Report No. 9592-AFR An Agricultural Growth and Rural Environment Strategy for the Coastal and Central African Francophone Countries September 4, 1992 Occidental and Central Atrica Department lJCROFICHE COPY Technical Department Africa Region Report No.: 9592-AFP Type: (SER( ) The World Bank Title: AN AGRI(C'j1-,Tt1RAf, GROWTH & ROFPAT, FOR OFFICIAL USE ONLY Auithor: CLEAVER FOR OFFICIL USE ONLYExt. :34595 Room: Dept. :APTAG Y=TWO VOLUMES Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without V/orld Bank authorization. Acronyms and Abbreviations Used AFR - Africa Region AIDS - Acquired Immuniodeficiency Syndrome APDF - African Project Development Facility BAT - British American Tobacco BNDA - Banque Nationale de Developpement Agricole CAR - Central African Republic CCCE - Caisse Centrale de Cooperation Economique CDC - Conmmonwealth Development Corporation CFDT - Compagnie Francaise pour le Ddveloppement du Textile CIDT - Compagnie Ivorienne pour le Developpement des Textiles CILSS - Commitd Inter-Etat pour la Lutte Contre la Seheresse au Sahel DRC - Domestic Resource Cost ECOWAS - Economic Commission for West African States EDI - Economic Development Institute EEC - European Economic Community FAO - Food and Agriculture Organization of the United Nations FONADER - Fonds National de D6veloppement Rural FY - Fiscal Year CDP - Gross Domestic Product HIV - Human Immunodeficiency Virus IARC - International Agricultural Research Center IDA - International Development Agency IFC - International Finance Corporation IFPRI - In-enational Food Policy Research Institute ILCA - International Livestock Center for Africa KTDA - Kenya Tea Development Authority NGO - Non-Government Organization OECD - Organization for Economic Cooperation and Development OER - Official Exchange Rate ONCPB - Office National de Commercialisation des Produits de Base OPAT - Office des Produits Agricoles du Togo PEP - Public Expenditure Program SADCC - Southern Africa Development Coordinating Conference SAPH - Societe Africaine de Plantations d'Hev6a SATMACI - Socidte d'Assistance Technique pour la Modernisation Agricole de la Cote d'lvoire SEMRY - Societe d'Expansion et de Modernisation de la Riziculture a Yagoua SER - Shadow Exchange Rate SOCADA - Societe Centrafricaine de Developpement Agricole SODECAO - Societ6 de D6veloppement du Cacao SODECOTON - Societ6 de Developpernent du Coton SODEFEL - Societe de Developpement des Fruits et Legumes SONAPRA - Societ6 Nationale pour la Production Agricole SPAAR - Special Program for African Agricultural Research T&V - Training and Visit TFR - Total Fertility Rate UDEAC - Union Douaniere des Etats de l'Afrique Central UNDP - United Nations Development Program USAID - United States Agency for International Development ZAPI - Societe Regionale de D6veloppement des Zones d'Action Prioritaire IntAgr6e Exchange Rate 50 CFA = I French franc FOR OmCIAL US ONY AN AGRICULTURAL GROWTH AND RURAL ENV1RONMENT STRATEGY FOR THE COASTAL AND CENTRAL AFRICAN FRANCOPHONE COUNTRIES I. ENTRODUCTON ANDSSUACARY ..................................... I A. Past Agricultural Perfornmace .................. ............... . 2 B. The Bank's Staty Up to 1987 ............ .... ..... . 5 C. The Role and Objectives of Agricultatl Development in the Coastal FnncophoneCountdes ... ........ .... ... 6 D. TheConstraints to Achieving Objectives ......... . .. ........ 8 E. AnActionPlanforAgricultuml Gwwth .................... 10 F. Is the Strategy Different? . . . . ......... ... 18 0. A Focus for the World Bank ................... .......... 19 H. SupplyResponse 2......... ... 21 H. HISTORICAL PERFORMANCE OF AGRICULTURE IN THE COASTAL FRANCOPHONE COUNTRIES ............... 21 A. Charactristics of Frming and Agricultural Potential .................................... . 21 B. Agriculturl Growth . ........................... . . . . . 26 C. Food Imports ........................... ...... . 28 D. Food Security ............ 28 B. Rural Women . .................................. .29 F. Agricultural Exports ..... ........................... 30 G. NatuwrResources and the Rur Environment .... .... .......... 32 III. CAUSES FOR THE FE T L AGRICULTURAL PERFORMANCE BETWEEN THE COASTAL FRANCOPHONE COUNTRIES IN THE 1960S AND 1970 .......................................... 33 A. Expansion of Ara Under Cultivation ............ . 33 B. Labor Availability Expanding ...... . .. . 34 C. Agricultual Investment . ........... ................... 35 D. Favorable Export Prices and Exchange Rate .................. 36 B. Reladtvely Favorable Foodcrop Pricing and Marketing ............ 37 F. fastructure ....................................... . 38 0. Research,Extension,andInputSupply ..................... 39 IV. PERFORM(ANCE IN THE 1980s ................... . .......... ) A. RecentTrends ....... ......................... 40 B. Useof Land,LaborandCapitalInvestment ................. . 41 C. Red EffecveExchangeRateOvervaluation .................. 43 This document ha restricted distribution and may be used by recipients only in the performance of their offcia duties. Its contents may not othewis be disclosed without World Bank authorlution. D. Declining World Prices for Principal Agricultural Exports, and Price Stabilization Which Does Not Work ....................................... 44 E. Inefficient Pamstatals ................................ 45 F. Donor Projects in Confusion ........................... 46 0. Environmental Destruction in Forest, Pasture, and Farming Areas ................................... 46 H. Land Rights Less Secure .48 I. Women Neglected ..... 50 J. Analysis of Relative Importance of Each Factor in Explaining Agricultural Performance .51 V. THE WORLD BANK'S EVOLVING AGRICULTURAL STRATEGY AND LENDING PROGRAM ........... ........................ 52 A. The World Bank's Early Strategy ......................... 52 B. World Bank Strategy in the Early 1980s ..................... 53 C. Results of the Bank's Strategy in the 1980s ................... 54 VI. A VISION FOR A DEVELOPING AGRICULTURE ................. 56 A. Ob --tives for Agriculture ............................. 56 B. Are There Markets? ................................. 57 C. Comparative Advantage ......................... ..59 D. The Strategy in Brief .......... .............. 61 VII. CREATING AN ENABLING POLICY ENVIRONMENT FOR PRIVATE SECTOR INVESTMENT IN AGRICULTURE, AGRO-INDUSTRY, MARKETING, FARM INPIJTSUPPLY AND CREDIT ......................... 62 A. Pice and Trade Policy ........................ 62 B. Cotton . 66 C. Cocoa and Coffee .66 D. Rubber .. ....................... . 67 E. Non-TraditionalExport Crops ........................ 68 F. Food ....6 ...................................... 68 G. Divestturi of Agricultural Parastatals .69 H. Savings and Credit Policy .70 I. Private Sector Investment Projects .72 VIII. TECHNOLOGY ADVANCEMENT AT THE FARM AND EN '3ERPRISE LEVEL .74 A. Technological Frontiers ..74 B. Agricultural Research ............. 76 C. AgdculturaExtension ............................... 78 D. Par InputSupply ......... . ... . 84 B. Livesok .................*. * F. AgriculturalEducatm ................................ 87 DC. DEVELOPMENT OF PARMER ORGANIZATIONS: EMPOWERMENT OF RURAL POPULA71ONS .................................. 87 A. 'ocofFamerssGroups andAswdations .... ........................ 87 B. ProblemsofthePast .................................... ....... 88 C. Th Future: Fsrmer Organiations as Autonomous Parmer MIanaged Businme Entrpri ...................... ... 89 X. NATURAL RESOURCE MANAGEMENT, FORESTRY CONSERVATION, AND LAND TENURE SECURrrY .............................. 89 A. IUPwblcm ....................... 0 B. Dealng with the Broad Causes of Natur Resoure ncaXon ...........................91 C. Pu dand Forests .. ....................... . .91 D. Pastured and Drylnd Areas ..........................*. 93 E. Land Use Planning and Land Tenure ...................... 94 F. StrengheninGovernmnt Sarces ........................ . 96 9. Financng .................................. 98 B. Bank Projects ........... . . . ........... . ........... 98 MI. DEVELOPING RURAL INEASTRUCTURE INCLUDING IRGATION, DRAINAGE,WATERSUPPLY,AND RURALROADS .............. 99 A. The Needfor lnfastutureDevelopnmt ................... 99 B. Thanvor ............... *.*.... #0.0.................... 100 C. Water Supply and Irrigation ........ . . . ........................... . 101 D. hfrastructure and Envirnmental Conservation ............... 103 E. urwizaton .................................. ..*... 00*.* 103 XII. fPROVING FOOD SECURffY . ........................... . 105 XIIL REDUCING POPULATION GROWTH, MPROVING RURAL HEALTH AND EDUCATON ............................................... 109 aIV. DEI,jENTATON OF THE STRATEGY ................ . ... 108 A. Impmved Govarnent Policy . ........... . . . . . ... . . . . . .. . 108 B. Reform of Pubic Expenditure Pogrms and the Role of thie Donof ............................................ 1CJ4 -iv - C. StrengtieningAgriculturalProjectManagement ............... 110 XV. IKEY SUPPLY RESPONSE TO THE STRATEGY ............... 111 A. TheDterdnants of AgriculturalG rowth ...................111 B. The Factors which Enable Production to Expand in Mediumt-Term .................. 114 C. Projections of Agricultural Growth in the Short to Medium-Term in Cte d'Ivoire ...........115 D. Projections of C6te d'Ivoire3 Growth in the Long-Term ............... ....116 E. Applicability to Other Francophone Coastal Countries .......................... 116 F. Impact on Rul Incomes ................ . . *....... . . . . . . 117 G. Impact on the Urban Sector ......... . . . . . . . . . . . . . ... 118 STATISTICAL TABLES Table 1.1 - Distribution of World Bank Agricultua Project Types, Existing and Future Portfolio ........................ 20 Table 2.1 - Crop Yields ..... ....... ..................... 24 .Table 2.2 - Agricultural Growth Rates .................... 27 Table 2.3 - Rate of Increase in Cereal Imports, 1974-1990 ............. ................. 28 Rate of Increase in Tonnage of Food Aid, 1974/1975-1989/1990 ....................... 28 Table 2.4 - Food Secity ............... 29 Table 2.5 - Agicuturl Export Perfomnce ................31 Table 2.6 - Rate of Deforestation . . . ... .. 32 Table 3.1 - Cropland Expansion to 1980 ................... 34 Growth in Agricultural Labor Force to 1980 ............................ 34 Table 3.2 - Gross Domestic nvestment .. ................. 36 Table 3.3 - Nominal Net Protedon Coefficients .............. 37 Table 3.4 - Estimated Road Transport Costs ................ 39 Table 3.5 - Fertilizer Consumption 40 Table 4.1 - Cropland Expansion 1980-1989 ................. 42 Growth in Agriculture Labor Force 1980-1990 ...................... 42 Table 4.2 - Growth of Gross Domestic Investment, 1980-1990 ................ .............. 42 Table4.3 - RealEffectiveExchangeRates ................. 43 Tlable 4.4 - Commodity Prices in Constant 1985 dollan .......... 44 Table 4.5 - Quantification of Factors Influencing Agricultural Growth, C8te d'Ivoire as an Illustrative Case ........................ 52 Table 6.1 - Projected Gtowth in World Demand for Primary Agriculture Commodities .............. ..... 58 Table 6.2 - Cote d'Ivoire Comparative Advantage for Main Crops . ... 60 ANNEXES Annex 1 - Ex-Post Analysis of Completecd World Bank Projects ..... ........119 Annex 2 - Quantitative Analysis of Factors Affecting Agricultural Growth in C8te d'Ivore ....... ..... 120 A"nex 3 - Annex Tables Table 1 - pWulation Growth Rates and Fertlity Rates ...... ........ 129 Table 2 - Agriculture's Share in GDP ..... 130 Table 3 - Food Security ...... ....... 131 Table 4 - Crop Yields ...... ........ 132 Table S - Producer Ptice Shares ........ 133 Table 6 - Irrigation and Fertilizer Use ..... 134 Table 7 - Land Use .............. 135 Table 8 - Per Capita AAble Land .136 Table 9 - Forest and Deforestation ....... 137 Table 10 - Social Indicators. .Indicator 138 Table 11 - C8te d'Ivoire - Shares of Various Crops in Agriculture ... . 139 Table 12 - Comparative Real Effective Exchange Rates: CFA Zone and Other Developing Counties .....140 BIBLIOGRAPHY ............. . .. . ........... 141 Afri. Thcic counM. ii1ud.  cit. 4VQi., fl*Rl Afd.n RpubJo, Czn@wQn, Co EguaoriaI ums, OutiOu. Guinea, asid Tho. Th curtwnt gotatinte t the rfruturnI develoVm0nt of theto oountrka, anI t .ratey fat egticultuml dJent ar not widely known n the intcmatona1 oomunity There ii prc.cnUy an intense 4elat 'ithh these eountru ipediag the ariou1tnra1 ntrncy to pumuc. Moat of the cowitriet have rooetid mnbaited on highly dean&a*4jwtndI1t * progra, widoli t$bd4 &)en With deolinesin Wen2atIeMt 1nio. tot *ietiltu ontoM#nd ito,of*neWe4taaI aomestio ioiilwrat cot plioiea to agxlcultural stagnation In niost of the counttiea.. 1aitaensthe history ofagriouitura policy and donot safistancein the con suinoelnd.penAnoe Differences between the cotantrieniri policy nod icvettnicnt mn1 di iiceawhh othm oonntzie. In Attica, are uad to li entIftit ta at polIny and investment wItibm  ann1*iing IwtIroh, with beneta Widely diattibuted mnionj the population. Cte d'hroke and Catesreco oucecededin maintaining high agrioultumi growth ratea lit Iit 1960* .*id 70a iey did this through a *e1atv@1y open policy to private Investment in igricuittare, maintenano tre1advey gQO%IpW#cent&VedOT farmem oonaidczb1e Investment in minI aattuctuze and in agriculture services such as awseareh andextenulon. Agriculture t tJ a*taI o0oj 4Ufltin* i$d ntrqh Jean Well, Jirgely haiis* these innict* r ioL IA l*o.. This 4WS1100 changed n the 1980s, with agrienturelo C8ted!Ivolre and Cameroon stagnating while that goboonied, n4 uignlftwt izpprOVInont ocotancd in guinea nd ettht. The ninreents needed for succoas in sgriaulnwe ptuwesuiel) di ppeste4 IA Caniemon and COte dvoire, and appeared in these ewerging countries. The htantegy planes heavy nijhaeli.n thiUow)ng In order o riorhy: (a an ewtbflngJoJiey environment far private Sector Investment in agriouIture agrionitusul precesuing and marketing, including d1tet suppoaftw private sector hwestment and a aa1 divestiture;  agrioulture indegy gitileralron and dissetnlantIoti (c development of farmer nisaziona (4) exjianded Iiivea(nwnt in nna1 Intnaatiizoture,4) better *atuaI vsonrOc aitt, (1) fc*d *eeririty ritentinns and (t) increased inveabnans in pep4IAtian poUoy wtsni) health end tion Attending to the needs of rural women In cnds of these domains Is a oonmnon focus, as Is mproving?he oalmelty.t West Attloana ta n1ang esob *OtivJty, This repoat was prepmd by via CIeavor Chief of the Agricultural Division ofthla1tanenkoftl,nWoM Bank it ban beuetted em aigniftcwi ioput by staf( of dre Apicultural Division of the OccidentaL Ceitted A(rLcS Department and the Agricultural Olvialoit ottlie Technical Depaztment iblyMesara. Eicl,ard Westebbe (Lad Reviower for the Study) Michael OIUeUD (Director), led Nkod J)rvruen Vhr@t), $P. usse, linikie Daab.Dwoinob, LV. Dnlce* * David Michn1k, L Smnkhorst,, A haIl, C. Pauban, N. Iwase, 7. Wemerftolder,L Mclntue IL Grwa lii  U.7an,l1.7nIt,nn4l . An arltet eeof the  heeivwidely lated  the dotter., and helM  the French Crnsse Centrale and the French Minutry of Cooperation, FAG (Mews. ft 4uaten, P Lucane, A. MacMWan .7 lioconthe,  Owens P Danphin) Dtltlsh DC, nod (german KPW. The ftepoft was modified on Ike hasl ft*ila laput+ The whet 4t4 wan presented in several setclnsrs held in West Mrtc& attended In total y aeveril hundred West And local 4oeornopesentalivesin COt 41 Beam, ucte* nod Seag.E, Ott C0A1tIS1 AfrIOSO R fleTego, and Osben have commented. lndnndnal country agzroultuwsea*or Studies ow whiab this tepo*t  bssedWrptaparod and disctzacd lit BquM t4ulnea, Conge, Onottal A*a@tui ft and comments were of isilleular Importance in the revisions and finalization of the document. Ihe views ncpreusedby Ovetumeat staff have led to eon i4eiablernodiZoatron' f this teport INTRODUCTION AND SUMMRY L INRODUC170N 1.1 The report proposes an agricultural strategy for Guinea, Togo, Benin, CMte d'Jvoire, Cameroon, Equatorial Guinea, Central African Republic, Congo and Gabon. These countries are referred to for brevity as the coastal francophone countries (although Equatoial Guinea is Spanish-speaking). I/ The coastal francophone countries have common agricultural characteristics, a common French colonial heritage (except for Equatorial Guinea), common currency (CPA franc except in Guinea), and similar macr-economic and agricultural policies (again except from Guinea). Food crops are important in each (up to 50 percent of agricultural GDP), and include root and tuber crops (cassava and yams) and cereals (maize, rice, sorghum and millet). Livestock (cattle, chickens, goats) are extremely important (from 5 to 25 percent of agricultural GDP). Cotton is important in all countries except Congo, Gabon, and Equatorial Guinea. C6te d'Ivoire, Cameroon, Equatorial Guinea, (and to a lesser extent Gabon and Togo) are large producers of cocoa and coffee. CMte d'Ivoire and Cameroon also produce sugar, rubber, palm oil, coconuts, pineapples, bananas, mangoes and other tropical fruits and vegetables. Traditional methods of cultivation characezed by slash and burn techniques, shifting cultivation, and low input use predominate in all nine countries. Transhumant pastoralism is common in the drier areas of the counties. There is considerable plantation agriculture producing tree crops, and some cattle ranching. 1.2 The important differences between the countries need to be reflected in the specific recommendations provided to each. For example, the Central African Republic is land- locked, increasing the cost of exporting, but also increasing the natural protection against agricultural imports. Road infrastructure will have to be developed, linked to Cameroon's road network, if the Central African Republic is to develop its export agriculture. The vast tropical rain forests of Cameroon, Congo, Equatorial Guinea, Central African Republic and Gabon require specil protection for environmental reasons, and provide opportunities for the development of forestry products. CMte d'Ivoire's situation as the destination of massive migration of people from the Sahel is beneficial to the Sahel, but puts increasing pressure on the land resource in Cote d'Ivoire. Agricultural intensification (more output per unit land area) may be more important in CMte d'Ivoire than elsewhere as a result, since land is increasingly scarce. C6te d'Ivoire has had a long tradition of private enterprise. This can be built on by more aggressive policy to promote private investment in agriculture. Guinea is not part of the CFA franc zone, and has a relatively flexible exchange rate policy which has proved very beneficial to agricultural production. This can be exploited through an I/ The reason for this grouping is that these countries are served by the same Department in the World Bank. They are grouped into a single Department because they have common characteristics. The other fiancophone groupings: The Sahel; and the Central and East African countries of Zaire, Rwanda, Burundi, and iZidagascar have quite different agricultural and economic characterstics. - 2 - aggressive policy to promote private investment in agriculture since many agricultural products are profitable to produce in Guinea. Benin is qnly just emerging from an extraordinarily constrained political and economic system characterized by excessive State control. Policy recommendations in Benin must therefore be directed primarily to getting a market economy started up, while providing a safety net to the large number of rural poor. Food security will be important as one aspect of this safety net. FinaRy, Equatorial Guiiea has virtually no agricultural services, banking services, or rural !if.astructure outside the Island of Bioko. Basic institution building and infrastructure is required here. Each of these characteristics is important to the adaptation of the overall strategy to each country. 1.3 The World Bank has recently completed, or is presently undertaking, agricultural sector work in each of the nine countries, on which the comparative analysis of this report is based. In addition, the study has made use of a large volume of research on African agriculture, results of past Bank and donor agricultural projects in the countries, and scrutiny of best agricultural practice elsewhere in the Bank and in other donor agencies. Most important in arriving at recommendations has been the characteristics of projects within the nine countries which have been successful, as well as policies and investment approaches in other African countries which have maintained high agricultural growth (Kenya, Zimbabwe, Botswana, C6te d'Ivoire and Cameroon in the 1960s and 1970s; and more recently Ghana, Nigeria, Tanzania and Togo). The Asian experience has also been referred to. Finally, the strategy has been developed after extensive discussion with the Governments and interested individuals in the countries concemed, during the period January 1992 to April 1992. A. Past Agricultural Performance 1.4 The 1960s and 1970s. In these years, C6te d'Ivoire and Cameroon stood out as exceptional agricultural performers by world standards, growing at 3.3 and 4.2 percent per annum respectively. Congo also had rapid agricultural growth. The other coastal francophone countries performed relatively badly. The causes for this differential performance are useful to review as the basis for an agricultural growth strategy in the future. 1.5 In the 1960s and 1970s, CMte d'Ivoire and Cameroon saw a rapid expansion of area cultivated and labor applied to agriculture. This was coincident with extremely high levels of public and private investment in agriculture. Investment tended to be of an engineered sort, whether public or private. For example, there was considerable public sector investment in parastatal-managed tree crop plantations, often both growing and processing the crop. Sometimes the plantations's production was supplemented by outgrowers who obtained technical assistance and inputs from the plantations. These investments were engineered in the sense that plantations are carefully planned and created, much as a road is planned and constructed. Careully planned rural development projects providing various services to smaLtholders were also abundant and well funded. Substantial investment was made in public sectr research and extension, infrastructure and credit. All of this was relatively well manag'4 in Cote d'Ivoire and Cameroon, mostly by large numbers of expatriates. Cameroon's cotton company (SODECOTON) fo. example had over 80 foreign technical experts up through the early 1980s. Private inve.t: ment in agriculture was also - 3 - largely "engineered", with Govemment defining prices of most commodities from the farm gate to export, defining marketing margins and marketing mechanismis. Often, the processing facilities were Govemments. Congo's growth was similar, based on public investment in pamcstatals producing export crops. 1.6 The system in Cote d'Ivoire and Cameroon worked partly because of pood management, and partly because the CPA franc was relatively well equilibrated by Afiican standards, untl the late 1970s. Agricultural prices were managed, but at levels which permitted agriculture to be profitable. World prices of export crops were high for most of the 1960s and 1970s. All these favorable factors induced Ivorian and Cameroonian farmers to expand production, especially of cocoa, coffee, and other export crops. Congo's parastatals also expanded export crop production, though at higher cost. 1.7 In the 1960s and 1970s, the other coastal francophone countries had much lower levels of investment (per capita and pe; unit land area). There was less land opened, and less expansion of labor use. Restrictions on private investment characterized these countries, thereby eliminating this source of growth. Agricultural price policy was less benign in these countries than in CMte d'Ivoire and Cameroon. In Congo and Gabon, the impact of substantial oil revenues was to escalate the cost of "non- tradable" inputs Qabor, land, intemal transport and other services) and to facilitate agricultural imports. This acted on agriculture in the same manner as an over-valued exchange rate; reducing its profitability. There was agricultural growth in Congo anyway, but by loss-maldng para3tatals. Guinea's exchange rate was extremely over-valued, and its price policy confiscatory. Its agricultural sector deteriorated greatly. 1.8 The 1980s. Agricuitural performance in CMte d'Ivoire and Cameroon deteriorated spectacularly, while that in Guinea, Togo, and Benin improved. The other coastal fiancophone countries continued to have mediocre or stagnating agricultural performance, except for Congo whose loss-making parastatals continued to produce. The causes of CMte d'Ivoire's and Cameroon's decline are several, and their origins can be traced back to the 1960s and 1970s. The heavy public investment of the 1960s and 1970s created large unwieldy bureaucracies. These bureaucracies (patatal enterprises, Ministry of Agriculture, Rural Development projects) became expensive. Thev were also not entrepreneurial. Good at starting up production and expanding production of a crop or product, they were bad at diverifying products, diversifying markets, improving processes and cutting costs. Increasingly in the 1980s it was the later characteristics rather than the expansion of output of a single crop unich were required for succes. The parastatals were susceptible to politicized staff appointments and over-staffing. Corruption became more apparent. 