-increasing concern that it is becoming more and more difficult to achieve and sustain the needed increase in production based on extensification because there are limited opportunities for area expansion or low-cost expansion of irrigation. Even in places where such opportunities exist, unrestrained expansion would entail pushing the frontiers of crop production into marginal areas with a high risk of long-term damage to the natural resource base and the environment. The vicious cycle of hunger, poverty and environmental degradation would be exacerbated by the risks associated with current trends toward a global world if the competitiveness of SSA agriculture does not improve.

The challenge therefore is to make SSA agricultural input markets work efficiently and effectively. To achieve this, the strategic framework stresses that liberalization is not enough. The framework proposes that reforms and policy initiatives be based on a two-pillar foundation: the reliance on the private sector to play the leading role in the supply of agricultural inputs and the recognition that governments have an important role to play in providing supporting public goods and services and creating conducive policy, legal and regulatory environments. As a result, the framework attempts to clarify the processes through which the private sector can be strengthened, the public sector can more actively fulfill its necessary functions, and the concrete tasks of the transitional period can be defined and addressed to make privatization work. It focuses on seed, fertilizer and pesticide markets. However, the framework recognizes that the lack of other agricultural inputs such as farm power, tools and equipment and the inherent poor soil quality for agriculture in some regions are the main constraints to increased food production and productivity in SSA.

The objective of the framework is to guide interested stakeholders, including donors and national governments, in strategically promoting sustainable agricultural input supply systems in SSA. To do this, the framework relies on existing literature, case studies (Ghana, Nigeria, Guinea, Mozambique, Uganda, Tanzania), survey data (99 respondents in 19 countries), formal and informal consultations with public- and private-sector stakeholders, and IFDC’s experience in Bangladesh and Albania.

However, the framework recognizes that in no case should input market development and the use of fertilizer be regarded as a substitute for proper soil management practices. Rather, they are important components of the national soil fertility management strategy.

The framework also recognizes that the idealized concept of a competitive input marketing system represents the ultimate economic progression of such systems, past implementation experiences have had limited success, and markets can fail in performing their functions for several reasons. In other words, developing a competitive input supply system in SSA has proven to be a daunting task. However, the framework suggests that it can be done based on a sustained nurturing of the private sector in a holistic approach. This suggests above all that agriculture in SSA needs to be promoted as a business, and it implies the following initiatives:

• Removing explicit and implicit input subsidies for both production and marketing. However, where there are existing subsidies, a credible and carefully phased subsidy removal program should be implemented, and this transition phase should not preclude private-sector participation in the market. If targeted price or credit subsidies are still considered necessary for the poorest farmers or those in remote areas, this should be done in a way that does not hamper the functioning of competitive input markets. The framework stresses that such subsidies are different from necessary public investments such as rural road infrastructure and communication networks.

• Establishing market information systems adapted to liberalized markets to monitor supply and demand and prices, overcome barriers to reform, and provide information to market participants.

• Privatizing inefficient parastatals where this process is not yet completed. This may prove to be a very difficult task when there are entrenched vested interests. However, it is much easier to overcome these interests by promoting the private sector and allowing the parastatals to compete as opposed to attempting to dismantle the institution.

• Reforming the rural financial system into a strong liberalized system by nurturing private-sector lending, increasing private-sector access to capital, developing human capital, and closely supervising and monitoring credit repayments.

• Designing and enforcing comprehensive fertilizer, seed and pesticide legislation and regulations. However, considering the thinness of the inputs markets in most SSA countries, it is critical that government regulations promote the emergence of regional markets and international linkages for the input industries to be vibrant, competitive and sustainable.

• Developing private integrated input market networks.

• Creating institutions to facilitate government and private sector interactions.

• Encouraging and supporting of human capital development both in the private and public sectors.

• Supporting research and extension to develop better technologies and educate farmers.

• Continuously monitoring and assessing the impacts of reforms to permit changes to be made so as to increase the chances of success of the reform process.

The framework recognizes that the transition process involves difficult tradeoffs. It should be taken one step at a time, rationally linked to constraint removal. The rate of change in the transition process should be tailored to each individual country's political and economic circumstances and the level of development and complexity of each input subsector. As a result, the framework categorizes country situations based on the stage of development of the input subsectors and identifies specific interventions and roles for governments, donors, private sector, and NGOs. In doing so, the framework stresses the importance of recognizing that within a country, there may be differences in the degree of market development by commodity (e.g., export versus non-export crops) and/or geographical area. As a result, the mix of initiatives to improve their performance will differ, depending on the stage of development.

For more information on this project, contact Dr. Georges Dimithe--gdimithe@ifdc.org)

Return to Programs/Projects