1.9 In addition to the problem with the parastatals, investment in agriculture and land expansion began to decline in C6te d'Ivoire and Cameroon because of the reduced profitability of agriculture. Reduced profitability resulted from an increasingly ov _r-valued real effectve exchange rate, increasingly ineffective public pnce stabilization mechaiisms, - 4 - and beginning in the rmid-1980s, a fall in international agricultural prices. Zv The cost of non-tradables, such as labor, trnsport, marketing, and Government "services" increased greatly in these countries, without corresponding productivity improvements. Donor projects multiplied, creating a multiplicity of services and interventions in agricultural research, extension, credit, marketing, and input supply. The public expenditure programs increasingly reflected the aggregate of donor projects, being often ill conceived, rather than reflecting a consistent agricultural development strategy. Most of these problems were apparent to some degree in all the coas'al francophone countries, but were worse in C6te d'lIvoire and Cameroon, Congo and Gabon. 1.10 In all of the coastal francophone countries, land expansion in the 1960s and 1970s, combined with traditional cultivation practices created important environmental problems in rural areas whicb became increasingly apparent in the 1980s. These problems included soil erosion and forest destruction -which was caused primarily by widespread burning and shifting cultivation, and by abusive logging and fuelwood gathering. Land tenure security, provided largely by customary law, declined as respect for customary law declined. This was exacerbated by Government ownership of much land. Govemment's inability to supervise the use of the land it owned led to open access land tenure systems where any settler could farm, liarvest fuelwood, or graze animals on any land found unoccupied. Open access does not provide an incentive to preserve soil fertility or invest in the land. This accelerated the process of soil degradation and environmental destruction. The situation worsened in the 1980s. Rainfall declines, wide areas of soil erosion and destructioni of vegetative cover are now apparent. CBte d'Ivoire, Togo, Benin, and Guinea lost most of their forests. 1.11 Despite facing most of these problems, Togo's agriculture did better in the 1980s because Togo more rapidly restructured its public sector, cutting the expenses and interventions of its Ministry of Agriculire, its rural development projects and its parastatals (especially thie cotton company). Privatization is further along in Togo. Those services which remain are better managed and cheaper. Price policy is relatively flexible. The real effective exchange rate is less over-valued in Togo because costs of r -:n-tradables such as labor, transport, marketing, and Government "services" are lower ilan in other coastal francophone countries. Rural infrastructure development was further advanced in Togo. Togo's agricultural sector grew at a spectacular 5.7 percent per annum in the 1980s as a result. 1.12 Guinea did better in the 1980s because it undertook important economic policy liberalization, with a managed float of its currency, introduction of flexible agricultural prices, and a relatively liberal environment for private investment (though greatly inhibited v Reference to real effective exchange rate over-valuation in this report is to a situation of excessive domestic costs of non-tradables such as labor, trw;sport, Government services, marketing; relative to tradable prices (domestic prices of exportablcs and substitutes for imports). -6- were recipients of project services. Bank policy advice tended to be directed to increasing administered agricultural prices, redaving the cost of parastatals, improving credit recovery, and coordinating donor projects. Bank projects tended to be successful in CMte d'Ivoire, Cameroon, and Benin, consistent with the rapid agricultural growth in these countries. In fact, according to the Bank's Operations Evaluation Department, 80 percent of the projects dating from this period in the coastal francophone countries were successful. All projects in C6te d'Ivoire and Benin, and most in Cameroon were successful. However, only half of these sustained the success five years later. And today, most of the parastatals and rural development projects supported during this period are in serious distress. Some have already been liquidated. The reasons for this distress are identical to the reasons for the decline of agricultural performance in C6te d'Ivoire and Cameroon. The workable strategy of the 1960s and 1970s is no longer viable. C. The Role and Objectives of Agricultural Development in the Coastal Francophone Countries 1.18 Agriculture remains the principal occupation of most people in the Coastal Francophone countries. Among working women, the percentage working in agculture is lowest in Benin at 69 percent, and highest in Gabon and Guinea at 84 percent. aI/ Among worKing men, the percentage worldng in agriculture is lowest in Congo at 45 percent, and highest in Guinea at 71 percent. Agriculture constitutes 47 percent of GDP in CMte d'Ivoire (the highest), and 27 percent in Cameroon (the lowest outside of Congo and Gabon; Annex Table 2). Gabon and Congo are exceptions, being most dependent on oil. 1.19 Tie analysis of this report shows that economic growth of at least 4 percent p.a., which is the objective set by most Governments of the nine countries, will require agricultural growth at the same level. This is because other productive sectors are relatively small (manufacturing constitutes about 5-15 percent of GDP on average). The exceptions are Congo and Gabon, which can achieve relatively high economic growth rates based on oil. With the exception of the two oil producing countries, 1I without agricultural growth at 4 percent p.a. the most competitive industrial sector (agro-industry) will not be supplied with the raw material to permit it to grow by its target rate of 4-7 percent p.a. Analysis undertaken for sub-Saharan Africa as a whole ji found that agricultual growth is the most important contributor to the growth of manufacturing and services. Agriculture is the major source of raw material for industry, is a main purchaser of simple tools (farm implements), is a purchaser of services (farm mechanics, transport), and farmers are the main consumers of consumption goods. Detailed analysis suggested a multiplier of 1.5 in economic growth 2/ The source of data is UNDP/World Bank, Africa Development Indicators, 1992. Data are for 1987. 4/ Cameroon and C6te d'Ivoire produce oil but in the former case declining amounts and in the latter too little to count them as oil-based economies. I/ S. Haggblade, P. Hazell, J. Brown; "Farm-Non-Farm Linkages in Rural Sub- Saharan Africa," Wr Di .Imfl, Vol. 17, No. 8, 1989. -5 - by widespread corruption and a nearly non-existent banking system). Guinea did not have the burden of a vast empire of public enterprises feeding off agriculture. 1.13 Benin's good agricultural growth in the 1980s occurred largely as the result of heavy and relatively efficient investment in cotton, and the resulting rapid exl insion in cotton production. In addition, a Lberal policy regarding food crop production and marketing facilitated expansion of Benin's food crop production at about the rate of population growth. 1.14 It is interesting to note how well agriculture did in Benin, Togo, and Guinea in the 1980s with only a modestly good, but stil imperfect set of policies. Many of CMte d'Ivoire's and Cameroon's problems also beset these three good performers in the 1980s, though to a lesser extent. The experience of Togo, Benin and Guinea suggests the potential of all the coastal francophone countries to expand agricultural production if policy can be improved and investment expanded. 1.15 The impact on poverty and food security of the varying agricultural performances was predictable. Data show food security and poverty indices improving slightly in CMte d'Ivoire, Congo and Gabon in the 1960s and 1970s consistent with growth in their per capita income. Pockets of rural poverty remained however in these countries; so growth was not as widely distributed as would have been desirable. In Gabon and Congo, improved food security occurred in the 1960s and 1970s despite poor performance of food production because food could be imported due to expanding incomes in the cities. Income growth resulted from the economic stimulus provided by the countries' oil exports. In Guinea, Togo and Central Africa Republic and Benin, food security and poverty worsened during this period because agriculture and non-agricultural incomes were stagnating. Cameroon's situation only very marginally improved, despite good agricultural growth. 1. 16 In the 1980s, consistent with the deteroration of agriculture in Cameroon and CMte d'Ivoire, poverty increased, rural-urban migration increased, urban unemployment increased, nutrition deteriorated. In comparison, these indicators improved in Guinea and Benin as agricultural sectors did better. Income growth in the cities continued to permit Gabon and Congo to import food, satisfying food needs. The situation in the Central African Republic and Togo continued to deteriorate, despite excellent agricultural performance in the latter. The conclusion is that good agricultural performance does not necessarily lead to improved food security, though it helps. Poor agricultural performance does contribute to food insecurity unless compensated for by rapid growth in non-agricultural income, used to buy food. B. The Bank's Strategy up to 1987 1.17 The Bank supported the prevailing Government policy and investment programs of CMte d'Ivoire and Cameroon up to 1987. Bank projects in all of the francophone coastal countnes focused on development of parastatal managed tree-crop and forestry plantations, parastatal agricultural credit, and integrated rral development projects managed by Government institutions. These projects fitted the engineering approach favored at the time. They largely if not completely ignored the private sector, except for those sma11holders who caused by agricultural growth (a 1 percent growth in agriculture causes economic growth of 1.5 times this amount) because of the stimulus to industry, transport, and services. 1.20 With the labor force growing at about 3 percent in each country, agriculture will have to grow by at least the same rate to absorb incremental la or, since industry and private sector services, even growing at 10 percent p.a. on average, will at best only be able to absorb about 25 percent of the incremental labor force each year for the next decade. Without rapid growth in agriculture's ability to absorb labor, the already large number of unemployed young people will grow flood the cities in search of sustenance. This suggests an agricultural strategy which is labor-using rather than capital-using, since labor is increasingly abundant and capital is scarce. An important element of the urban strategy of all nine countries will be to minimize the rate of urban growth, in order to make it more manageable, by assuring a high enough agricultural growth to absorb as much of the increased labor force as possible. 1.21 Surveys undertaken in all the countries show that most of those who are food insecure are rural women and children. Most of the poor in all nine countries are rural people. Poverty alleviation and improved food security therefore require that rural people, particularly rural women and children, receive attention in agricultural growth strategies. Women are increasingly the main agricultural decision makers as men migrate to towns and cities or estates looking for work. If agriculture is to grow at 4 percent p.a. it will be increasingly women who are responsible. 1.22 Analysis of environmental issues undertaken for each of the nine countries shows the major environmental issue to be the combination of forest destruction and soil degradation which is affecting rainfall, destroying wildlife, and reducing soil fertility and crop yields. T-he loss of bio-diversity resulting from forest degradation is significant. The major cause of this destruction is the combination of shifting cultivation, slash and burn agriculture, and destructive logging practices. Solutions will involve elimination of all of these practices. This will require the settling of farmers, eliminating slash and burn through agricultural intensification, reducing logging and improving logging practices. Good environmental protection requires good agricultural and forestry practice. Good agricultural practice from an environmental perspective must be made identical to good agricultural practice from a growth and poverty alleviation perspective. This can only be achieved by rapid agricultural intensification (greater output per unit land area), using labor-intensive techniques to absorb the growing number of labor force entrants, minimum capital and financial outlay (due to capital scarcity), widely distributed over the population. 1.23 The conclusion is that in the seven non-oil countries, objectives of economic growth, export growth, labor absorption, maintaining urban population growth at a manageable level, poverty alleviation, food security, and environmental protection, require rapid agricultural growth. There is no alternative. Moreover, poverty alleviation, food security and environmental protection objectives define the type of agricultural growth required. This growth must be widely distributed over the population (not concentrated on large estates); use labor-intensive technology; use land and capital conserving technology; use technology manageable by women; and must treat food and exports in a neutral manner. There is - 8 - potential for growth in (a) food crops, livestock, and fisheries, (substituting for imports and keeping up with population and income growth), (b) traditional export crops such as cotton, coffee and cocoa for which world demand is growing at about 1 - 2 percent p.a., and (c) export diversification crops (fruits, vegetables, rubber, nuts, and flowers among others for which demand is growing at 2 - 5 percent p.a.). Agriculture's role in Gabon and Congo is different and will be more one of food security, poverty alleviation and environmental protection than the major motor of growth. There is considerable forestry potential in Gabon and Congo as well. D. The Constraints to Achieving Objectives 1.24 A commonly observed constraint is the lack of agricultural and processing technology. Chapter II demonstrates that this observation is false. The coastal francophone countries have very high agricultural potential. Application of known technology for food crops (rice, maize, cassava, yams, cow peas, sorghum and millet are the main ones), for livestock (beef, poultry and smaU ruminants), and export crops (cotton, coffee, cocoa, rubber, oil palm, bananas, other fruits and vegetables) would increase yields and production greatly. The constraint is not the availability of technology. The constraint is that farmers do not use yield enhancing technology to a significant enough extent, and in the late 1980s there has been no effective investment to introduce improved technology. 1.25 In answering the question why do farmers not use yield expanding technology, the first factor to be looked at is the availability of markets. There is a common view that export markets are constrained, and that even domestic markets are limited. Chapters V and VI find that this issue does not stand. Except for Ivorian cocoa, the coastal francophone counmties have been losing world market share for all export crops. The markets are available, but other countries are conquering them. Even for Ivorian cocoa, all production is sold, unless it is held back by the Ivorian Government in an effort to stimulate world price increases. Similarly, the share of imported agncultural products on domestic markets has been increasing. Production has not kept up with local demand. The problem is not the availability of markets. It has been on the production side, along with high costs and low efficiency of marketing. 1.26 Chapter IV diagnoses the reasons for lack of investment by farmers and entrepreneurs (in the late 1980s and early 1990s) as varying combinations of the following, depending on the countri: (a) There is a poor policy environment for private sector investment in farming, processing, marketing, farm input supply, and credit delivery. This has resulted in the lack of profitability of much of this activity and hence a lack of investment at all levels. The technologies and markets available are not exploited because policy makes this unprofitable. (b) There is a lack of capacity in Government agricultural research, extension, and livestock services to adapt and introduce improved technology. This has -9 - contributed to the slow technological improvement and lack of profitability of many farming activities and of many small scale processing activities. To remain profitable requires continuous innovation, in order to keep up with foreign competitors. Crop yields and processing efficiency continue to expand in competitor countries throughout the world. The coastal francophone countries are not keeping up, in part because Governments provide little help. (c) Environmental degradation has further constrained crop yields, putting downward pressure on the profitability and sustainability of farming. (d) Rural infrastructure, and in some cases urban infrastructure such as ports and major road arteries, have been deficient in some countries (especially Guinea, Equatorial Guinea, CAR), although in Cote d'Ivoire and Togo the infrastructure situation is relatively good. The poor infrastructure situation in most of the countries has contributed to the high transport and marketing costs for agricultural products, reducing the profitability of the sector. (e) Inadequate food security, related largely to poverty, has led many farmers to oppose the introduction of higher yielding but riskier agricultural technologies, since the margin of survival is in some cases low. Risk aversion in risky situations reduces innovation. (f) Inadequate rural health, family planning, and educational facilities have resulted in a high incidence of relatively unhealthy, poorly educated people, expanding in numbers at a high rate, dependent on agriculture. Such people are less likely than better educated, healthy people whose numbers are expanding at a lower rate, to innovate in agriculture and in agro-processing. AIDS is increasingly a problem in some countries. 1.27 The common effect has been to reduce the profitability of agriculture, agro-industry and of agricultural marketing. These activities are essentially private, and increasingly so as Governments divest their commercial enterprises to the private sector. To invest and flourish, the private sector must make profit. It cannot make profit and compete on world markets (producing exports and import substitutes) when faced with poor economic policy, lack of access to new technology, expensive transport, a deteriorating natural resource environment, and poor health, education, and family planning services. To achieve the objectives for agriculture set out here requires that each of these problems be addressed. There will be variation between countries in the severity of each problem, and in the adaptation of the strategy to it. These adaptations must be worked out. However, the action plan to deal with these issues will incorporate all the elements set out in the following section. - 10- E. An Action Plan for Agricultural Growth Priority 1: Creating an Enabling Economic Policy for Private Sector Investment in Agriculture, Agro-Industry, Agricultural Marketing, Farm Input Supply, and Credit (a) Price and Trade Policy 1.28 The pillar of a new strategy is to undertake policy changes necessary to make agriculture, agro-industry and related services profitable. This profitability will be the main element to stimulate the private sector (including small farmers) to invest in agriculture, agro-industry, marketing input supply, and credit. It will require firstly a real effective exchange rate depreciation 6/ (except in Guinea) to increase the profitability of agricultural exports and import substitutes (which include all agricultural and agro-industrial products). A real effective exchange rate depreciation will increase the domestic price received by farmers for selling tradable (which include most agricultural products) and reduce the domestic cost of non-tradable (which include most costs of producing agricultural products such as labor and land). 1.29 Farmers must be allowed to become economic players, responding to changes in market conditions as reflected by freely fluctuating prices. Farm prices should no longer be fixed administratively. Commercial transactions for agricultural products and inputs should be iberaLized. Free prices and liberal commercial practice already work efficiently for many food crops, fruit and vegetable exports and some livestock products in most of the countries. Contrast this with the negative impact on farmers when world prices are high and administered prices low, or on Governments when world prices fall but fixed prices remain high. Tariff protection should be established to the extent necessary to counteract dumping only, and to maintain approximately the same level of protection as that afforded to the average product in these countries (no discrimination against agriculture in trade policy). The best situation would be to establish common tariffs throughout the sub-region at about 20-30 percent (after real effective exchange rate depreciation), with sliding scales for dumped products. The sliding scale would permit higher duties on dumped products such as meat, dairy products and vegetable oils. Free trade should be established between countries within the area (UDEAC and ECOWAS). I/ An effective exchange rate depreciation is being pursued in the CFA Franc countries through policies which cause the domestic price of non-tradables to decline relative to the domestic price of tradables. This is presently pursued by deflationary monetary and fiscal policy, wage restraint in the public sector, cost cutting in Government managed enterprises and services. Reference to real effective exchange rate depreciation in this report indicates this effort to shift relative prices of tradables and non-tradables. - 11 - (b) Savings and Credit Policy 130 Because of the recent absence of loan funds and of liquidity, private investors in agriculture and agro-industry will require medium and long-term credit in order to invest, in response to an improved incentive regime. Therefore, when the incentive environment is right, mechanisms should be in place or should quickly be put in place to channel loan funds to private investors through the banking system at un-subsidized rates, with Banks and borrowers sharing risks. This will require banking sector reform. 1.31 Specialized parastatal agricultural credit institutions have failed in every single country of Sub-Saharan Africa, and are clearly not the proper vehicle for pursuing this objective. Examples of this failure are found in all the coastal francophone countries. To assure proper management of banking services, commercial and investment banks which are at least partly private owned have to be induced to lend to agriculture. For such banks to be interested in agricultural lending, this lending must be profitable. This means allowing adequate interest rate margins to cover risks. At current rates of inflation equal to 2 to 5 percent p.a., interest rates on the order of 15 percent for agro-industrial investments, and from 15 to 25 percent for farming, may be likely. The point is not to administer such high rates of interest, but that Government policy allow lending institutions to charge interest rates necessary to cover all costs and to provide funds needed to cover loan defaults. High lending rates will cut off some private investment. The alternative, however, would be for Govemment to decree lower lending rates, which in the past, has been a major element in rendering Banking institutions insolvent. Banks will have to be able to count on the legal system to honor default contingencies so they can recover on bad loans. (c) Divestiture of Agricultural Parastatals 1.32 A third pillar for the creation of an enabling policy environment is the divestiture of agricultural parastatals having purely commerciai activities. Parastatals own rubber and palm oil plantations, cattle ranches, sugar estates, and industrial forest plantations throughout the coastal francophone countries. Most processing facilities for these products, as well as for cotton, rice and wheat are owned by Governments. Several Governments also own marketing enterprises for export crops, rice, wheat, and some farm inputs. Privatization should start with these commercially-oriented enterprises. In fact, there are privatization efforts underway in several countries, which merit support and in most cases acceleration. 1.33 The parastatal cotton companies are exceptional in that they function efficiently in Togo, Benin, and C6te d'Ivoire. They are therefore the last priority for privatization. A restructuring program is improving the efficiency of Cameroon's parastatal cotton company. Only CAR's cotton company appears un-restructurable, and would be a good test case for privatization in the cotton subsector. 1.34 Divestiture of any agricultural parastatal appears best done by sale of assets such as individual plantations, processing plants, or trucking fleets. Sales might be best undertaken by auctioning the whole or parts of such enterprises. Alternatively, ownership in the form - 12 - of equity shares can be sold, or in some cases given to employees or farmers. This would result at first in joint private-public ventures. Divestiture can be helped by initial restructuring aimed at cost reduction. Divestiture of some of the agricultural parastatals is being planned in all nine coastal francophone countries, although in most there has been little action. Until there is a significant macro-economic reform, private investors are likely to bid for only few of the most valuable parastatals, or parts of parastatals. Priority 2: Support for Direct Investment by and Financing of Private Agricultural, Agro-Industriali Agricultural Marketing and Credit Enterprises 1.35 It is expected that even with macro-economic adjustment and banking sector reform, commercial banks will lend little to agriculture for many years because they know so little about agriculture. Donor projects could help to assist private banks to develop agricultural lending capability. This is the experience in Kenya for example where the banking sector is largely private, is competitive, and where banling regulations are largely appropriate, but where private agricultural lending needs to be assisted. This assistance will include lines of credit provided through the private banks, dedicated to agriculture, agro-industry, agricultural marketing and farm input supply. The private banks should be assisted in establishing capacity to manage agricultural credit and savings mobilization. In addition, assistance in stimulating equity investment in agriculture through the establishment of equity investment funds and creation of capital markets will be unoertaken. This is best done by IFC, though the Bank can and will help. Support is needed by private and mixed private- Government professional associations and trade associations. These various ldnds of assistance make sense only when the enabling policy environment for private investment is in place. 1.36 Donor projects need not select specific agricultural or agro-industrial products for special emphasis. There are an enormous number of agricultural and agro-industrial products that have potential on world and domestic markets. Obvious winners include rubber, arabica coffee in Cameroon, many fruits and vegetables (including some that are already exported from Cote d'Ivoire such as bananas, pineapples, and mangoes), flowers, cotton, livestock (including small ruminants), forestry products, fish, and commercial food crops for both export and the local market. Generally, the proposed projects would finance investments by large and medium enterprises seeking to develop one of these commodities. These enterprises could be concentrated on plantations. They could be processing enterprises using contract farmers or purchasing farm products on the open market. In some cases, the development potential of a commodity will be so great as to justify a project which finances private investment in that commodity alone. Possible examples are rubber, fruits, vegetables, and cotton. Such projects were supported in the past, but were completely Government owned. The major difference in the future is that they would be privately owned. 1.37 There is some skepticism that the coastal francophone countries can be competitive on world markets for many agricultural products. All recent literature suggests that they can be, easily, if the types of measures suggested here are undertaken. There is a world market for agrcultual products of the types produced in the francophone coastal countries. The - 13 - constraint is having a quality product, produced at low cost and profitably. The problem is on the supply and marketing ability side, not an absence of international demand. Recent analysis of this subject was undertaken in a study done for USAID by a consortium of respected institutes (Harvard, Stanford, IFPRI, among others) entitled African Cash Crop Comntitiveness and Strategy, May 1990. It found clear competitive advantage in the six countries scrutinized (including Cameroon and Senegal in the francophone area) of many agricultural products, provided that domestic policies are right. This was particularly true of many traditional exports such as coffee, cotton and groundnuts. The only exception was for vegetable oils, where Africa suffers declining competitiveness compared to Asia. A similar conclusion emerged from a recent IFPRI study on world horticulture production. Africa can be (and in many cases is) extremely competitive in producing fruits and vegetables for world markets. Again, the issues were domestic policies and efficiency of production; not access to world markets. Finally, a recent study by Ulrich Koester, H. Schafer, and A. Vald6s; Demand Side Constmaints and Structural Adjustment in Sub-Saharan Aftican Countries, IPPRI, July 1990 came to an identical conclusion. 1.38 A second issue is the likely interest of the private sector in investing in agriculture and agriculturally-related activity in the coastal francophone countries. There is considerable indirect evidence that such investment would be forthcoming. The first such evidence is the Ivorian and Cameroonian experience in the 1960s and 1970s. A good policy and institutional environment, though far from perfect, stimulated private investment in agriculture, agro- industry and marketing. This investment was undertaken by farmers of all sizes, as well as foreign and domestic enterprises. Many of the larger investors were local "foreigners" (Lebanese and French nationals). That this would happen again in the right environment is suggested by the experience of Kenya, Nigeria, Ghana, Zimbabwe, Botswana, and Mauritius where policies similar to those suggested in this report (though still with many imperfections) have stimulated private investment in agriculture and agro-industry. Recent policy changes in Uganda and Tanzania appear to be obtaining a similar response. The responses in these countries have not been miraculous. Agricultural and agro-industrial growth rates in the 3 to 5 percent per annum range have resulted. The strategy proposed here should do at least as well, since private investment would be actively promoted and financed. Technology policy, rural infrastructure development, education and health investments iiscussed in the following sections, would help sustain private sector interest in the coastal francophone countries. 1.39 Direct financial assistance to small and medium farmers, previously handled by lending through parastatal agriculture credit banks is needed. Agricultural lending by commercial banks, even assisted by donors, is unlikely to go to the majority of smaLtholders for many years. Most smallholders are not likely to be judged creditworthy, and the cost of lending to them is likely to be great. Cooperative credit and the credit union movement have considerable promise for reaching large numbers of smallholders with small loans. Cooperative savings and credit institutions already have a solid base in Benin (assisted by a consortium of donors including IDA), in the anglophone areas of Cameroon, and in Togo. These experiences, and experience elsewhere in Africa (Rwanda, Ghana, and Burundi are good examples) suggest that cooperative credit and savings institutions need complete management autonomy from Govemment, initial reliance on members savings deposits rather - 14 - than external loans, group responsibility for repayment (to create peer pressure for repayment), and high interest rates (to maintain financial viability, to ration credit, and to discourage the political elite from borrowing). Farmers are more likely to repay loans from Banks that they own themselves, and in which they have savings. Savings by farmers reduce their credit needs, and help farmers learn cash management. Priority 3: Development of Agricultural Services, and Farmer Participation In Managing Services (c) Agricultural Research 1.40 Once technological innovation and farming is made profitable by a suitable policy environment, and finance is provided to farmers to invest, Governments will have a major role in the transfer of agricultural technology to private farmers. It is here where the bias toward labor-intensive technology most suitable to smallholders can be safely introduced, without distorting market signals. Agricultural intensification, using labor-intensive and environmentally sustainable technology, will be critical to greater agricultural growth, to arresting environmental destruction in forest and pasture areas, and to employing people in farming. This will require firstly improved national agricultural research. 1.41 Agricultural research in the coastal francophone countries has deteriorated in the past 20 years. The causes of this include Government lack of commitment and hence poor funding of public agricultural research establishments. Donors exacerbate this by refusing to assist ongoing research and management of research on a significant scale. Donors continuously add new research programs and provide technical assistance to manage these "add-ons". Once donor funds are exhausted for such incremental projects and the technical assistance goes home, the neglected national research establishments are unable to maintain the new programs. There can be little benefit from this situation since research output comes in the long-term, not as the result of 5 year spurts of activity. In addition, donors and governments have neglected the potential contribution of both the private sector, and foreign agricultural research establishments. Projects have been exclusively directed to the public sector. 1.42 A solution to these problems must start with improving the content of all agricultural research in each country. This is a change from adding new research themes in incremental projects and financing more infrastructure and equipment in research stations. The change in approach can be facilitated by strengthening research networks between countries for specific commodities including most importantly cotton, rice, sorghum, millet, maize, yams, cassava, cocoa, coffee, palm oil, fruits, vegetables and livestock. There should be no attempt to undertake all researrh subjects for all these crops in each country. Linkages with the international agricultural research centers and with industrial country agricultural research centers will be critically important for improving the content of research, and for managing the networks. These foreign centers should be contracted by national agricultural research establishments to execute specific research programs. Donors should finance these contracts. Biotechnology research will define many of the agricultural advances in the future. Since - 15 - West African research establishments will be much too small to ur,dertake this research, it must be brought to West Africa through contracts. 1.43 National researchers should focus on adapting of intemational research to the needs of farmers with the objective of putting relevant technology in the hands of farmers. This on-farm and adaptive research should therefore be the focus of national research institutes. This will require a new type of researcher, interested in solving the problems of farmers rather than in undertaking research for its own sake. (d) Agricultural Extension 1.44 The direction in agricultural extension will be to reduce the size and cost of the multitudes of existing agricultural extension systems in these countries, and to increase the efficiency of the surviving systems. Efficiency increasing measures include more careful identification of the improved agricultural technologies which are to be introduced to farmers (hence the importance of the linkage to research). The necessary measures also include improved management systems. 1.45 Experience to date already suggests ways in which to improve the national extension projects. First, use of cooperatives or village extension workers rather than civil servants to provide basic field level extension should be tested and expanded where possible. Farmers must be brought in as partners in on-farm research and extension; not left simply as recipients of knowledge from above. Women should be targeted in all extension systems, both as recipients of extension messages often tailored to their needs, and as extension agents. This is because women are increasingly dominant in farming as men take off-farm jobs, or migrate to town and cities. Extension messages now tend to be rather narrow. These must be expanded in content, including subjects such as simple crop processing and storage, introduction of new crops, use of soil-enhancing measures, water conservation, agro-forestry, and agriculture-livestock linkages. Chapter II discusses some of the agricultural potential, as yet far from fully exploited, which needs to be converted into appropriate extension messages. 1.46 Greater use must be made of modern communications (radio) to help spread technical messages. Training for extension agents must be greatly improved, partly through formal training, partly through practical bi-weekly training, and partly by their participation in on- farm trials with researchers and farmers. Monitoring and evaluation must be taken seriously (it is currently ignored). Government ambitions in extension must however be tempered with fiscal reality. Most Governments will not have the financial resources to maintain significant extension systems. This creates the need to bring in as partners the private sector, NGOs and cooperatives. These partners can execute components of the national extension strategy, financed in part by donor projects. 1.47 Although the full benefits of improved research and extension cannot be obtained until commercial agriculture becomes profitable with a real effective exchange rate change in the CFAF zone, the strengthening and restructuring of these services will have some immediate - 16 - benefit in cutting farm production costs, and in improving crop and livestock technology. They should be supported even in the present ub-optimal policy environment. (c) Farmers and Farmers Groups as Participants in Managing Agricultural Service 1.48 Much more of the task of managing and financing agricultural services will have to be done by farmers groups because of the inability of Governments to manage and finance rural development activity on a significant scale, and because of the present absence of a strong private sector. The development of farmer-managed cooperative saving and loan associations has been mentioned above. Cooperative groups should also be supported for input supply, crop marketing, land management (especially in pastoral and forest areas), livestock services, creation and .management of village level infrastructure, rural road and water supply maintenance, and eventually field level extension. In many cases, groups existed in traditional societies, and these traditional groupings (clan, tribe, etc.) might be supported ir. managing agricultural services. Priority 4: Environmental Protection, Natural Resource Management and Forestry 1.49 Environmental protection in the context of environmental action plans and tropical forestry action plans, should be supported in all the countries. Environmental protection involves considerably more than natural resource management. Industry, energy, and infrastructure all bring environmental problems. However, the problems brought on by shifting cultivation and logging are most severe. In this regard, investments should be directed to improved management and conservation of natural forests and pastures, management of parks and reserves, soil conservation, watershed protection, and control of water pollution. 1.50 The management of natural resources will have to be vested as far as possible in local communities, NGOs, and the private sector given, Governments' management and financial constraints. Governments will have a major role in planning (development of environmental action plans for example), policing of parks and reserves, policing of logging concessions, and research and extension on environmental themes. Fisheries protection will be important in some countries (such as Guinea), because of present over-exploitation of the resource by foreign fleets. Finally, Government capacity to undertake environmental assessments of investments, should to be created in each country. But in the final analysis, it will be rural people who must conserve natural resources. For this to happen, they will need incentives. The most :.nportant incentive to conserve will be ownership and user rights. 1.51 Land tenure reform must be related to environmental protection. The increasingly common "open-access" land tenure situations which have created a "tragedy of the commons" needs to be eliminated. This will require the de-nationalization of land, and its return to traditional community ownership, and in some cases private ownership. Titles should be available for community ownership (with land managed by customary rules within the community), and for private ownership. A mechanism for fair dispute resolution needs to be created in each country. Additional tenure security will create a greater demand by - 17- farmers for improved agricultural technology, should sfimulate investment, and should help protect the environment from abuse arising from open-acess to free fuelwood, free logs, free pasture, and free land for cultivation. 1.52 The above actions can be prepared in the context of environmenital action plans. The objectives of the emvironmental action plans will be to maintain forest cover, maintn park and conservation areas (including the wildlife), preserve watersheds, provide security of tenure to farmers, establish environmental planning and assessment capacity, develop fuelwood and industrial wood plantations, develop wood farming, protect ix .igenous forest dwellers (by providing them with land rights), and reduce soil and pasture degradation. Logging activity in primary tropical moist forests should not be supported. Logging in industr plantations and in secondary forests used as logging reserves should be supported. In the logging reserves, the establishment of long-term concessions with logging companies which provide for replanting and maintenance, and the establishment of appropriate taxes, is of high priority. Priority 5: Rural lnfustructure 1.53 Rural infrastructure includes rural roads, market development in nrual towns, rurl water supply, and irrigation and drainage primarily in valley bottoms and in semi-arid areas. In the past, these investments have been fimanced by Governments and donors in the context of rural development projects. In nearly all cases, rural development project authorities have been poorly equipped to manage and maintain such investments. In most cases the Project authority disappeared after donor financing ended. Ile inrvestments then fell into disrepair. The solution is to develop and maintain this infastructure through a combination of (a) planning and investment by responsible Govemment line agencies (Public Works Departments, Rural Water Supply Departments, municipal councils) with private contractors executing the works; (b) investment by private individuals or cooperatives receiving technical advice from Government (especially small-scale irrigation and drainage), (c) maintenance, largely by local communities, of rural water, irrigation, drainage, local markets; and (d) maintenance of rural roads by local communities and private contractors paid by Government. Food aid available to some countries would be used to pay local communities for such work (food for work). 1.54 Large infrastructure developments including primary roads, ports, and telecommunications, are also important for agriculture. Marketing costs in the nine countries are high, partly due to poor infrastructure at all levels. Hence, the total infrastructure development effort can be considered as a strategic priority for making agriculture profitable. However, the present bias in public expenditure programs in favor of high cost infrastructure projects in the mega-cities needs to be eliminated in favor of a more neutral expenditure program between large urban centers, secondary towns and cities (which are more closely linked to farming areas), and rural areas. - 18 - Priority 6: Food Security 1.55 Although problems of food security and malnutrition are less severe in the coastal francophone countries than in most of Sub-Saharan Africa, there are large pockets of nural and urban poor who are food insecure. In each of the sector analyses undertaken for these countries, food security problems have been found to exist primarily among rural women and children, in regions where agricultural potential is low, and among the very poorest of the urban population. 1.56 All the strategies developed to deal with this problem put first priority on employment and income generation for the poor. In rural areas, this translates into measures to stimulate agricultural growth which involves all the fanming population. Labor-intensive agricultural technology and technology directed to women are important elements. Investment in rural infrastructure, built and maintained by rural people, with some targeting to the poor, is an important element of food security strategies. financing of handicrafts, small-scale industry, and food marketing activities in rural areas can help by providing income and by improving food marketing and processing at the local level. It has been found in some of the analysis that nutrition improvement programs targeted to the poorest women and children are necessary since these people are those most difficult to reach through employment creation. Priority 7: Population Control, Education and Health 1.57 Rapid population growth has combined with shifting cultivation to cause environmental degradation. And the rate of technological improvement necessary to expand c-op yields to feed and provide income to rural people cannot keep up with rates of population growth exceeding 3 percent p.a. Population growth of 2 to 2.5 percent p.a. wo uld be much more sustainable from both an environmental and economic development perspective. Population growth will come down when people demand fewer children. Education and improved health are critical to reducing the demand for children. Better htealth also has an important positive impact on nutrition. A better educated and healthier farm population will also find new technology easier to assimilate, hence increasing agricultural growth. These factors, in addition to the inherent value of better education and health, make this endeavor relevant to agriculture. There is a feed-back loop, in that more rapid agricultural growth will also help solve population, health, and education problems. This is because the demographic transition lower population growth) occurs with higher personal incomeo Higher income also permits communities to support improved levels of health and educ don. F. Is the Strategy Different? 1.58 All of the above requires the building of African capacity to manage agriculture, at the level of the farm, the enterprise, the cooperative, and in Government. It also requires development of non-farm rural industry. Education, infrastructure, health, population policy, environmental protection, and urban development are all critical elements for agricultural growth. Agriculture cannot be seen as independent from the rest of an economy or society. Linkages with other sectors must be brought explicitly into Government and donor - 19 - agricultural analysis and action. An increasing percentage of farmers are women, so improved research and extension, land tenure reform, forest conservation, population policy, as well as rural education must increasingly be targeted to women's needs to ensure that where there are special constraints and needs, these are not overlooked. 1.59 Is this strategy different from what is already being done? The answer is that it is very different from the approach followed in most African countries and by most donors. It also reflects some difference with Bank practice, although the Bank has been evolving in these directions. Much of Government and donor focus has been put on priority 2; creation and dissemination of agricultural technology. This will continue to be of great importance, but the approach to doing it will have to become more pluralistic; involving non-Government actors and especially farmers. More multi-country collaboration will be required, and the role of the private sector expanded. Regarding policy reform, structural adjustment programs have pursued many of the elements identified as necessary in this report. However, this report finds that structural adjustment programs have neglected many areas of importance for agriculture. The reform agenda needs to be significantly expanded and deepened in the areas of land tenure, natural resource conservation, improved public expenditure programs, social services in rural areas, and private sector development. Regarding farmer participatior. and natural resource management, neither Governments, the Bank nor other donors have devoted anywhere near enough attention. These are therefore areas of expanded activity. In infrastructure, the changes proposed are to reduce Governments role, increase the role of the private sector and local communities. In addition, it is proposed that relatively more infrastructure investment be directed to rural areas and to secondary towns and cities. Expansion of food security strategies and investments is proposed, compared to what is presently done. Finally, explicit inclusion of population, health and education development as an ingredient of agricultural development is needed, and is new. G. A Focus for the World Bar! 1.60 The Bank plays an extremely important role in agriculture in the coastal francophone countries, as a major contributor tc ogiicultural projects, and to structural adjustment programs which affect agricultural poli-y. Because the Bank also provides major support to urban development, infrastructure, arn. Numan resource development, it will be the single major external source of support to Africa Governments, the private sector and local communities in implementing the strateg. proposed. To have a significant impact on agriculture, the Bank should maintain 'he same order of priorities as is needed for agricultural development, and should conuibute to each. Its agricultural lending program for FY93-FY95 reflects these priorities. - 20 - ______________________ ..._ . J*Isrb(AIlo 0 O-V@ W a A 4i* ttw PrOject' T)e ' I : .: ;:............... ::;: ....:- - :- : -: -::.:r .: 1::. - ...................... : - ... , ,, .. : - -.. .'. . ,i 1 " . ' . ' '-:' - '. ... .. .... ..t 1 0 : - u S ;E:~~~~~~~. . ;.... : .... ....... . F .. r LivestLck . 0 . 0 e Ag3-tredit. 0 0 0 0 Agr.' SeCtor ...M4nt. IhA. ... . .: -0 B. NEW:ISTRATEGY:______ _______ -Nationat Extn & ResearchV 1 24 2, '' 19 |o -ecr0$ y 0< . '.: : ... .0' - ';;f; 1 orst0 /aura :-e 0 '.- ., 1,, , .27' '- '''0: iJ',. at'$iiL/iveet'k:.' h' ' 11....9...10....7 P.'-::. rivate Sector focus) :: _____ s_______ ':._-::".''::S,-l-.___..______i':::::..':: ::: 1x~. cr' v-t sector i 0 s - s . - - - "t ' ''tutal' srtrt, 0 4 . . f Agr. sect,o or .S ::z:Poli cy ________ _______ ________ .__::__:__:__ -L-.nd:Te'nur::Y^e 0 . 0 , .:, , .. ..: 0 7. ... Wo.en i Deveto::,'t 0 : . : 3 0 . T. OT .:.: 100 la o 100 too 100 (a) Excludes banking sector re orm, structural adjustment, infrastructure, and human resource development projects, all critical for agricultural development, but undertaken outside agriculture. The distribution of projects is changing due to the complete elimination Of single crop parastatal and rural development projects, expansion of environment, forestry/natural resource management projects; expansion of private sector/export promotion projects and of cooperative credit. The Bank should increasingly tie its entire agricultural investment lending to progress on policy reform and public expenditure programs. Where progress is great, the Bank should be responsive by financing sector investment programs with disbursements tied to progress on the program. - 21 - H. Supply Response 1.61 The supply response will be highly dependent on the private sector's interest in investing, as discussed above. Statistical modelling suggests that an agricultural growth rate of nearly 4 percent p.a. would occur in the medium-term if the policies and investments suggested here are undertaken. This is similar to the actual experience in African countries recently undertaldng significant structural adjustment programs which included some of the measures proposed here. The distribution of the benefits of this growth over a large percentage of the rural population is quite feasible. The poor can be brought in. The task is immense however. The magnitude of the changes suggested in the report is enormous in terms of sldll and management. Resources are unlikely to be the problem. The problem is in making sure that the resources available are put to good use through appropriate policy and institutional development. II. HISTORICAL PERFORMANCE OF AGRICULTURE IN THE COASTAL FRANCOPHONE COUNTRIES A. Characteristics of Farming and Agricultural Potential 2.1 The characteristics of the agricultural sector are similar in the nine countries in terms of farming systems for smallholders. Most smallholders cultivate both subsistence and cash crops. Subsistence crops include roots and tubers (cassava, yams, sweet potatoes), and cereals (millet, sorghum, maize, rice). All of the above are also sold on local markets so they can be cash crops as well. Many smallholders have livestock, including cattle and in many cases chickens. Limited amounts of vegetables and fruit are produced by smallholders, although the amounts are growing. Food crops are important in each country (from 20 to 50 percent of agricultural GDP; see Cote d'Ivoire example in Annex Table 11 attached). Livestock (cattle, chickens, goats) are also important (from 5 to 25 percent of agricultural GDP). Among export crops, cotton is important in all the countries except Congo, Gabon and Equatorial Guinea. C6te d'Ivoire, Cameroon, Equatorial Guinea and to a lesser extent Gabon and Togo are large producers of cocoa and coffee. C6te d'Ivoire and Cameroon produce much more of these and other tree crops (including palm oil, rubber, coconuts and some fruit) than do the other seven countries. 2.2 Plantations, some with outgrowers, some only with estates, are widespread in CMte d'Ivoire and in Cameroon, in the production of most tree crops. Gabon and Congo have focused on parastatal tree crop plantations. These exist, but to a lesser extent in the other countries. Sometimes, plantations provide services to smallholders. Rubber in CMte d'Ivoire provides the best example of a mutually beneficial relationship between plantation and smallholder producers. The plantations produce rubber and buy smallholder rubber for processing. Both private and Government rubber plantations exist in C6te d'Ivoire. 2.3 The most common farming system among smallholders remains shifting cultivation. Typically, a farm family will clear land, burning the vegetation, and cultivate for up to three years before shifting to a new plot. Only in the most densely populated areas has shifting largely ceased, and permanent cultivation been introduced. However, farming methods in - 22 - settled areas often remain largely similar to those of shifting cultivators with vegetation burned before planting. Farmers typically use traditional seeds, little or no fertilizer, rudimentary implements and hand labor. Crop yields are extremely low from these practices. 2.4 Smallholders remain surprisingly similar from one country to the next, despite large differences in over-all country levels of development. Traditional farming practices have been altered only in enclaves, associated usually with agro-industrial investment such as that of the cotton companies and some of the tree crop-oriented companies. Most cattle raising remains traditional and is done in the savannah and sahelian zones (low rainfall areas), and is based primarily on transhumance. In transhumant systems, cattle are moved in rotation covering large distances, in order to put the cattle in the areas of greatest water and grass at each season. Many farmers also have small stock such as chickens and goats, grazing on open land and in some cases fed with crop residues. 2.5 The most important questions to ask from an agricultural perspective in guiding policy concern the potential for production increases. If the agricultural potential is low, due to inadequate new technology to introduce, absence of fertile cropland, or rainfall characteristics which are inimical to expanded crop prc Juction, then improved price incentives, rural infrastructure, and agricultumal extension, will not have mauch impact on production. 2.6 To answer this question, considerable research was done on agronomic potential in the region. 1/ Plucknet points out that historically, gains in production per unit of land came very slowly in the industrial countries. The big change in agricultural productivity in Europe and North America came during this century, as a result of the development of scientifically-based agriculture. Fertilizer use was one key to iml:ovement of agriculture. Plucknet estimates that about one-third of the total increase in food production in developing countries is directly attributable to fertilizer. The second big change in the industrial countries was in crop breeding advances which developed varieties having higher yields or which were resistant to important diseases and pests. Pesticides and herbicides were developed to control weeds, insects and plant diseases. Then came the improvement of farm machinery. Better water management by tillage and shaping of the soil surface to enhance water efficiency, along with irrigation, had a major impact on yields in industrial countries as well as in Asia. Next came the introduction of new crops, largely fruits and vegetables of high value. The green olution which spread new semi-dwarf wheat and rice varieties used all these advances and brought dramatic gains in Asia. There has been a world revolution in processing technologies. In 1989 alone, there were 8000 new agriculturally- The best sources include Stephen Carr, Technology for Small-Scale Farmers in Sub- Sahara World Bank Technical Paper No. 109, October 1989; Donald L. Plucknett, Modern Crop Production Technologies in Africa: The Conditions for Sustainability. for the Sasakawa African Association, May 15, 1991; and Jitendra SAvastava, Cr_ Technologies for the Nineties, presented at the Eleventh Agricultural Symposium of the World Bank, Jan. 9-11, 1991. - 23 - related products introduced in the United States. i This reflects the impact of niche marketing, and the proliferation of products and processes. 2.7 Science-based agriculture has been introduced into the francophone coastal countries mainly in the more modern plantations growing rubber, fruits and vegetables, and by CFDT in smallholder cotton production. It has also been introduced into limited areas through donor-financed projects for some other cash crops (irrigated rice in Cameroon for example). But for the most part, the huge increases in crop yields which have occurred in the past 40 years in much of the rest of the world have not come to the coastal francophone countries (similar to the situation in most African countries). This can be seen in Annex Table 4, reflected in the low cereal, roots and tubers yields compared to India. 2.8 Table 2.1 below extracts yields per ha for two major food crops (rice paddy which has been at the center of the green revolution elsewhere), and sorghum (an important traditional staple), as well as three export crops (coffee and cocoa grown largely by smalUholders, and rubber grown largely on estates). The table uses FAO data available for the period 1965 to 1990 for a large number of crops. The table aggregates yields in the three principal climatic zones of the coastal francophone countries. These zones include the humid lowlands which are particularly susceptible to soil degradation if repeatedly cultivated without adding fertility back to the soil. Second is the sub-humid zone which comprises woodland and wooded savanna with a rainfall of from 1000 to 1400 mm per year. Soils here are typically less leached and less fragile than in the humid lowlands. Major agricultural constraints here are soils deficient in N and P. The third and driest belt is the sorghum and millet belt in which the major constraint is water availability. a' James Brown with Deloitte & Touche, Agro-Industrial Investment and Operations, World Bank, Economic Development Institute Working Papers, 1991. 24- R ;.;s...AS. .& S @SB........ ... .... *E:.::;:::a:r .830 2340 52.0 Centr' a t ARia g BI S1 68S 1160sgs XS g 2*eag,s- Cat. yaS..I,.vpg. .* ....... Ceta AfrEsican S R Ic 30 2S0 , , 40,, | |X- *- . ... . . . . '. . .. . . . . ..C.. .. e:::n: AC ate . :....::: .... ... .. ....s g R RS W~~~~~~~~~~~~~ . . ... .. . . . B. . 43U5~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.. . 8S . g g - e ,--- gw,: ;S je 8,,,R,.E,,*{. a s~~~~~~~~~~~~....... - 25 - 2.9 Sorghum yields in the coastal francophone countries have hardly changed in 25 years. This is true also of other traditional crops such as millet, cassava, yams, groundnuts and cowpeas (based on FAO data). Rice paddy, grown in irrigated conditions, has shown some increase, especially in Cameroon due largely to the SEMRY irrigated area where fertilizers, better varieties, relatively well managed water supply, and improved husbandry practices (i.e. science based technology) has been introduced. Cocoa and coffee yields have stagnated. Only rubber yields have increased greatly. This increase is science based, as rubber is grown on estates or by smallholders assisted by estate management. 2.10 The comparison with potential crop yields in Western and Central African conditions is most interesting. Using known technology, which is applied in limited areas (such as research stations) in the countries shows the following potential yields: I/ r ietd (kg/lha) rce paddy . 6500 . aorghwn . . .: :. 4000 .C ;ffee ... 20ao:: Other comparisons between actual yields and potential also give en^rmous scope for improvement. Millet yields are in the 700 to 900 kg/ha range compared to a potential of 4000 kg/ha. Cowpea yields are in the 300 kg/ha range compared to a potential of 2000 kg/ha. Maize yields average about 1 ton/ha compared to potential of about 4 ton/ha. Only cotton and rubber approach their agronomic potential in farmers fields. 2.11 The technologies needed to increase yields toward the potential are known, and are discussed in the three references footnoted above. For most crops, the following would increase yields: (a) application of organic and inorganic fertilizers; (b) agro-forestry to restore soil fertility; (c) better water management in farmers fields, in drier areas through the use of irrigation, use of mulch, use of contour lines, water harvesting; (d) better land management (crop rotation, mechanization through ox-drawn equipment in the drier areas, better weeding); (e) use of herbicides and pesticides, and integrated pest management; I/ The source for potential yields was J. Srivastava (op. cit.), and Bank project documents. -26 - (f) use of numerous improved varieties which are higher yielding and or disease resistant; (g) better practices and chemicals to control storage pests; (h) better spacing of plants; and (i) seed dressing. 2.12 Similarly, for livestock there are improved technologies available. The introduction of trypanotolerant breeds of cattle like the N'dama could greatly expand livestock production. 41 Non-polluting tsetse fly control methods (traps) have been proven effective, and will expand the area of potential livestock production. The production of fodder grasses and trees, development of fodder banks (as researched by ILCA), and use of crop residues for livestock feed, would help resolve the constraint of ca;tle feed throughout .1ie nine countries. 2.13 None of the above is new. It is the application, with adaptation, of the same science based technology which permitted increased yields elsewhere in the World. The question is why most African farmers have not applied these improved technologies, and what can be done to introduce these technologies to them. Answers to this question are provided in Chapters IV and VI. What has been established here is only that the agricultural potential exists to greatly expand production. The next several sections describe the impact of poor agricultural performance on agricultural income, food security, the environment, and on women. B. Agricultural Growth 2.14 Agricultural growth in the nine countries is best seen by dividing the post indepenJence years into three periods: V Information on livestock is taken from Cees de Haan, Developments in Animal Thmnology, World Bank, presented at Eleventh Agricultural Symposium, Dec, 1990. - 27 - , ... . ..I .w... C*e'voir . . . Cero 4. ;-5 ..... l --::.Central African Republic 2.1 8: 2 Equatorial Guinea (2 o (2 r . .sCongo- 4.1 ; :.; 6 -. .:...... . - -..... Source: World Bank, World Development Indicators, 1992; for 19810990. World Bank, Sub-Saharan Africa: From Crisis to Sustainable Growth, 1989. for period 161980. (1) Bank Staff estimate (Guinea, Agriculture Sector Strategy, World Bank, 1989). (2) Qualitative assessments made in agriculture sector reports suggest poor performance. (3) World Bank/UNDP, African Development Indicators, 1992. (4) Agriculture grew In China at the average rate of 2.8 percent p.a. from 1965 to 1980. 2.15 Agrculture in Cote d'Ivoire. and Cameroon has, until the 1980s, performed significantly better than it has in the average Sub-Saharan African country. Growth of agricultural production in the 1960s and 1970s in these two countries slightly surpassed population growth (Annex Table 1), and permitted a rising standard of living in rural areas. In the other six countries, agricultural performance was poor except in the Congo in the 1960s and in Benin in the 1970s. The 1980s witnessed a deterioration in agricultural performance for Cote d'Ivoire and Cameroon, continued poor performances in Cental African Republic, Equatorial Guinea, and Gabon. Performance was good in Guinea, Togo and Benin. Although output has increased in Congo, it has done so largely in heavily subsidized parastatals, which are no longer viable. The causes for this differential performance are of critical importance and are discussed in Chapters IH and IV. The data show that most agricultural growth has resulted from expansion in the number of people working in farning on expanded areas of land. Some growth has come from the introduction of higher value crops such as cocoa, coffee, rubber and cotton. A little of the increase has come from crop yield increases. - 28 - C. Food Imports 2.16 There has been a remarkable increase in food imports (including food aid) in all nine countries, which has accelerated in the 1980s. Local production could not keep up with rising urban demand which was increasing rapidly because of a high rate of urbanization, and in several countries such as Cote d'Ivoire, Congo, Gabon, and Cameroon, because of increasing real per capita income for part of the period. This situation was exacerbated by price, exchange rate, and tariff policy which combined to cheapen the domestic price of imported foodstuff relative to locally produced food thus hastening the switch to imports (discussed in Chapter IV). The result was a more rapid rate of increase in food imports by each of the countries than occurred on average in Sub-Saharan Africa. o o ine n . .. - S.-.Cereel I011974-1 990, RaeOf Ice F~:ood AW174/75 X _ - X~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~...... _- d# ' s~~~~~~~~~~~. ... .. .. v . - - - - ,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~..,.....,,.,,,.,,,. ..,.... - ....l I ~~to~i, 10.... . . ed to one ., ^, N.,, , . ..~~~~~~~~~.... ...... . .......................... .... .... . GuTe&?8 . E tonfl. Guna1643 ,^.,.., ^ aw jg~~~~~~~~~~~~~ ..... . .... . ,,. '' i C3 8?S -e I-~~~~~~~~~~~~~~~~~~~~~~~A ..g}; ..Si :: .r3.'... ..'..AM | ~ ~ ~~~~~~~~. . ...... .. . ... .... .. ..- (Source. Uorld Bank, Warld Develooment Indicators.,1.. , & UHDP/Worl Bank, African Develorment Indicators, 1992 for Equatorial Guinea. D. Food Security 2.17 The combination of domestic food production and imported food has permitted only two of the countries to maintain an adequate level of food security at the national level (Cote d'Ivoire and Congo). Gabon is close however. Average calorie intake in the two countries has been about at the level necessary to assure minimum needs (about 2,400 calories per person per day). This compares favorably with the average Sub-Saharan African country where the average calorie intake has been about 85 percent of requirements in the 1980s (World Bank, The Challenge of Hunger in Africa. a Call to Action, September, 1988 and World Bank, World Development Indicators 1992). In the other seven coastal francophone countries, despite "conventional wisdom" to the contrary, there are significant food deficiencies at the national level. Even in Cote d'Ivoire and Congo there are significant food security problems among the poor, and from 8 to 27 percent of the population of each country probably has an insufficient food intake. The number of such people has grown - 29 - faster than the growth of population in each country. In effect, the number of absolute poor has increased. The great majority of these people are found in rural areas. TABLE '2"'4.4F(D S DI Y_ _ _ _ _ _ _ I :: .:::::. P:-rcentae of the :. . . ..... V. cat ' : -. . . "-. .. . ... . . Q - i., ........ ... ._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ I I. . A ra1 80 8 A'. GLOBALLY SATISFACTORY C6te d'tlvoire 2352 2498: 205 8 Congo --2:O 240 9 2519 _2? 8. Bd cz ir __________- =_. ._-._._._._- I:::Gabon . :: ::: : -:950 : 2243. 23i8::--- :7:--.-. 8enin- 2019 :2015: 215 1 ... .. . -...M':. . V. . ... -Central Ar' t - 2055 2028 1965 . 2. : a:- roon 2011 :: 2:142 9- ...... ..................... i--~~~~~~~~~~~~~~~~~~~~~~~ .. . .... .. . . ....2 Sources: f. Wortd Bank/UNDP African DeveLopment Indicators, 1992, to 90and 1986 1989. 2. Wortd Bank, World Devetopment Indicators, 1992, for 1965. 2.18 Causes for the existence of food insecurity in many rural areas of each country are found to include: (a) shortfalls in production as a result of unfavorable uimatic conditions and/or untimely and insufficient pest and locust control, especially in arid areas; (b) low purchasing p)ower limiting access to food, health and sanitary facilities; and (c) inappropriate infant and child feeding and maternal dietary practices due to inadequate knowledge and insufficient time, on the part of women, to devote to child care responsibilities. I/ E. Rural Women 2.19 The p 2ight of rural women has been documented in studies for 6e d'5voire, Cameroon, and Togo. Information has also been collected in agricultural sector reports for Equatorial Guinea, Congo, Benin, and Guinea. In each ny rural a ofeach cn ahildren are found to constitute a disproportionately high percentage of the rural poor and malnourished. Women are responsible tor most of the food crop production (unless the food urI See in particular the Camers Food d Security Project, World Bank Appraisal Report, May 1991; and Benin, Food SecuriG n SIeac oy, World Bwank, 1990. - 30 - crop is largely for sale on the market in which case men participate). Women are also responsible for most household duties (firewood and water collection, meal preparation, child care), and act as laborers in cash crop production. Women head of households are increasingly frequent (70 percent of Congo's farm households are headed by women) as men seek off-farm employment. Women head of households face considerable obstacles in obtaining credit, land, and extension advice. Women's agricultural production systems have therefore remained unproductive and primitive due to neglect both by traditional society and by Government. j. F. Agricultural Exports 2.20 As in the case of agricultural growth, agricultural exports have performed relatively well in Cote d'Ivoire and Cameroon in the 1960s and 1970s, and in Congo in the 1960s. Exports in the other countries had a mixed performance during this period. Coffee and tobacco exports grew significantly in Central African Republic during the 1970s. Coffee did well in Gabon and Congo in the 70s. Cotton did well in Togo. There were important changes in export performance in the 1980s. Exports of cocoa by Cameroon and CMte d'Ivoire continued to grow until the very end of the period, at which they began to decline in CMte d'Ivoire and virtually stagnate in Cameroon. Cotton in Togo, Benin and CMte d'Ivoire grew rapidly in the 1980s, falling off at the end of the period only in Togo. Coffee exports grew in Togo, CAR, Congo and Gabon. But, exports of virtually every other commodity in the eight CFAF countries stumbled in the 1980s, and in several cases disastrously. In comparison, agricultural exports from Guinea have expanded in the 1980s. I/ These characteristics of women's role in African farming systems are common throughout Africa; see The Population. Agricultural, and Environmental Nexus in Sub-Saharan Africa, May 1992 by Kevin Cleaver and Gotz Schreiber, World Bank, Africa Region. Each of the country studies of women in development for Cameroon, CMte d'Ivoire, and Togo documented this same set of problems. - 31 - 19g5-73 1 r,3-0 198047' 1'96-9- ee.... ..- - 3.2.5 .. .. . .. .cotton . .6. 1 5 27.4 . j oc@b 0~~.0 - 6.9 lwiX _ a o o * 6.t : 0.0 = 40 ~9 =~~~cto 3.5 --5. 34:.:... 2.6 < :.- tco.f: . 8.9 4.7 - : G A cotton ~~5.3 - J4L . tobacco 8.1 3~~.6 *1. 21.0. - -a. cocoa -:5 3.6 . 4.0 - coffee - 2.3 -41.7~~x .21".0 -20.7 I .. toeo. .0 1 =... .. -. ........ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ;-' ...o ....Ss..-. eeffee -5.7 -8. -3 S .733 .:coffee 1711 . | {gs;~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. s es . . .... . toh" ~ ~ ~ ~ ~ . .6.4 ....... ''::S;,. 2 S : x : . . . . . . . . .. . . . .. .. ,., ','....... f:..;:f:.SS:fff cocoa 76.. ....4.1 4. c 0.9 4.8 3.5 ::'vx :::v-,-~~~~~~~~~~... ...... .. , f f.::.S:S'.S.'2 Ot: ::''"':. ' .-.f .:'4- f':S':2:... 4 Ss;.S S:B ,.................... ..... S.. . . . .... :::: B w 1989, Tab ' 1 , p#. 4 far 1965 87 UNDP/Uorl- Bn . . .. .... n . t nd at s,19. fo -5 - sf -"'f .. ... ........... .. . ..;2Bfaf:- ,ource: Sub Shrn'Arc From crisis t Sutlnbe Growh WorId Bank, 1989, Tabte 15, p. 247 for 1965-87. UNDP/World Bank, Africa Revelonnent Indicators, 1992, for 1986-1990, and for SSA as a whoLe. - 32 - G. Natural Resources and the Rural Environment 2.21 Analysis of environmenta: issues in the rural areas of the nine countries shows extremely significant natural resource damage and degradation, especially to the tropical forests. Deforestation leads to reduction in blodiversity, loss of valuable plant gene types and wildlife. Deforestation is caused mostly by movement into forest areas of expanding populations practicing shifting cultivation, and secondly by logging. The second environmental problem is soil erosion and degradation due largely to slash and burn agriculture techniques practiced on a shrinking body of land. Fallow periods needed to restore soil fertility are less long, and the result is an increasing incidence of soil degradation. An increasingly large livestock population in fragile pasture areas has the same impact. Restorative periods in which livestock do not graze on the same land are increasingly short as livestock populations increase. The result is soil degradation in pasture areas. Soil erosion is visible over wide areas, especially in the northern countries of West Africa: Guinea, Benin, Togo, CMte d'Ivoire and in Northern Cameroon. It has not been measured in these countries however. I/ YUlE 2.6 -6 RATE F DEFORESATIO A .... . rt ''' ..... . .ivoir,1 . 11. i .g. ...... X- . s . ' . : ~~~~~~~~~~~~~~~~~~........... ... .-1 lenin 67 *t~~~~~~~~~~~~~~~~~~.7- CetrlAf rican ReOLbite 5 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.. .... .'..'., .'.... .. A'.. | .G,.'e.................. ....... 0 . . Source: Wortd Resources Institute, iWo Re ou9 1 , 1992. 2.22 Available research shows that during shifting cultivation in tropical ecosystems, with a normal fallow period, an average 2.8 tons of soil is lost per ha per year. A low and acceptable rate would be less thaii 2 tow ialyr; a moderate rate is 2 - 10 t/halyr; and a high 2/ See Environmental Issues Papers for each country, World Bank, July 1990. Articles submitted to the West African Forest/Environment Conference held in Abidjan in November 1990, by the Guinea, Togolese and Congolese delegations cited observations of widespread soil degradation in those countries (articles now being prepared for publication in July 1992). - 33 - . rate is lOt/ha/yr. / During the fallow period soil loss is about that of a natural rain forest or an undisturbed forest plantation. Therefore, in the average situation, traditional shifting cultivation with an adequate fallow period is not excessively destructive. As fallow periods shorten and cultivation periods expand, soil erosion expands, in some areas to fantastic levels (70 tons/ha/yr. maximum). Tree crops, with clean weeding, are also bad (average soil loss is 47 tons/ha/yr.). Forest plantations with litter removed or burned are also big losers of soil (average soil loss 53 tons/ha/yr.). Continuous cultivation, as typically practiced in Africa, shows more erosion than does traditional methods with adequate fallow (5.2 tons/ha/yr. loss on average), but is better than shifting cultivation with inadequate fallow. Soil loss is much less in tree crop plantations, forest plantations, and under continuous cultivation if known conservation strategies are applied, which largely assure continuous vegetative cover. HI. CAUSES FOR DIFFERENTIAL AGRICULTURAL PERFORMANCE BETWEEN THE COASTAL FRANCOPHONE COUNTRIES IN THE 1960s AND 1970s 3.1 This chapter analyzes the causes for the different agricultural performances of the coastal francophone countries in the 1960s and 1970s. The purpose is to distinguish policies and investment which have stimulated agricultural growth and which have conserved the environment, from those which have slowed growth, and which compromise the environment. The major sources of information are the Bank's agricultural sector studies for the countries. The decade of the 1980s is dealt with in the next chapter, because of the major structural changes which took place. The combination of the experience of the 1960s and 1970s, and the impact of the structural changes in the 1980s, will inform the future agricultural strategy. A. Expansion of Area Under Cultivation 3.2 There are several causes for the excellent agricultural performance in CMte d'Ivoire and Cameroon in the 1960s and 1970s compared to that of the other coastal Francophone countries. In the 1960s and 1970s, there was an abundance of good agricultural land with an appropriate climate in all the francophone coastal countries. The difference in Cote d'Ivoire and Cameroon was that very large areas were cleared and planted in both the forest and the more temperate "cotton" areas found to the North of the Forest zone (see following table). This vast planting of tree crops and cotton was undertaken both by parastatal enterprises and by small farmers. The same phenomenon occurred on a lesser scale in Togo in the 1960s, and for cotton in Benin in the 1970s. The expansion of cotton area in Benin fueled its rapid agricultural growth toward the end of the 1970s. Cropland expansion in Gabon occurred largely on tree crop plantations, but did not have a measurable impact on growth of agricultural GDP. The four remaining countries had no expansion of cropped area. u/ Data from John Spears and Raymond Rowe, Tree-Based Farming Systems, World Bank, November 1990, (for 11th Agricultural symposium). p. 13. - 34 - rx~ Foc =~~~~~~~~~d 7 toCa n .j.. . '5 04 E ninS 3; 0.......-. - Central Africa Rep ic 0 0:- : . 0f. : - . -- . 0 :; Eaatoial Guinea s' * ' Guinea 0 12 Cw xA''---''".-':'r='..A>* 0S 16.,... Source: World Bank; Sub-Saharan Africa. From Crisis to Sustainable Growth, 1989 Table 34, p. 277. B. Labor Availability Expanding 3.3 In land-abundant but labor-scarce agricultural systems such as those of the coastal francophone countries, the labor constraint was the predominate one in the 1960s and 1970s. Research indicates that it was this labor constraint which prevented many farmers from employing the crop yield-increasing technologies suggested in Chapter II. 2/ The above table shows that the agricultural labor force in CBte d'Ivoire and Togo expanded rapidly in the 1960s and early 70s, at 1.4 percent p.a. and 2.3 percent p.a., respectively. This was the most rapid rate of increase in Africa except for Kenya, Uganda and Zimbabwe, and it stimulated an expansion of area cultivated, both by smallholders and on plantations. Cameroon's cultivated land area expanded without a large labor force increase, indicating that its growth was associated more with labor-saving technology (provided through large parastatal tree crop plantations, and mechanized opening of cotton areas). Benin had a moderately rapid labor force expansion and crop-land expansion, consistent with its relatively good agricultural growth in the 1970s (cotton-related). In Guinea agricultural labor increased, but land cultivated and output did not. This suggests declining labor productivity, consistent with the poor agricultural performance of this country during most of the period. In Cental African Republic and Equatorial Guinea, agricultural labor use did not increase nor was new land opened for cultivation. Most incredible was Gabon's performance where much land was opened up, but there was no expansion in agricultural labor use and output stagnated. This suggests enormous inefficiencies in the plantations established. Congo's agriculture grew, consistent with growth of agriculture labor. 2/ This was the finding in Stephen Carr's analysis cited in Chapter II. - 35 - C. Agricultural Investment 3.4 The opening of land for cultivation in CMte d'Ivoire and Cameroon was facilitated by significant investment in agriculture by the public and private sectors. Togo in the 1970s also had heavy investment, which helped open land for cultivating, but this must have been used inefficiently because production did not increase as rapidly. Investment was primarily in tree crops like coffee, cocoa, palm oil, and rubber. There was large investment in cotton in Cameroon and CMte d'Ivoire. Investment was also made in other tropical agricultural products for export (coconut, bananas, pineapples, mangoes, wood). The relatively unrestricted environment for foreign private investment in plantations and processing facilities in Cote d'Ivoire stimulated agricultural investment in that country. Cote d'Ivoire, and to a lesser extent Cameroon, have had a considerable number of private sector agro- industrial enterprises. These marketed and processed bananas, pineapples, mangoes, rubber, and forestry products. 3.5 In both Cote d'Ivoire and Cameroon, parastatal agricultural credit banks (BNDA and FONADER respectively), distributed extraordinarily large sums of money in rural areas, much of which was used for agriculture, marketing, or other rural investment. Short-term credit has also been provided by these institutions to marketing intermediaries (both private and public) for the purpose of buying export crops. This short-term credit was used by intermnediaries to pay the prices fixed by the Government for farmers. When an intermediary sells the crop, the credit is repaid. The easy credit availability in the 1960s and 1970s in Mte d'Ivoire and Cameroon financed much if not most of the private investment by farmers, private and parastatal enterprises in agriculiure and agro-industry. 3.6 Of greatest importance however, were direct productive investments by agricultural parastatals in Cameroon and CMte d'Ivoire. The most important were the parastatal cotton companies which were marketing, processing aind service organizations. In addition, investments were made by several palm oil companies (processing, marketing and servicing farmers), parastatal rubber plantations and processing companies, timber companies, sugar companies, and some cereal companies. Additional parastatals provided services to smallholders and indirectly stimulated investment by them (for example, SATMACI and SODECAO promoted coffee and cocoa in Cote d'Ivoire and Cameroon respectively). Both CMte d'Ivoire and Cameroon made extensive use of foreign technical assistance and foreign investment partners. 3.7 In the coastal francophone countries other than CMte d9Ivoire and Cameroon, the regulatory climate for private investment was particularly poor, public direct investment in agricultural plantations and agro-industry was more limited than in Cote d'Ivoire and Cameroon and was often badly managed. In Benin, Guinea, Congo, and Gabon, equity investment was not made by foreigners at all, and the regulatory environment was highly restrictive. These countries therefore did not experience significant private agricultural investment. Congo and Gabon focused agricultural investment in a few large parastatal companies producing palm oil, forest products, cattle, rubber, and other tree crops. But these were not very efficient. Most perplexing was Togo where there was both investment - 36 - and cropland expansion during the 1960s and 1970s, but agricultural growth was mediocre, suggesting low efficiency of investment and land use. 3.8 The only comparative data available is on overall expansion of gross domestic investn.ent which provides an idea of the level of investment in the 1960s and 1970s. G3ROSS DGESTZC !MVESflENT TABLE 3.2 ,,I aj -port growth) .1965-73 1973-80 Cote d'lvolre ..8 15.5 Cam' eroon r.6 14.4 senin 9.1 9.0 :C~~~~go 9~~~4.3 4.'9 Gabon 1.3 ~~~~~~~~~~0.7 etrat fia ~pbu . *10.6 G'uine a:: ..n.-,- 23 Source: LTPS, TabLe 5, p. 228 D. Favorable xaport Prices and Exchange Rate 3.9 A policy characteristic of all the coastal francophone countries in the 1960s and 1970s has been Government administered price stabilization for export crops. Governments have fixed producer prices and intermediary margins for export crops at levels which have little relation to international prices, or to domestic costs. A stabilization fund is used for this purpose (for example the "Caisse de Stabilization" in Cote d'Ivoire and an institution of a similar name in Central African Republic, ONCPB in Cameroon, Caisse Cacao and Caisse Cafe in Gabon, Togo's OPAI). In some countries, several crop specific stabilization funds are used. For example, in most cases, a separate stabilization fund exists for cotton. 3.10 These institutions all work in a similar manner. Charges and margins of export crop intermediaries, as well as producer prices for farmers, are established by Government, and supervised by the stabilization organization. Where the stabilization organization also markets some of the export crop, the same margins apply to its own operations. The principle is that the stabilization organization pays-out to farm producers and intermediaries when world prices are lower than the fixed producer prices plus the fixed intermediation margins. The stabilization organization accumulates reserves for later pay-out when world prices are in excess of the producer price and the intermediary margins. There are some variations between francophone coastal countries in the organization of price stabilization. In the Central African Republic for example, the cotton company SOCADA performs a price stabilization function for cotton, while Central African Republic's Caisstab performs it for coffee. Cote d'Ivoire's Caisstab stabilizes producer prices and intermediation charges for - 37 - coffee, cocoa, and cotton, while the price of oil palm is stabilized by Palmindustrie (the palm oil parastatal), and rubber prices by the rubber industry. 3.11 Both Cote d'Ivoire and Cameroon were able to assure through the above mechanism relatively favorable producer prices for export crops in the 1960s and 1970s. The table below summarizes a careful analysis undertaken by William Jaeger, of real protection coefficients for major export crops from 1970 to 1980. This measures domestic producer prices compared to world prices, adjusted for changes in the real exchange rate since 1970. The higher the ratio, the r.:ore favorable the domestic price for the producer, relative to world prices. Ratios over 1.0 indicate producer subsidy. Ratios less than 1 indicate a tax on producers. lALE 3.3 - _ :. IM.AL EOTECTION COEFFICI.NTS .. V-ui 1970 1971. 197 1973A 974 1975- 1976 1977 197 i1979 1:96 Ceroon '. cofe1.2-' ,1.23 |f 1 03 .76 96 1.40 BAR,, =- :; - eott - -. _ -: - - - - - - - . _ .CA~~. x 7 Cott'on 64 .4 5O 3 80 48 53 67 6 .5 .7 Cong . - .cocos ,63 '44 - .2 44 _. .17 .2Z _27 4 tote______ dtt:oe 1 offee 1.. 1.1 1.0 1.0 , 4 1.3 i .0 d 5 .~ 8 1 .1l Tgo o:- -:cocoa .-:::76 :6 .-. .30 ..0 .2 .2 . .2 36 4 F-: . - - - - - - - -. ____ _E FOR~~~~~ofj-: J.7%-'~A 4 G0IARSO - -9, -Ni ,erfa ! ,,cocoa 1 I.6 .0 |3 4 20 .41.56 - 'A- f4- Ghana R . cca . 6 :- ..5... .3i 2 -3 1 (Source: Wi lIam Jaeger, "T epact o o icy in African Agricu ture," WorLd BanK, PRE wor ing paper, Marc 1991 Producer prices for major export crops were best maintained by Cameroon and Cote d'Ivoire, and in many years were somewhat subsidized. Only in the boom years for coffee and cocoa prices in 1975-1977, were domestic prices low in these two countries compared to (high) world prices. In the three other coastal francophone countries, administered pricing served to tax farmers, more closely paralleling the Nigeria situation. The situation in Ghana, for comparison, was even worse. E. Relatively Favorable Foodcrop Pricing and Marketing 3.12 In several countries, the price of rice was fixed by government at farmgate for the producer and at the wholesale and retail points for consumers. For example, in Cote d'Ivoire, a price equalization fund (Caisse de Perequation) was used to establish a single producer price for rice throughout the country, and to fix the retail price of rice. Importers were licensed so that they could be supervised in this pricing and marketing of rice. In several countries, the prices of beef, flour and sugar were also fixed by Govemment at each stage in the marketing chain. - 38 - 3.13 Major uncontrolled food crops in all of the countries included (and still include) roots, fibers, beans, sorghum, millet, maize, fish, some meat, dairy products, fruits, and vegetables. Domestic marketing of these products was largely characterized by small scale private marketing companies and individuals who collect food at farmgate and on farmers markets. These primary marketing enterprises and traders sell to larger private intermediaries. The intermediaries in turn sell to retailers. These uncontrolled markets worked relatively well in all of the francophone coastal countries. William Jaeger computed nominal protection coefficients for traded food crops in Cote d'Ivoire and Togo as follows: (domestic price to world price). A ratio above 1 indicates a subsidy, below 1 indicates a tax on producers. |741 971 A191971911 t. 19-9-978 1979 1980 IICtd'lviO4 re- :. :6-0 :4.0 - 1 :7 ............. X6# 1:4 2:0 .:|; - -9. Source: Witliam Jaeger, op. cit. 3.14 These numbers suggest effective taxation of domestic food producers in Cote d'Ivoire up through 1975, (probably through marketing and price controls on the several controlled commodities), but relaxed controls after that date. The situation in Togo has been good throughout. The situation in the other countries was roughly similar. The result of this relatively liberal food price and mark-eting policy was the expansion of production at slightly faster than rural population growth in each of the coastal francophone countries, but slightly slower than total population growth, with the difference made up by food imports. The similarity of these policies between the countries suggests that food policy was not responsible for differential agrcultural growth rates. F. Infrastructure 3.15 Cote d'Ivoire and Cameroon had relatively good telecommunications and port infrastructure compared to the other countries of the sub-region. Better roads had an impact not only on food and cash crop marketing but on th5 flow of technical information, farm inputs, farm equipment, and consumer goods to rural areas. All of these were ingredients for more rapid agricultural modemization in these two countries, and their absence inhibited agriculture in the others. Togo also had good infrastructure, although this does not seem to have aided in greatly stimulating its agricultural growth, probably because too few of the other ingredients for success were in place. 3.16 Data on intemal transport costs for export crops show Cote d'Ivoire in particular to have an important transport cost advantage as a result of its good road system. Togo also has considerable advantage. - 39 - RR:.0.. . .....o- SRce. U e . cit. G. Research, Extension, and'Input Supply 3.17 In the 1960s and 1970s, M6e d'Ivoire and Cameroon had relatively good agricultural rerch and extension services by African standards. Both countries inherited very sophisticated French agricultural research establishments which had developed considerable agricultural technology, especially in cash crops. The other countries of the sub-region had very underdeveloped agrcultural research institutions. Cameroon and M6e d'Ivoire also invested considerable sums in agricultural extension and farm input supply. Important agricultural extension and input supply operations were undertaken by the cotton companies (CIDT in M6e d'Ivoire and SODECOTON in Camneroon), for coffee and cocoa (SATMACI in M6e d'Ivoire and SODECAO in Cameroon), for palm oil in M6e d'Ivoire (Palmindustrie), SODEFEL for food crops in C6te d'Ivoire, and by a large number of rural development authorities for all crops in Cameroon (of which ZAPI in Eastern Cameroon supported by the Bank, and Mideno in the Northwest Province are the best known). Benin and Togo also invested in agricultural services through their cotton companies and through rural development projects in the 1970s, contributing to growth of cotton production in both countries. The other five countries did not invest in agricultural services on nearly the same scale. 3.18 Despite intensive agricultural extension in the 1970s, fertilizer use remained low in all the nine countries (see table below for comparison with the average developing country). - 40 - This was, however, little different from the low levels found in other Sub-Saharan African countries. TA8LM 5.5 4 - - .:: -FERTILIZER CON:UW . -. : .- c hAdredb of - 0rs-of :Plant nutrient pef hectare arOabe f,g^4 -Benin: :36 .63 Centrat African Reteubtc 1C I Jtia Guinea -: -84 -l.0.e Guina- :.: --: 19 - -COte dlvore: 74 83 .Co'jo' 114d; .... .-:' .,., :' Cameroon . 34 75 Caboni. - - E n- - : ... ... - < - --; 0 - ;: .......22 -A erage.-SSA . -- : . -.:.-- -: Source: Sub-Saharan Africa. FromCisis to Sustainable Growth, op. cit 3.19 The table shows that C8te d'Ivoire enjoyed a relatively high fertilizer consumption per ha in the 1970s by African standards, but low by world standards. Congo and EQG had relatively high fertilizer use per ha because of the larger relative area under large tree crop plantations. Benin and Cameroon used about the average amount of fertilizer per hectare found in other countries of Sub-Saharan Africa. Togo, Central African RepuLlic, and Guinea used less fertilizer than average for SSA. Fertilizer use appears to have played little part in defining agricultural growth, having remained at low levels. However, use of fertilizer did contribute to cotton growth. It was also identified in Chapter II to be a critical element for agricultural growth in the future, since there is considerable potential for expansion of its use, if incentives are appropriate. The cotton experience demonstrates the positive impact of fertilizer if applied properly. IV. PERFORMANCE IN THE 1980s A. Recent Trends 4.1 Cote d'Ivoire's and Cameroon's agricultural growth greatly decelerated in the 1980s, and in 1990/91 appears to be stagnating in value-added terms. Agricultural growth continues to be at a rate lower than population growth in Central African Republic, and probably (statistics are poor) in Equatorial Guinea and Gabon. However, in Togo, Benin, and Guinea, - 41 - agricultural growth increased to high levels (above 3.5 percent p.a.; see Table 2.2 above). 1/ Real effective exchange rate over-valuation, price distortions, excessive parastatal costs, increasing parastatal inefficiency, the proliferation of poorly performing donor projects, the collapse of agricultural credit, and increasing environmental problems were responsible for the greater relative deterioration of agriculture in CMte d'Ivoire and Cameroon. Similar problems are responsible for continued poor agricultural performance in Gabon, EQG, and Central African Republic. Congo also has these problems. Guinea and Togo did better in the 1980s because they avoided some of these problems. Benin suffers similar problems, but benefitted from huge and successful investment in cotton, and a beneficial inability of Government to control foodcrop production and marketing. Benin's cotton and foodcrop production expanded greatly as a result. B. Use of Land, Labor, and Capital Investment 4.2 Table 4.1 shows cropland and agricultural labor expansion in the 1980s, and Table 4.2 shows growth in gross domestic investment. The investment data relates to investment in the economy as a whole; the only investment data available. Of the four relatively high agricultural growth countries, Togo, Guinea and Congo had relatively little land opened up. All three had significant growth in agricultural labor, but at lower rates than agricultural growth. Table 4.2 shows them to have had negative growth in investment. It appears therefore that land, labor, and capital productivity were increasing in these countries. In Benin, the fourth of the high agricultural growth countries in the 1980s, both cropped land and agricultural labor expanded, though less quickly than output, suggesting increasing productivity. Investment also declined. CMte d'Ivoire's poor agricultural showing is consistent with a rapid decline in investment. But agricultural labor and land continued to expand rapidly in CMte d'Ivoire suggesting declining productivity. Cameroon's poor agricultural growth rate is closely associated with slow opening of new crop land and slow agricultural labor force growth, as well as a modest decline in investment. Gabon, Equatorial Guinea, and Central Africa Republic suffered stagnation in growth of the agricultural labor force, cropland, investment, and output. .l/ The World Bank statistics also indicate Congo's agricultural growth to have exceeded 3.5% p.a. in the 1980s. This was largely the result of expanded tree crop production by highly unprofitable parastatals. Congo's tree crop parastatals are not viable without large Government subsidies. - 42 - _ _ C8t. d'ivMrt ..... =6S [~~~~~~~~~~~~~~~~. . . . . . . . .. . . . . . . . . . .. . . . . .l Source: UNDP/Wort Bank, African Devel omnnt Indicators, 9* a X1.9.. . ...,:.ii>.Ui,j,'.,', .......X... M E to,':t :,S,4f,:ie::... f.. . 8 . fX ;X ~~~~~~~~~~.... . ... ...' . . ... ... " ....s;< .... . _~~~~~~~~~~~~~~~~~. ifa...X sf.... . .. . a '=d; fea ~~~Source: UNDPWorl lak fiank Weeortd eoto Indctos 19Z rWc tors, 1992 si2S+ Saharui Afr%*cs 4; Source. Worl Bank W orl Dvelrnn Indicators, 1992 - 43 - C. Real Effective Exchange Rate Overvaluation 4.3 The exchange rate between the CFAF and the French franc has been fixed at the same parity since prior to the independence of these countries. Since domestic infiation in each of the eight CFAF countries in the sub-region has been more rapid than either international inflation or inflation in France, the real effective exchange rate has become over-valued in each. The table below shows the CFAF appreciating in the 1980s, while other currencies in Sub-Saharan Africa (and Latin America for comparison) have depreciated. REAL FFECT.IVE EX(CHAGE:WE .... .. Ix: g ' f ':,2.,g .: . .g . :-'' : , :..'. . '' :.. : ': . '. ' ''-'. ' ': "'-''' " e ....... ... . U X. csource:IEaC - -.nd Wc rerWord Tb s. F''' (2)Trae eigte usng197878to198t82r19d7. 44 The degree ofrealefc ti .; 1e g 4e10i is 1 2 dvoir thaeroo,1ono1ad .1bn becus thyhdth 2otrpi30rae npie ofdoetic nontrtadale120aspr cots Goemn 13vies lao)3hs stems iSource. IEC and corLdI Bang t orld Tables.) . o c) Movement fromeans depreciation. (2) Trade weg ted uing 1987 total trade. 4.4 The degree of real effective exchange rate over-valuation is most severe for Cote d'Ivoire, Cameroon, Congo, and Gabon, because they had the most rapid increase in prices of domestic non-tradables (transport costs, Government services, labor). This is the most important factor contrbuting to reduced profitability of export agriculture and agro-industry. It also causes import substituting agriculture to be unprofitable without effective import protection. Protection from imports artificially cheapened by the over-valuesA real effective exchange rate is not working for agricultural products because of the high level of customs fraud and smuggling. The over-valued real effective exchange rate has therefore been a major cause of the reduction of private investment in agriculture during the 1980s, because it has reduced profitability. This situation has existed for some time in Gabon and Congo whose intemnal price regimes were particularly biased against agricultural exports and import substitutes because of the impact of oil revenues in increasing domestic production costs. The situation has grown worse in the other CFAF countries. It is greatly exacerbated, especially in Cote d'Ivoire and Cameroon, by the dramatic fall in the late 1980s of the world prices of cocoa and coffee which are the mainstays of their agricultural export sectors. This reduced the equilibrium eL.hange rate (the exchange rate which would have held had it been free to move). Togo, Benin, and Central African Republic were hurt less since their main - 44 - export commodities are cotton and food which were not as damaged by world price declines. Guinea is subject to the same world prices, but its exchange rate has adjusted accordingly. Export crop production is profitable in Guinea and is expanding as a result. D. DeclnIng World Prices for Principal Agricultural Exports, and Price Stabilization Which Does not Work 4.5 The table below shows the decline of international prices for coffee, cocoa, palm oil, cotton, and rubber. Prices are not expected to recover to past lev.'- in ical terms. Of the export commodities, only logs (and other minor fruits and vegetables not shown in the Table) have maintained world prices even close to those of the 1970s. . . .... s s . s ~ . :R .-:: -- .-.. S..- . : ...V. . . , . ~~~~~~~~~~~~~~~~~~~~q . . .-..s .-p- tl l :::.. .s .:g .:f-::..:: ..>..::.. . s..-.... --@..-::.. . .;-: s 2.> . sg ss. s .. t.>..g s s. ....... iro a n t ofe 1s1 tet-s .- . 1 3. ,:4 152 1 :ocoa. :4s ::Cer:..:. . 185 . 24 ... . - 10 >'$i''''''""''''2'B ' ' . ~~~~~~~~~~~.. ...... ss , tea Ut tents Ic 300 213 24~ ~~~~ ~~~~1338: 10 . z. .gJ334.: ~~~~~~~~...3.... .. Source: c o WarLd Rank, "Primary Co uty Price Forecasts a auarter y Rev eW a Com s moty Markets aDecember 1991, "Internatfonal Economics Department Feb 3, 1992. The causes of decihne in intemrational prices have been a combination of (a) world production growth faster than growth in international demand, (b) subsidies by industrial countries, for production of sugar, cereals, vegetable oils, and beef, which reduce international prices for these commodities by stimulating over-supply, (c) in a few cases such as sugar, the development of substitute products has expanded supply, reducing international prices. These declines have reduced agricultural incentives in all nine countries. 4.6 The price stabilization organizations in each country, except Guinea which has none, allocated the many years of surplus not to establish reserves to support producer prices in the face of a decline in world prices, but to finance general Government expenditures. Hence when needed in the late 1980s there were no resources in the stabilization funds to - 45 - support producer prices for export crops (most importantly cocoa and coffee in Cote d'Ivoire, Cameroon, Gabon, Congo, and Central African Republic). Togo and Benin are much less dependent on these funds since tree crops are much less important and cotton did not fare as badly. Furthermore, Togo and Benin have better managed cotton sectors. The cotton "filibres" in Togo and Benin now make money, compared to heavy losses by the cotton sectors in COte d'Ivoire, Cameroon, and Central African Republic. Guinea had no agricultural price stabilization in the 1980s, which gave it an advantage since price stabilization served only to tax agriculture, and cost money to operate. These were important reasons for the better performance in Guinea, Togo, and Benin in the 1980s. 4.7 The government-administered marketing systems for cocoa, coffee, palm oil, and cotton in each of the countries other than Guinea did not provide incentives for cost reduction or efficiency by companies or by licensed private traders. This was because the parastatal and private enterprises received the same intermediation margin fixed by Govemment regardless of their efficiency. The government stabilization organizations in each of the countries have also become cumbersome, costly bureaucracies. Togo was the first of the countries to scale-back its price stabilization organization (OPAT). As a result, costs are now less in Togo, and this has probably contributed to Togo's higher agricultural growth in the 1980s. Cameroon, Gabon, and the Central African Republic have recently begun similar marketing reforms to those in Togo. E. Inefficient Parastatals 4.8 The large number of agricultural parastatals providing agricultural services in CMte d'ivoire and Cameroon have lost efficiency in the 1980s as staff numbers expanded to excessive levels, management appointments became increasingly politicized, in many cases expatriate technicians left, and services multiplied under the impulse of donor projects. The parastatals became generally costly and often ineffective. Since they were usually organized to promote one commodity, they did not encourage farmers to diversify. Rather, they continued to promote the commodity regardless of the market. Examples are cocoa and coffee (promoted by SATMACI in CMte d'Ivoire and SODECAO in Cameroon), cotton (CIDT and SODECOTON in CMte d'Ivoire and Cameroon respectively), oil palm (Palmindustrie in C6te d'Ivoire and SOCAPALM in Cameroon), sugar, and cattle ranching. These organizations were major contributors to the rapid increases in the production of several commodities in the 1960s and 1970s. They were useful for starting production on a significant level. But they are now responsible for constraining agricultural diversification, avoid cost cutting, and have difficulty in improving marketing and processing. a 4.9 By comparison, this situation does not exist in Guinea, which will be able to diversify its agriculture more easily. In Togo, there are relatively few agricultural parastatals. Agricultural marketing is also increasingly free in Togo, with limited parastatal involvement. 1 IbThis is documented in World Bank supervision reports for projects financed throughout tht coastal francophone countries, dependent on parastatals for implementation. - 46 - What in Togo constituted partial neglect of agricultural investment in the 1960s and 1970s (absence of agricultural parastatals to invest) hias become an asset today (less public waste and mismanagement of agriculture). Similarly Guinea is less weighed down by wasteful public agricultural structures, although it does not have the initial production base because of neglect during the Sekou Toure regime. 4.10 Several of the psastatal cotton companies have proved to be exceptions to the generally poor parastatal performance, notably in Benin and Togo. 2/ There are indications that Cameroon's and Cote d'Ivoire's cotton companies are now reducing costs and increasing efficiency. F. Donor Projects In Confusion 4.11 Donor projects have multiplied in all the countries, although the number of orngoing projects is fewer in Guinea, Benin and Togo. As a result, in CMte d'Ivoire and Cameroon especially, there are many competing extension systems and agricultural service systems, which are the most typical focus for donor projects. In the 1980s, public expenditure programs in agriculture in all the countries (though less in Togo and Guinea) grew to include large numbers of poorly-conceived public investments, many providing an agricultural service to a region or for a commodity. Most were the residue of donor-financed projects, including World Bank-financed projects. The net results are large, costly, and generally ineffective public investment programs in agriculture (as documented in annual Bank public expenditure reviews for all of the countries). G. Environmental Destruction in Forest, Pasture, and Farming Areas 4.12 All the francophone coastal Governments have neglected environmental issues. The most visible environmental problem is deforestation related directly to the increase in population, and the consequent opening up of new farmland and increasingly intense fuelwood gathering. Table 2.6 shows rates of deforestation and regeneration in each country. Lack of economic growth and employment generation in most of the countries contributes to deforestation, as few alternative employment possibilities are available, and desperate people move into the forests looking for new land for cultivation. A similar population expansion is occurring in pasture areas, resulting in increased livestock grazing and increased rates of fuelwood extraction. 4.13 There are other factors contributing to the destruction of the forests and savannahs, and the wildlife and bio-diversity in them. Most of the area of the coastal francophone countries was under forest at the turn of the century. About 64 percent of this has been lost. Almost all primary forest outside of parks has been lost in West Africa. The loss is more limited in Central Africa. Governments in each of the countries have set aside some forest and savannah areas as parks for complete protection. Other areas are set aside as gazetted I/ Documented in WVorld Bank supervision reports for cotton projects in Togo and Benin. - 47 - forests owned by the Government where only Government-owned logging or logging through special pernit takes place. Other forest areas can be logged under special concession arrangements with Governments. 4.14 Typical in the nine countries has been the distribution of logging permits in the form of short-term concessions for political reasons. This reached its apex in CMte d'Ivoire where a logging concession became a favor bestowed by senior Government officials in return for political or other favors provided to them. In this circumstance, concessionaires had no incentive to conserve or to exploit the concession in an environmentally sustainable manner. Replanting was unheard of. Low stumpage fees and royalties which did not differentiate by type of tree encouraged wasteful and excessive harvesting of the most valuable species, while discouraging the use of less valuable species for which the same stumpage fee represents more of the final price of the log. Payments were usually as little as one-fifth of what was owed, and what was owed by logging companies was usually much lower than the amounts that they would be willing to pay. 4! Concessions were rapidly logged out, and new concessions were distributed at low prices tO log previously untauched forest. Forest roads brought settlers who greatly expanded the destruction. Subsidy of wood processing industries by most of the Governments further accelerated this process. Such enterprises often have low value added, requiring subsidies for survival, but take an additional toll on the forests. 4.15 Perversely, the Government take-over of ownership of some of the forests from local communities has reduced local community interest in the proper management of those forests. The local populace has no incentive to conserve forests owned by Government. Indeed there may be an incentive for local people to destroy the forest because they gain de facto ownership (in some countries) by clearLng the forest and planting tree crops. Governments in the region do not have the financial or manpower resources to adequately maintain parks and conservation areas or to supervise concession agreements. Conservation wil not occur in these circumstances. 4.16 The impact of sigrificant forest destruction may be even more serious than the loss of wood and biodiversity for future generations. A statistical regression of annual rainfall over time in CMte d'Ivoire revealed an average decrease in measured annual rainfall at 0.5 percent p.a. during 1965 to 1980, accelerating to a decrease of 4.6 percent p.a. in the 1980s. St The movement southward in Cote d'Ivoire of drier weather, and hence of the Savannah zone, has been observed in the last 20 years. This decline has a negative impact on agriculture. It cannot be proven that this decline in rainfall is related to the destruction of 41 See Milael Grut, John Gray, and Nicolas Egli, Forest Pricing and Concession Policies: Managing the High Forests of West and Central Africa, World Bank Technical Paper No. 143, Africa Technical Department Series, World Bank, Sept. 1991. 11 See World Bank, C6te d'Ivoire Agriculture Sector Adjustment Operation, 1988, Working Paper No. 11, Assessment of Impact. - 48 - the forests, but many observers believe it is. A similar phenomenon has been reported in Guinea (as well as in Nigeria and in the Sahel). A/ 4.17 Other costs of forest destruction include a reduction of the product of forests in the future, since tropical hardwoods are slow to recover once cleared. In 1988, CMte d'Ivoire's forest sector provided about 40,000 jobs, about 5-1/2 percent of its GDP, and about 5 percent of Government revenue. At current trends, the Ivorian forest, and the benefits derived therefrom, would disappear completely sometime in the 1990s. Several essential oils, medicinal substances, flowers, as well as bio-diversity will disappear. Tropical forests contribute genetic materials that plant breeders have used to provide disease and plant resistance to coffee, cocoa, bananas, and pineapples. 2/ Tropical forest medicinal plants have provided us with antibiotics, narcotics, contraceptives, fungicide and pesticides. These problems are far more advanced in CMte d'Ivoire, Guinea, Benin, and Togo than in the Central African countries, and the impact on agriculture is already more negative. 4.18 Soil loss resulting from the application of traditional slash and burn farming methods without adequate fallowing were reported in Chapter 2. The problem is caused by expanding numbers of people, with a resulting decline in arable land per farm (Annex Table 8 attached shows figures). Fallowing declines because shifting to new land becomes less possible. The enormous rates of soil erosion reported in Chapter 2 are the result. Because fertilizer use is low, the nutrients available to crops are declining in many areas. This is contributing to the decline in crop yields of some crops such as coffee and cocoa (as reported in Chapter 2 and in Annex Table 4). Although statistics are not available, it is reported that pasture degradation due to overgrazing is occurring in the northern parts of Togo, Cameroon, Benin, Guinea, and Cote d'Ivoire. H. Land Rights Less Secure 4.19 The rights that farmers in the nine countries hold over land vary between the extremes of communal, Government and individual forms of ownership. Traditional land rights in the coupnies are defined for groups rather than individuals. Within the groups, individual or family rights rest on customs which serve to enforce group control over the use and disposition of land. Furthermore, to minimize social friction and ensure the group's survival, the entitlement of individuals to specific tracts of land is usually transitory. This system fails to provide incentives to individuals to improve land. The economic losses are small where land is abundant. Shifting cultivation is the natural response of farmers to this situation. When fertility is exhausted, farmers move to new land, made possible by communal ownership. Fertility is restored after long periods of fallow, after which shifting See K. Cleaver and G. Schreiber; The Population. Agriculture. Environment Nexus in Sub-Saharan Africa, World Bank, Africa Technical Department, Agriculture and Rural Development Series Number 1, May 1992. aj See K. Cleaver and G. Schreiber; op. cit. Also Robert Repetto, Forest for the Trees, World Resources Institute, Washington, D.C., May 1988, page 10. - 49 - cultivators return. However, as population pressures increase and land becomes scarce, as is now happening in Cote d'Ivoire, Benin and Guinea as well as in the more densely settled parts of all of the countries, long fallow periods can no longer be relied upon to maintain soil fertility. Farmers must increasingly abandon shifting cultivation, and adopt fertility restoring technologies. This requires investment of capital and effort. This will not be provided if farmers consider the fruits of such effort to be insecure for whatever reason: low profitability or insecure tenure. 4.20 An important incentive to invest is the right to cultivate land continuously and to bequeath or sell it. Secure land rights are also important to the emergence of rural credit markets. Land is an attractive collateral, provided that the owner-borrower can assure the lender that his land can be transferred. Again, such an assurance is greatly enhanced once individual forms of land ownership become established. 4.21 It appears that traditional tenurial practices are slowly evolving to individual family farms, sanctioned by traditional communities. However, Governments have been dissatisfied with traditional tenure practice, and its slow evolution. Attempts in West Africa to legislate land rights on a national basis in order to improve land tenure security have come in conflict with prevailing customary rights. In all of tCe nine countries, Governments have declared de jure public ownership of most land. Traditional tenure systems often operate de facto, but with the insecurity caused by the knowledge that Government owns all land. Governments have used their de jure ownership to expropriate land to establish parastatal and private plantations, parks and forest c')ncessions. This has served to reduce the sense of tenure security in traditional systems. It has hastened the already apparent decline in respect for customary rules of land allocation. Migration of "foreigners" from other tribes and countries has also contributed to the decline in the power of customary practice in regulating land access. 4.22 As traditional tenure systems decline, without individual land tidtles, 'open-access' results. Any settler, clearing land, establishes user rights over that land. Sometimes, as in CBte d'Ivoire, the planting of tree crops establishes more permanent rights. But the settler has no incentive to improve or conserve the land if it belongs to the Government, or if traditional or other rights are insecure. This situation encourages shifting cultivation, forest and pasture destruction. Forests are open to free fuelwood collection in open access situations. 4.23 In Cote d'Ivoire, individual private titles are provided to Government officials and for some of the larger farms and plantations. The availability of private land titles in Cote d'Ivoire has not helped. In fact, it has been the political and economic elite and large plantations which have exploited the availability of Government distributed land titles to "grab" traditional land in same cases. 8/ However, agricultural modernization, population I/ "Land Tenure Security and Agricultural Production in Sub-Saharan Africa" by S. Migot-Adholla, P. Hazell, B. Blarel and F. Place, in L. Richard Meyers, ed. Innovations in Resource Management: Proceedings of the Ninth Agriculture Sector - 50 - pressure, and the breakdown in traditional tenure systems will make individual land ownership, documented by some form of legal recognition, necessary in the long-term. The transition to full land titling will require decades to achieve, and should be attempted only in response to demand by rural people, not as an imposition from above. In the interim, respect for traditional tenure systems needs to be codified, and Government ownership minimized. One way to do this is to provide titles to villagand communities. The community then manages the land according to customary law. This strategy is discussed in Chapter 10. I. Women Neglected 4.24 Women are responsible for an estimated 70 percent of staple food production. In most West African cultures, women may be allocated their own fields (usually from their father's or husband's land), are responsible for specific crops and operations, and enjoy independent income from certain crops, or from marketing. As farms shrink through inheritance, and men turn to outside work and become part-time farmers, women increasingly become managers of the entire family farm. Women's agricultural workload increases while their traditional work burden in child care, wood gathering, water fetching, and staple food pounding remains the same, or increases as deforesation progresses. The excess labor burden on women means that land preparation, planting and weeding are often delayed, depressing yields. Despite these responsibilities and special constraints, research and extension services have neglected women and women's activities. Traditional roles foresee no permanent rights of women to land, and limit women's access to credit. Recent work in C6te d'Ivoire, Cameroon, Togo and elsewhere in Africa suggests that the failure to address women farmers through research and extension, to provide secure land tenure to women farmers, to successfully find ways to reduce women's non-agricultural work burden, and to make credit available, has reduced food production compared to its potential. 2/ Symposium, World Bank, October, 1989, develops a similar thesis for several countries in Sub-Saharan Africa. It argues that the need to 'modernize' land tenure practices in Africa is less than commonly supposed, since traditional systems provide considerable security of tenure. This argument is true in the West African francophone countries as well, until traditional land tenure systems break down, as they have begun to do. 2/ For example, see: a) "Women in Development* Studies undertaken by the World Bank for Cote d'Ivoire, Cameroon, and Togo, AFI Department, August 1989 (mimeo); b) Kenya Women in Development Study, World Bank PPR, 1989; and c) The Population. Agriculture. and Environment Nexus in Sub-Saharan Africa, K. Cleaver and G. Schreiber, May 1992, Africa Region, World Bank. - 51 - J. Analysis of Relative Importance of Each Factor In Explaining Agricultural Performance 4.25 In prioritizing actions needed to stimulate agricultural growth, the relative importance of each of the factc-! described above needs to be established. From the analysis in the preceding paragraphs, the principal present problem facing agriculture in the coastal francophone countries is the lack of profitability of commercial agriculture, both for smallholders and plantations. This lack of profitability has reduced investment in farming, agricultural marketing and processing, depressing the rural sector. This is why there is now little land and labor use expansion in agriculture. Low profitability is due to over-valuation of the real effective exchange rate, declines in international commodity prices, marketing and price controls, Government regulations of the private sector, and the decline in credit available to agriculture. Where the problems are less severe, as in Togo, Benin, and Guinea, agricultural growth continues. The next most important problem is the deterioration of agricultural services: agricultural research, extension, livestock and forestry services. This results from the excessive costs and poor management of parastatals, rural development authorities, Government and donor-managed services. Where this problem is least bad (as in Togo and arguably in Benin), growth has been better. The third problem is environmental degradation. This has affected all the countries negatively, but CBte d'Ivoire the most, and the Central African countries the least. Better infrastructure investment in CMte d'Ivoire and Cameroon in the past, helped stimulate their agricultural growth in the 1960s and 1970s, but could not compensate for the above negative developments in the 1980s. Poor infrastructure development in the other countries (except in Togo where it is relatively good) hindered agricultural development. Land tenure systems increasingly characterized by "open-access" which encourages the mining of soils and destruction of forests have hindered growth in all the countries. Neglect of women's role in agriculture has also had a negative impact in all the countries. 4.26 Growth rates of important inputs and determinants of agriculture were measured in the CMte d'Ivoire for the two periods. The following was the result. - 52 - ETABL 4.5 WJANITFICATINI OF ifACTOAS INFLUENIN A(3JOJLIW CAUI OtE o'IMlft As ILLtSTRIVE CASE 1965-190 198019$ _______________________________________________' ( .A routh 1. Rate of Lreal appreciation of CFA fran (1) .i- 17. 4.7 .2. Rate of increase of domestie:agricutture pr:i 0. . . compared to domestic price nrflation (2. ._._._._ 0______3 __ _: 0.3__._O 3. Rate of i erease of w Orr.e - *or ieefcult. i exports compared to domestf op tes (3) 1.4 :_:________ : 4..: Rat e of real fncrease 1 4r:la tat o ( 14-. . 18.8 6.- :Rate o f inrease in ag-rieulture eredit. 20. - : ::: 2.1 :7U:. Rate of increase in fertfilteruse. .. . . 0 10.2 - 2. 8 0Rate of increase in planted ea . . 5.0 2.8 -Rate otfincrease in average raifa ____ _ 0_ 2.8_:.4 ... . .. . ...* 0.5 4. --10. "atef o f ncrease a in agr fieu atuat-a. .: 4...0 :. 4* 16.O '11.: Rte Iuralpo l . .S . 2.0 Source: RCI Ministry of Agriculture for prices, area, rainfall, fertilizer, credit. (1) A negative growth signifies real depreciation (advantageous for agriculture); positive growth signifies appreciation (disadvantageous to agriculture). 1965-1980 was advantageous, 1980-1987 disadvantageous. (2) increases are in current prIces. The higher are domestic agricultural prices relative to domestic price inflation, the greater the advantage for agriculture (1965-1980 were advantageous, 1980-1987 highly disadvantageous). (3) Rate of inqrease in export prices minus the rate of increase in domestic prices. The higher the rate the better for export crops (1965-80 was advantageous, 1980-1987 was disadvantageous). (4) Taxation of agricuLture has become progressively worse in CMte d lvoire. 4.27 The relationship of the above changes to agricultural growth is tested statistically in Annex 2. V. THE WORLD BANK'S EVOLVING AGRICULTURAL STRATEGY AND LENDING PROGRAM A. The World Bank's Early Strategy 5.1 The World Bank, along with the French Government and to a lesser extent other donors were early supporters of the Ivorian and Cameroonian agricultural strategies. The Bank provided numerous agricultural loans to these countries, promoting public sector investment in tree crop plantations (21 percent of the Bank's portfolio by 1987), agricultural credit (8 percent of the 1987 portfolio), integrated rural development (45 percent of the 1987 portfolio). Rural development projects provided regionally-focussed agricultural extension, credit, research, and rural infrastructure. Industrial forest plantations managed by parastatals also received Bank assistance (8 percent of the 1987 portfolio). Similar types of projects, though much fewer in number, were financed in Central African Republic, Togo, and Benin, - 53 - though these were nearly exclusively of the rural development type, most often focussed on cotton development. The Bank's agricultural policy advice in the 1960s and 1970s was limited. It tended to concentrate on the need to increase producer prices toward world levels, and to reduce costs of the agricultural parastatals. In the late 1970s when it became apparent that the CFA Franc was overvalued in Cote d'Ivoire, the Bank proposed that the negative impact of this could be offset by paying export premiums and increasing import duties. The export subsidies were not strongly advocated elsewhere in the francophone coastal countries, and were not taken up in those countries. 5.2 These actions by the Bank did initially contribute to agricultural development in Cote d'Ivoire and Cameroon. However, over time the Bank's own assistance contributed to the proliferation of agricultural parastatals and Government agencies operating in agriculture, indirectly supported the maintenance of a system of administered agricultural prices and public control of a large proportion of agricultural marketing and exporting, supported an expansion in the role of public investment in agriculture, and neglected the private sector. It became apparent by the 1980s that agriculture in Cote d'Ivoire and Cameroon was growing more slowly for these reasons. The Bank began rethinking its agricultural strategy as part of the preparation of the first structural adjustment program in Cote d'Ivoire. B. World Bank Strategy in the Early 1980s 5.3 The Bank strategy which emerged in the early 1980s in the nine countries consisted of the following: (a) Price policy recommendations remained the same: increase administered producer prices to world price levels. Agricultural input subsidies on the other hand were to be reduced and eliminated. (b) The agricultural parastatals required cost cutting and efficiency increasing measures. In many cases expatriate assistance was recommended. In some, public sector employment in parastatals was to be cut. However, the parastatals were still seen to be relatively effective enterprises for investing in agricultural processing, marketing, tree crop plantations and for providing services to smallholders. The Bank continued to provide nearly all of its agricultural lending assistance through parastatals (for integrated rural development and for commodity development such as cotton, cocoa, coffee, rubber, and palm oil). (c) The parastatal agricultural credit institutions were to be supported as credit channels. However, an additional objective was to support management improvements in these credit institutions, particularly by improving loan and recovery performance, cutting salary costs, and increasing interest rates to cover administrative costs and the cost of capital. - 54 - (d) Focus was increased on the content of the public investment program in agriculture. The most poorly performing projects were identified and recommendations made to eliminate them. (e) The need to coordinate donor projects became apparent, and considerable effort was expended on meeting with donors to coordinate agricultural aid programs, and in cofinancing projects. (f) By 1986, the strategy shifted further to the need to improve national agricultural research establishments (a project of this type was financed in Cameroon and preparation begun o.a an agricultural research project in CMte d'Ivoire). In addition, the idea was introduced of developing a single national extension system in each country managed on the principles of the "training and visit system" pioneered in Asia and successfully introduced into Kenya. Such projects were prepared and financed in CMte d'Ivoire and Togo. C. Results of the Bank's Strategy In the 1980s 5.4 The Bank strategy of the early 1980s had mixed results. In several cases (C6te d'Ivoire, Cameroon, Central African Republic, Togo, Gabon, Congo) Governments increased agricultural producer prices toward world levels. Benefits accrued to farmers. Except in Gabon where increases were not sufficient compared to the costs of farming, this provided some early stimulus to agricultural growth. In Togo, Benin and to a lesser extent CMte d'Ivrire, parastatal operatir.g costs were cut, and some parastatals became more efficient. Agricultural extension improved in C6te d'Ivoire and Togo as a result of the Bank financed national extension projects. There was a great increase in donor cofinancing, especially with the French Caisse Centrale and French Ministry of Cooperation. Donor relations reached their high point in the early 1980s. In Togo, the entire agricultural investment program improved as a result of these efforts, contributing to Togo's good agricultural growth rate. 5.5 Much of the strategy did not work, however. Many of the rural development projects were failures. Those evaluated by the Bank's Operations Evaluation Department as having succeeded were almost exclusively in the cotton zones, and used the cotton companies to implement them. Togo, RCI and Benin had successful Bank-financed cotton companies. (see Annex 1 for summary of Bank Project results). The cotton companies however were facing increasing financial problems, and were not assisting farmers to diversify into other crops. By the late 1980s, several of the cotton. companies had serious financial problems, though the companies in Togo and Benin began resolving them by 1990. The problems of the Bank financed parastatals and rural development projects were identical to those identified in Chapter IV: politicized management, resulting in bloated staffing and bureaucratic inefficiencies. This was combined with the decline in world prices of most agricultural commodities, and an increasingly over-valued exchange rate, causing serious financial problems in the parastatals which could not be significantly restructured. Political interfe.-ence in hiring and management, mis-use of funds, and poor planning continued. Most became heavy drains on Government budgets by the end of the 1980s. - 55 - 5.6 The rumral development model tumed out to be a poor mechanism for managing the investment and upkeep of rural infrastructure. Autonomous project authorities could not attain the management competence necessary. Five year donor-financed rural development projects were not designed to permit project authorities to upkeep rural infrastructure or agricultural services beyond the project's financing period. National public works organizations, ignored by the rural development project authorities, had their rural infrastructure capabilities reduced or eliminated by neglect. 5.7 The parastatals financed by the Bank continued to displace private sector activity. There was little new private investment in agriculture or agro-industry in any CFAF country in the 1980s, and the Bank did not finance private agriculture or agro-industrial investment. In the late 1980s the private sector began to divest its existing activities. Agro-industrial and plantation closures in CMte d'Ivoire and Cameroon are common today. 5.8 The elimination of only the most poorly performing agricultural projects from the public investment program was not sufficient. The public expenditure programs (including staff and operating costs) in all of the coastal francophone countries (though to a lesser extent in Togo) were by the 1980s poor and ineffective. An increasing percentage of expenditure went to staff, and less to farming and to other operating costs needed to provide effective services to farmers. Except in Togo and CMte d'Ivoire, agricultural extension and research deterorated greatly by the mid 1980s despite Bank projects which financed research and extension. Extension services continued to be fragmented, with separate systems for different crops or as part of area development projects. Multiple donor extension activities in the same country resulted in confusion and lack of coordination. Outside of Cdte d'Ivoire and Togo, management and supervision of extension continued to be lax, links with research weak, training of extension agents poor, feedback from farmers nonexistent. 5.9 Neither the Bank nor the Governments turned out to be very good at guessing what appropriate administered producer price should be. In the late 1980s, the breakdown in the functioning of the price stabilization funds and the low world prices for most tropical commodities, meant that movement toward world prices caused a reduction, not an increase in domestic prices. Decreasing domestic producer prices for export crops in line with world markets proved politically difficult, and was not undertaken until late 1989 in any of the countries. Because producer prices were set on the basis of domestic political agendas rather than the value that the world market attached to each agricultural commodity, farmers produced these commodities in a quantity signaled by politics rather than by market development and supply. The Bank did not succeed in overcoming this situation largely because it acquiesced to administered pricing, which was inevitably political. 5.10 The export premium/import duty scheme in CMte d'Ivoire, designed to offset exchange rate overvaluation, did not work due largely to fraud, administrative problems, and lack of funds for the export subsidies. 5.11 Although some farm input and equipment subsidies were eliminated, many persist, supported and sometimes financed by the projects of several donors. Many donor projects, - 56 - including the Bank's cotton projects, continued to provide subsidized farm inputs and equipment, crowding out the private sector. 5.12 Bank and government strategies in the 1980s, as in the 1960s and 70s, ignored the quality and management of agricultural education and training institutions. These produce in several of the countries (C6te d'Ivoire and Cameroon in particular) large numbers of inadequately trained people, who are oriented to, and nearly always join the public service. The impact is negative. The training is generally not good enough to permit a significant contribution to agriculture, and is often not relevant to the needs of the private sector or to actual farming operations. The cost of training and subsequently the costs of under- utilization of trained manpower in the public service are high. 5.13 Bank and Government strategies neglected the development of farmers groups and associations. These have been discouraged in all the countries, and in some effectively suppressed. Only in Northwest Cameroon have they been allowed to flourish unhindered. The reason for this neglect by Governments was probably that such groups represented competing political power which was not tolerated. Several governments stepped in to control these associations, with the excuse that management needed strengthening, or that funds were stolen, or that marketing was best handled by parastatals serving the interests of consumers as well as producers. By not permitting farmers to organize in an autonomous manner, or to maiset their produce on a free market, a valuable developmental mechanism for farmers appears to have been lost. 5.14 The Bank strategy of the early eighties, like that of the 60s and 70s neglected issues of land tenure, environment, and rural women, all of which were important as discussed in Chapter IV above. VI. A VISION FOR A DEVELOPING AGRICULTURE A. Objectives for Agriculture 6.1 The agricultural growth objective established in all the countries is 4 percent p.a. This rate is necessary to contribute to economic growth targets of 4 to 5 percent p.a. (with agriculture contributing from 27 to 47 percent of GDP outside of Congo and Gabon), and is consistent with the targets established by the countries of the sub-region and by the Bank for Sub-Saharan Africa as a whole. Increased agricultural growth will be a major contributor to poverty reduction. Most of the poor in the nine countries live in rural areas. Tr e food insecure, and those living in absolute poverty are largely rural people. Increased agricultural production, widely distributed over the rural population, would increase both income and food security. Expanded food production would tend to reduce food prices, benefitting those dependent on purchased food, also contributing to poverty reduction and food security. As pointed out in both the World Bank's Study entitled Sub-Saharan Africa. From Crisis to - 57 - Sustnable Growth (1989), and in research undertaken by the Bank 1/, agricultural growth stimulates labor-intensive rural based activities. These rural-based industries produce farm inputs and equipment, process farm products, and supply consumer goods to farmers. Haggblade, Hazell and Brown found US$ .5 equivalent in income to be created in such activities for every US$ 1.0 increase in agricultural production. Raising income in rural areas stimulates a diversified rural economy, leading to the development of secondary towns and cities, and more likely avoiding the centralization of population in a few huge mega- cities. The agricultural strategy must focus more on women, be consistent with environmental protection, and provide for food security (see Chapter 1 for full statement of objectives). 6.2 To achieve these objectives requires firstly that there be agricultural potential for expanded crop production based on expanded crop yields and the introduction of high value crops. If there were little agricultural potential, or if improved technology were not available, agricultural growth of 4 percent p.a. would not be possible. Chapter II demonstrates that the coastal francophone countries have very high agricultural potential. Application of known technology for food crops, livestock, and export crops would increase yields and production greatly. The constraint is not the availability of technology. The constraint is that farmers do not use yield enhancing technology to a significant enough extent. B. Are There Markets? 6.3 In answering the question why do farmers not ue yield expanding technology, an explanation commonly given is the lack of availability of markets. There is a common view that export markets are constrained, and that even domestic markets are limited. This argument has not been true in the past. Chapter I (para. 1.37) cited three studies covering sub-Saharan Africa as a whole, which demonstrated the availability of domestic and export markets for agricultural and agro-industrial products. Except for Ivorian cocoa, the coastal francophone countries have been losing market share for all export crops. The markets have been available, but other countries have been conquering them. For cocoa, all of the countries sell all that they produce. Similarly, the share of imported agricultural products on domestic markets has been increasing. Production has not kept up with local demand (Table 2.3, 2.5). 6.4 But will the future provide the same market potential as has the past? Projections suggest that world imports of commodities produced in the coastal frmcophone countries will increase at the following rates from the year 1990 to 2005. 1V Haggblade, Hazell and Brown; "Farm-Non-Farm linkages in Rural Sub-Saharan Africa," World Development, Vol. 17, No. 8, 1989. - 58 - I"2AR ACAXCULTI MI CiSOS ...--i.;-.-. -..... . -., ......: :- .. , . s . ... .... .. E E : : - g D:.:: . ..... .. ... . :.=-I Soure. WoL1a.0PIePrset foroa m2lor PrI Commodi.'' 't I 1: Aa:- : .tural, Products, . .-............. tertf-e r. c.a Ti , Dec 199 , .. n t- :.:..: : .,0-Ttion ar, Ecnmc Depart Lment PamOlt 6-- 024 t r fo . (as wl as .bes a : ,, ,be.-. .. . * . -2::.0:."1 shown in theTablewSoud e:n in oredaBing worlce Parkectshr,gingbcsoefte for 'o Premar : . I . . growth rates, s t 'ae 4 percent p"aA a: Agriculturalv t s 9 P inrtr t rnersb abdoTroI Tbed,f . Dcl E-cept fore fruiso exandig palmPoi (asdwell as vegtaleso aonfoddmeatinot shon bthfrwhc worldbyteea demand isogrowingsraptidy,gowt in eeoastal fncophonee countryc exports at abovpereth r.ate mark het previously held b , countries. Excep for c a talncof thfe sae sofn inThbe oastales trnohoe contrieso dinvtersf Wnorl othradexpofrths crommfoditiesps 65 Te IFPRIs also consuaoid ral spe o aimpr sub1st wt 55-7 pc of agricultural vau Padddcnsume doetically, (Anne Table:9). Prdcto grwt of food: 2000. a, Food consum tionn deveopin conre is.ncrasng.t.35.er.nt..a (World ~ ~ ~ ~Sure Bankd data).c PosJet 6.6 Thabovprojction , cm Intedrwithothe mEdicrenprices xettos o oo n cofeshown inth Table 4.4ougges then inceedin todvrsif intaohekepot shr,giigbcrs food copsth marke Iprei,u 1990 Anua Rhepeornt,rpage 12 etfrcca n oalseretn ofe -59 - and livestock, while improving the efficiency (reducing costs) of existing cocoa and coffee plantations, as well as of cotton production and marketing. C. Comparative Advantage 6.7 Another way of looking at the capacity of agriculture to grow is through analysis of comparative advantage for various crops. Such an analysis was undertaken in 1989 for Cote d'Ivoire, using the "domestic resource cost" methodology. This computes the value of domestic resources used per unit of foreign exchange earned or saved by production i,; the commodity. "Economic" prices are used to compute costs and benefits, with adjustments made to the exchange rate to reflect the real value of the CFA (purchasing power parity). The results are as follows. ... .. . ...._ _ _ _ __ _ _ _ _ _ _ __ _ _ _ _ _ _ __ _ _ _ _ _ .2 ~ ~ ~ OEbI0R 0PRTI~AVIAEFRMI RP 6T' Vivlke cbAMttve qVWAw-aO--NA''N-995 ..... ....~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~D.ust ....... .... ~ ~ ~ ~ ~ ~ ~ *titia aO~C Cs ......S.C. ..Ar... ................ . ... .~~~~US$ton ..... . .. oV[Ehnig) 0 ,0006 Cocoa.. .. dton t.h.o~ 5 .0005 Co .....ve.t..n.....1.80 6 ..... 001~00 07 Ir ted Rie anal3000 ---3 50. 1 3 ~~ahe Savanna oxen) . . .<.1,800 ~~~~~~~~~~~~~~~~~~~5 .... . .... ... ...t j... ...:T:>!:: ,5 0 3( (a) Based on Bank's Comnodity Price Forecasts, June 28. 1989, in constant~~........... ........1988.....dollars Cb ThfoetcRsuc ot(R)rpeet h au fdmsi ...... . esou..ces usdprui ffrinechneere rsvd h rAdjutmentl Proram - 60 - 6.8 A DRC lower than unity indicates that the country can earn or save foreign exchange through expanded production, because cost of production is less than sale value per unit of output. Only certain food crops would not be economically "viable" to produce locally, due to low world prices and low yields. If yields were to increase, which is quite feasible agronomically, as indicated in Chapter It, these crops would also be viable economically. The DRCs suggest that production of cocoa, coffee, oil palm, rubber, cotton, rainfed rice, and savanna maize should be greatly expanded. However, given the low projected increase in total world imports and poor price prospects for cocoa and coffee, significant investment in new coffee and cocoa plantations is not recemmended. Improved efficiency on existing coffee and cocoa plantations is. 6.9 Comparative advantage is an economic concept, and DRCs are computed using prices adjusted to their real economic values and assuming no tariff protection. When recomputed in Cote d'Ivoire at unadjusted local prices using the official exchange rate, only cocoa, coffee, and rubber are viable, though only marginally. for all other crops, costs of production exceed value of production. The difference between the economic value and the financial value of production reflects the negative impact of the various factors described in Chapter IV, including but not exclusively the overvalued real effective exchange rate. Measures necessary to increase the profitability of agriculture are therefore of critical importance to pernit the economic gains to be realized from increased production. 6.10 Another constraint to growth often cited is the availability of processing technology. A review of available agro-proc~ssing technology suggests widespread opportunities from a technical perspective, which could be acquired by the coastal francophone countries. a/ The proliferation of processes and products is immense. 8,000 new agro-related products were released in the U.S. market during 1988 alone. I/ But instead of private enterprises undertaking such investments in the coastal francophone countries, there has been in the 1980s some disinvestment by the private sector. The public sector agro-processing facilities are increasingly loss-makers. The problem, as with farming, is not the lack of availability of technology. It is a lack of investment in the technology, and lack of efficiency in its use. 6.11 The projections of the world agricultural situation and the analysis of comparative advantage are uncertain, with large margins of error. Several factors could change the situation significantly. Growth of food production outside Africa may slacken as the Green Revolution slows, as the scope for irrigation expansion shrinks, as the intensity of farm input use declines in response to the degradation of the natural resource base in many areas of the world, and as farm subsidies decline. Already accustomed to a low input and largely un- subsidized agriculture, the position of agriculture in the coastal francophone countries on world markets would improve. Real wages in West Africa are high but are declining, slowly increasing competitiveness in producing labor-intensive crops. On the other hand, I/ James Brown with Deloitte & Touche, Agroindustrial Investment and Operatino., World Bank, EDI Working Papers, 1991. Ibid, p. 9 - 61 - technology improvement leading to better and cheaper products is likely to continue to be much further advanced in the industrial countries and in Asia. The coastal francophone countries will have trouble keeping up technologically. Hence the uncertainty. The sub- region's agricultural strategy must be responsive both to the opportunities, and the uncertainty. Responsiveness to domestic and external market demand (which changes rapidly), to development of new products and processes, and to acquisition of technological improvements which increase efficiency and cut costs is likely to be critical for these countries. These factors have contributed importantly to the strategic concerns to be presented below which focus on a policy environment which creates a profitable commercial agriculture. This is vital in providing incentives for private investment in agriculture and processing. It also suggests more investment in efficiency improvements such as rural infrastructure, better agriculture research and extension, and human capital development through rural education, health, and population measures. D. The Strategy in Brief 6.12 The common thread of the analysis of the preceding chapters has been that numerous policy and structural conditions reduce the profitability of agriculture, agro-industry and agricultural marketing. These activities are essentially private, and increasingly so as Governments divest their commercial enterprises to the private sector. To invest and flourish, the private sector must make profit. It cannot make profit and compete on world markets (export and import substitutes) when faced with poor economic policy, lack of access to new technology, expensive transport, a deterorating natural resource environment, and poor health, education, and family planning services. To achieve the objectives for agriculture set out above requires that each of these problems be addressed. There will be variation between countries in the severity of each problem, and in the adaptation of the strategy to it. These adaptations must be worked out. However, the action plan to deal with these issues will incorporate the elements set out below. 6.13 The priorities for agricultural development are: Priority 1: Create an Enabling Economic Policy for Private Sector Investment in Agriculture, Agro-Industry, Agricultural Marketing, Farm Input, Supply, and Credit, Priority 2: Support Direct Investment by and Financing of Private Agricultural, Agro-Industrial, Agricultural Marketing and Credit Enterprises; Priority 3: Improve Agricultural Services and Empower Farmers; Priority 4: Improve Natural Resource Management and Land Rights; Priority 5: Expand Rural Infrastrucure; Priority 6: Provide Food Security; and - 62 - Priority 7: Reduce Population Growth, Improve Health and Rural Education. 6.14 The long-term vision of agriculture in the nine countries which would result from successful implementation of the strategy consists of a better-educated farming population, using land, labor, and capital resources more efficiently. Bank-financed extension and research would contribute to this. Private trade and processing would flourish (promoted by policy adjustment programs and support of private investment). Investment of increasing amounts would be combining with technical change to expand agriculture growth. New domestic and foreign markets for agricultural products would be actively conquered (the Bank would assist through agricultural export promotion and financinig projects). This would however require improvements in the quality of agricultural produce, more enterprising marketing enterprises with a world vision, and less government interference in markets. Farmers would have greater involvement through their associations and communities in determining the shape of agricultural policy and rural development (the Bank would assist by financing farmers groups and cooperatives). Because of the reduced cost of labor and of non-tradables brought about by structural adjustment, combined with climatic advantages and proximity to Europe, the nine countries would have comparative advantage in the production of many agricultural commodities over the long-term. Increased income, and with it improved social services, would make rural areas attractive, further encouraging the development of dynamic rural communities. The achievement of this vision is likely to be gradual, but can be accelerated to the extent that good policies and investments are developed. Each of the strategic priorities are discussed below. V3I. CREATING AN ENABLING POLICY ENVIRONMENT FYOR PRIVATE SECTOR INVESTMENT IN AGRICULTURE, AGRO-INDUSTRY, MARKETING, FARM INPUT SUPPLY AND CREDIT A. Price and Trade Policy 7.1 World markets for tropical agricultural products are extremely competitive. Asian countries compete not only with effective technology generation and transfer mechanisms (research and extension), but through the private sector working in farming, marketing and processing. Flexibility and responsiveness to market opportunities have been the keys to their success. Asian Governments, as well as many in Latin America and increasingly in Anglophone Africa (Kenya, Botswana, Mauridus, Nigeria, Zimbabwe, Ghana), help to keep private sector-managed tropical agriculture running by allowing world prices to be passed on to farmers and pi; = ion owners so that producers become responsive to changes in world supply and demand. Private marketing and processing enterprises are given their head and encouraged. With reforms in Eastern Europe, the CFAF countries of West Africa were until recently among the countries with the greatest degree of Government control of export prices, marketing, and processing. These Government-administered systems are costly and inefficient, stifling entrepreneurship and private investment in agricultural marketing and processing. - 63 - 7.2 The Govemments of the coastal francophone countries have all embarked on a process of price and market liberalization. The main tenet of the proposed strategy is that for competitiveness to be increased and private investment stimulated, the incentive structure facing agriculture must be further improved. This requires that domestic costs of production significantly decrease, and the prices of agricultural tradables (exports and import substitutes) increase. A real effective exchange rate depreciation (except in Guinea) will be necessary to do this. Use of the nominal exchange rate has not been foreseen. Real effective exchange rate depreciation must come about through cuts in public sector wages, cuts in minimum wages, increased efficiency of enterprises providing transport, electricity, water, and other public services. Costs of agricultural marketing should be reduced by cutting costs of public sector marketing enterprises, in some cases liquidating such enterprises and encouraging competition between private marketing enterprises. In most cases, duties on agricultural exports will have to be temporarily eliminated in order to increase the domestic profitability of such exports in the face of an over-valued real effective exchange rate. In CBte d'Ivoire, Congo, Gabon, and Cameroon domestic costs have become so high relative to the CFAF value of agricultural exports and import substitutes, that action on agricultural prices is also required in the form of export subsidies and import duty surcharges to increase domestic prices of agricultural tradables. This is also the case in the other CFAF countriti, though to a lesser extent (Annex Table 12). 7.3 The proposed strategy should include the dismantling cf the Government-administered price and price stabilization schemes, simultaneous with the shift in relative prices described above. This recommendation is based on the observation that such schemes have not worked to stabilize prices, are wasteful and are subject to fraud. Similarly, internal marketing of all export and food crops should be freed of regulation. Internal prices of agricultural commodities should be free to find their own levels based on supply and demand. Import taxes and export subsidies recommended for offsetting the effect of real exchange rate overvaluation could also be used to both stabilize prices and offset the effects of foreign dumping of meat, flour, vegetable oils, and dairy products. 7.4 A major objection to the strategy of freeing prices has been that world prices for West Africa's agricultural products have declined, and Governments have felt it necessary to intervene to protect export crop industries and producers. However, for export crops, there is little that most West African Governments can do to protect farmers from changes in world prices. Administering producer prices and Government monopoly of marketing has not succeeded in protecting farmers, as indicated in Chapter IV. West Africa lost world market share in the last 20 years for coffee, palm oil, rubber, copra, and cotton, particularly to Asian countries which have had much more liberal price and market policy regimes and which have encouraged private investment and productivity gains. Only Cote d'Ivoire's cocoa industry has increased world market share. The strategy to follow is not to try to ignore the reality of the world market, but to allow farmers and investors to respond to it, - 64 - through free and open price and marketing regimes, while assisting private industry in productivity improvements. 1/ 7.5 Barriers to intra-West African trade in agricultural products should be eliminated as domestic distortions in tariffs, quotas, agricultural prices and marketing systems are eliminated. This will encourage some specialization according to the comparative advantage of each West African country. However, tariff protection from subsidized and dumped exports from Europe and North America is justified, particularly in the case of dairy products, meat, cereals, and edible oils. For these commodities, a long-term build-up of local specialized capability is justified since costs computed in border prices, calculated at a "shadow" (equilibrium) exchange rate, are lower in many West African countries than in Western Europe and North America. Combined with the objective of free regional trade, this suggests a common tariff system on agricultural goods imported from outside West Africa, and free trade within. 7.6 The improvement of the incentive framework would not only benefit smallholder agriculture. It would also benefit agricultural marketing and processing by more sophisticated medium and large-scale private farmers and investors. Medium and large-scale private enterprises can integrate agricultural production, marketing and processing activities. Experience shows that such enterprises are more likely to search out new products and markets than are parastatal enterprises. Medium and large-scale private plantations and agro- industries establish production contracts with numerous smallholders who receive the benefits of modern technology, quality control, marketing and other services. In the 1960s and 1970s, C6te d'Ivoire especially attracted considerable private investment in plantation agricalture producing export crops such as coffee, fruits and vegetables, bananas, pineapples, and rubber. CMte d'Ivoire showed in the past that a relatively open policy for such investment attracts both national and foreign capital, technical and marketing expertise. Other West African countries could follow this example. More and more educated Africans will have to turn to farming and agro-industry for jobs, since limits to public sector employment have been reached. Jobs would be available on medium and large farms, and in the private marketing and processing industry, if private enterprises were encouraged by an appropriate policy environment, such as that suggested here. 7.7 Both local and foreign private investment in modern agriculture requires first and foremost an enabling environment including an appropriate macro-economic policy, a liberal marketing and price regime, efforts to minimize or eliminate administrative controls on investment and trade, and a well functioning financial intermediation system serving the rural areas. Guinea has partially practiced the above philosophy, with a relatively free exchange rate and agricultural price regime (though with a non-functioning financial system). Import duties provide very modest protection in Guinea. Export subsidies are not needed in Guinea I/ This is the strategy suggested for Africa in two path-breaking recent studies: Ulrich Koester, H. Schafer, and A. Valdes; Demand Side Constraints and Structural Adjustment in Sub-Saharan African Countries, IFPRI, July 1990. See also USAID: Africa Cash Crop Competitiveness Strategy, May 1990. - 65 - given the relatively flexible exchange rate. Marketing controls do not exist except for rice. In the other countries, elements of these reforms have recently been introduced. The following text explains recent reforms, and additional reform necessary, on a crop-by-crop basis. The ideal would be to arrive at a situation like Kenya's horticulture sector, described in the box below. . .:: ~~~. . . . .;... .. -. : .......: . . .....:...... .....:....:-.:....:.. .... - :..A.-on. :t.he most Interesting priate t theme have bn thhet for hortTic.t-ra ..:crops such as-:.resh ftuit and vegetables, mostly for export.-. Kenya has-be.end ost successful,..::. . now exporting -about -$1o milltion p..4 nd expanding ar 1t.6X p... .KenYas horticulture sector contains. about 120 private sector cosqanies contractin withk about 20,0Q0 farers to. produce about.75 commodities . These.nclude conned pineapptes ind french. beans;-fruit and-" ovegetable juices (pineapple,passion. fruit, ange, t to); fresh- trorcal f .::..Veget.bl-e$,(french beans, chiDP lies.:okra mangof, avocado), strwberry, p neppltO, passion : rult4 , and cut -flowers (carnations, :rses; alatroemesia, chrysantheiums, and arch a), Keny' n has ore'than o -.third"of-SSA a exorts'of fresh vsgetables (1988), one-half of " its:exorts of processed vegetables4 two-thirds ofits" exports of processed fu'it, and 80% :'--ts,exports of-cut .f towers. he indstries oftel use f orward co itme"ts der which . ;farme.rs; agree to.supply, and coppani :toflower-.productio :and export begun wiz'th .investment b.Da Onis -fir (DXa.nak;-.. .- :-rysathaumktan), .This a ny obtainod favorable.-credit terms, :: ow-costa easeon ,:,-,15,000.-acres, exclusiv grw-.ing, an trading rights for.-several:flowers for 8 years,. an so'me -t,ax-'e,.x,eiptions..:The Dan sh -Gove,rmentprovided a subsidy'foiroe-thid ..Of the nvestment. co,s't' .T,h,e. industry was so lucr,ativ,e, however,' that bythe mind-190 i there were. ore thoan.. l....t. fwt er pro duers.exp rte,r,s,.int ing sev.eral Africanwn fima. :.: - .-....The enyan experience.lndieates what an happen in a benign po.ti:cy. ioment ulth. ..:-:good transport'links,,..ard ,a. Co'e-rrentmehich welcomes investment y foreign cm ies.w.ith..- .:...-..-..e oodma-rketingnetwork -in industriat countries, and which providesrsome'support. However, '.t'o th'i-s' day-only:about SX of "the totaltrade is''acco,nted for by Kenya:African fir' IKenya : fricans have: haddiffi.culty a infing viable -enterprises because :low c:aptaliation, management weaknesses, and lack>of links 'to foreign impoeters, Where Afreten opan' es have'' Aworked, familymeners liv.ing in Europe have been imporcant in managi nipotts. Lcng'ter'. ,.'tradingarrangements between exporters.and importers-are therefore cr tical.. As a resultt attractIon of foreign experience and investment- ia ikely to be critieal lnitally',becaus'e-.. :'it provides the know-how, markets, and investment. .:Thi.s irfarmation is entirely%based:on work in progress by :teven Jatfef:.. ta) "Marketing .-. . Afrtc -ai Horticultural Bxportst A .Transactions.Costs Perspective," draft Vored Bahk Afrita::' ...Re.iont.echnIcat Pubtication, March'1982;i:.b)"How Private Enterprises organized Agricultural ...met. In eny a,Vorld Bank PRE'Workln per 8,199-. - 66 - B. Cotton 7.8 More flexible producer prices for cotton have been recently introduced in Togo, Benin, Cameroon, Cote d'Ivoire and Central African Republic, as part of Bank and Caisse Centrale-financed cotton sub-sector adjustment operations. In most cases, a floor price for cotton is fixed for the farmer by Government which can vary each year on the basis of the world price, but is intended to be relatively stable. Increases above the floor price are shared between farmers, the cotton company, Government, and a price stabilization fund managed by the cotton company. Government does not guarantee the minimum producer price. This system provides more price flexibility in response to world prices, more price pressure on the cotton companies to be efficient, and less room for politicized pricing decisions. The cotton companies, donors, and Government jointly manage these Funds, hence reducing the risk that Governments divert the funds to other uses. Simultaneous with this price reform in Togo, Benin, Cameroon, COte d'Ivoire and Central African Republic has been restructuring of the parastatal cotton companies, to reduce costs and increase efficiency. In this phase of reform, the cotton companies have been maintained as public sector monopolies. Results thus far are excellent in Togo and Benin, good in Cameroon and CMte d'Ivoire, and yet to be seen in Central African Republic. Most recently, a further drop in the world cotton price has put the schemes into jeopardy, as the industries' own stabilization funds have not had time to be accumulated, and prices to farmers have been cut to the limit. Further cost-cutting of the cotton marketing and processing operations is required. 7.9 Completion of the reform process may require in the long-term divestiture of the cotton companies to the private sector, allowing private investment in cotton marketing and processing, and complete freeing of cotton prices from administrative regulation. This would come about more easily in a flexible exchange rate regime, or with a fixed real effective exchange rate in rough equilibrium. Until this occurs, the reforms to date should be supported and completed, except possibly in Central African Republic where the move toward greater privatization may now be appropriate. No new cotton investment projects are foreseen by the Bank until after a real effective exchange rate change. C. Cocoa and Coffee 7.10 Cocoa and coffee are smallholder crops for which producer prices have been fixed administratively in all the countries except Guinea. Ey 1988/89, world prices had fallen to historically low levels and the stabilization funds had difficulty paying the higher fixed prices to farmers and to marketing intermediaries. In most of the countries, the result has been the recent collapse of the fixed price system. A limited number of licensed private marketing agents purchase coffee and cocoa at prices negotiated with farmers, which are well below Government's minimum fixed prices. Recently, the Central African Republic has agreed to reduce the role of the coffee price stabilization organization to one of export quality control, allowing the licensed private companies involved in the trade to manage their own price stabilization fund and to guarantee a minimum price to farmers. Prices paid to farmers could exceed the niinimum price if world prices warrant. However, many traders pay less than the minimum. Similar flexibility is being introduced in coffee and cocoa pricing in Togo, although this is still managed by the Government's stabilization fund. The Cameroon - 67- '.:..,;.,'' '' '"',''''. "" ~ ~ . . ...';" . .'"' . ' "' '''" ' ' ', ' . :.'..'....".'.'. '' '...... : :-. ,,..... . <:... ' he :l:i e l.t's ........... The main elemnt. of 8onina cotton se -Orefrm program.: GU pr ted by a consort Iuii "ons 'ncling JD* u (a tra fer ef r.ps-lllty af.''' otton ginning from :.-. ,- ,Wer .'s::rurat ,*w,to ,, s) to en ln.trial and commarcial entity irw,:. ..-SAPtA>; too a'rog-ra for SQNAPRA as wW as the other entities * R invoe ini Cotton oduon; CC) d * ni.*btf ton" nd management of SONAPRA; Cd) ..ts.r.ansfer Vf finertciol managew of the entire cotton ind to SONAPRA; .Ef,armer,s have :.received anf . V. : -e.nt of.'aboutf CFAF 7/kg tinked to':the's urluses of;.cbtained on'.-the cotton accounit o.ver.sthe.et two: yearf..Payments toa~ n over the. sam . i,p.,riod'} .haveaverag over. 13 .ionC-A' $nt and Government's 'hare,in,the surplus: -h ucs fth rg~t a bea *uc ha ain ran th onl _onr in..the ..~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. .........,.. ' sub-reion tht is nt indaiditono.mi,- an dsaca ,d,e,velopmnt of .thecountry^,.'T,he annual- ntftnaf alt return per ha of Smaltholder pantaons. is.e.stimated .at CFAF 190,000O after:: service.- The farmer's ...raet . ow. ver.. sessina 1truerdvlpet -proga. ienfBply ef strictprotectio of ga10ittdla. ra frestv -ard"the dynam is ofarcuirL settlement i.n t- d i.ore> it will b:e dinfficut tog'create l ' il ockndustrial .pLantations a-..-es n,ew ptes.of:rubberdeveopment,which:inthe future wilt need to b based'essentially on asiallholder and umd.ii-sc y ,private :ptlntatio n.- xisting estates should be privatized. (source: Robert Bronkhorst, World Bank, June 1992.) this. Full privatization will take some time because of the difficulty of finding foreign purchasers in the present policy environment. COte d'Ivoire has, however, allowed price flexibility for rubber, and has allowed SAPH to market its own rubber without going through the Caisse de Stabilization. This has worked well, proving that the Caisse de Stabilization is not a necessary element to efficient export marketing and commodity pricing. E. Non-Traditional Export Crops 7.12 Most other agricultural export crops are not submitted to price stabilization or marketing controls. It is instructive that these liberal regimes work well where they are applied in the sub-region. Pineapples, bananas, mangoes, flowers, and vegetables for export are largely uncontrolled by Government. F. Food 7.i3 Foodstuff produced in the nine countries competes directly with imported cereals, vegetable oils, and meat from Asia, Europe and North America. Roots and tubers as well as cereals are also imported from Zaire, Ghana and Nigeria; countries which have competitive exchange rates. The combination of an over-valued CFAF and the practice of - 69 - dumping from developed countries and Asia has caused a decrease in domestic market share held by agricultural producers of import substitutes in all nine countries. The recommended medium-term strategy is to establish adequate levels of protection which cover the price effect of dumping (generally 15-20 percent of world price), added to the ad valorem general level of tariffs (about 20-30 percent are recommended in most adjustment programs). For dumped products, this gives a range of 35 to 50 percent depending on the product. Until the real effective exchange rate is depreciated, the effect of exchange rate over-valuation needs to be offset by an import duty surcharge. One way to do all this is to apply variable import duties, with a base duty equal to the average rate of duty on all imported products, and the variation equal to the price reduction for the particular product caused by dumping. The problem with this recommendation is that import duties are easily bypassed. Strengthened customs services are required. Although such strengthening is being pursued in all adjustment programs, it is unlikely to happen soon. Variable import duties are being introduced for meat in Cote d'Ivoire and Cameroon, but thus far have not been introduced for other commodities. 7.14 With adequate protection from dumping and from the effects of an over-valued exchange rate, domestic marketing and pricing of food stuff should be free. The Caisse de Perequation in C6te d'Ivoire, and its function which is to assure a standard domestic price to all producers of rice and sugar, should be liquidated, as should similar organizations in the other coastal francophone countries. Free trade in food stuffs could be established between CFAF countries and their neighbors to encourage regional agricultural trade. The `mport duties described above should therefore not be applied to intra-West African agricultural trade. G. Divestiture of Agricultural Parastatals 7.15 As discussed above, parastatals own rubber and palm oil plantations, cattle ranches, sugar estates, and industrial forest plantations throughout the coastal francophone countries. Most processing facilities for these products, as well as for cotton, rice and wheat are owned by Governments. Governments also own marketing enterprises for export crops, rice, wheat, and some farm inputs. Privatization should start with those commercially-oriented enterprises which are financially weak and which are least efficient. In nearly every country this includes most agricultural and agro-industrial parastatals, except the cotton companies. Divestiture appears best done by sale of assets (individual plantations, processing plants, trucking fleets). The reason is that the commercially-oriented parastatals have in the vast majority of cases performed poorly. zi Private enterprises perform generally better. An 2/ The evidence is set out in World Bank, Privatization: Lessons of Experience for Bank Group Lending, Country Economics Department, March 12, 1992; and World Bank "Strategic Agenda for Private Sector Development," Africa Region, Industry and Energy Division, Note No. 11, March 1992. Both studies cite abundant cases of conversions from public sector to private sector ownership which caused an improvement in enterprise performance. - 70 - analysis undertaken by the Bank of the impact of privatization on welfare covering 12 firms in 4 (non-African) countries showed it tc have improved welfare 92 percent of the time. The improvement resulted from increased private investment, increased productivity, improved management and better prices. In Africa, British American tobacco performs better than parastatal tobacco companies, and the private coffee processing companies of Kenya perform better than the public companies in both Eastern and Western Africa. Unilever's palm oil plantations in Cote d'Ivoire perform better than the Govemment's plantations. The worst- performing cattle ranches in Africa have been govemment-owned; such as in Benin ahd Gabon. Privately-owned ranches throughout Africa perform relatively well. The parastatal cotton companies function relatively efficiently in Togo, Benin, Cameroon and CMte d'Ivoire. They, therefore, are the last priority for privatization, although in the medium-term they too should be privatized. 7.16 Privatization of an agricultural parastatal is sometimes best done by sale of assets such as individual plantations, processing plants, or trucking fleets. Sales of parastatal assets might also be undertaken by auctioning the whole or parts of such enterprises. In this way, the market decides on the sales price. Enterprise valuation by Govemment before sale is difficult and often leads to over-valuation. In these circumstances, few private investors will be interested in purchasing. Transparency of the transaction, however it is arranged, is critical. One alternative to auction or sale to a single private investor is to sell some or all of a parastatal's equity shares to the general public. Or shares can be partly given to employees and/or to farmers supplying the enterprise. a/ In difficult cases, privatization might begin with a joint private-public venture. Govemment could sell its shares slowly over time. In the most difficult cases, where private sector investors are not forthcoming, privatization of management can be a good first step, but it works best if full privatization is set out as the final objective. Where excessive foreign ownership is a concern, giving some shares to employees and reserving some for sale to nationals, may help. Divestiture can also be helped by initial restructuring aimed at cost reduction. Restructuring should include legal, organizational, and managerial changes. If labor shedding is necessary, it is often best handled by the state. Changing management and settling liabilities of the parastatal are standard measures in successful privatization according to the studies reviewed. The support of workers is best obtained by subsidized shares in the privatized firms and by the granting of adequate severance packages. H. Savings and Credit Policy 7.17 Because of the recent absence of loan funds and of liquidity, private investors in agriculture and agro-industry will require term credit to invest, when the incentive regime improves. Therefore, when the incentive environment is right, mechanisms should be in place or should quickly be put in place to channel loan funds to private investors through the banking system at unsubsidized rates with Banks and borrowers sharing risks. This will require banking sector reform, since the present situation will not permit the required 2/ See G. Nankani, "Techniques of Privatization of State-Owned Enterprises," Vol. HI Selected Country Case Studies, World Bank Technical Paper No. 89. - 71 - response. Specialized parastatal agricultural credit institutions of the type dominating agriculture credit in the coastal francophone countries have failed in every single country of Sub-Saharan Africa, and are therefore not the proper vehicle for pursuing this objective. This failure in the coastal francophone countries resulted from easy politicization of these institutions by their Government owners. This led in turn to heavy lending to the political elite, using non-financial criteria. Political constraints to loan recovery, nd political pressure to maintain low and financially unjustifiable interest rates contributed to the failure. 4/ Undue reliance on external sources of subsidized funds facilitated these abuses, and made nearly all of the credit schemes unsustainable. The result was poorly-performing portfolios, low loan recovery, and heavy financial losses. 7.18 To assure proper management of banking services, commercial and investment banks which are at least partly privately owned have to be brought it, to provide lending to agriculture. In order for such banks to be interested in agricultural lending, lending must be profitable. This means allowing adequate interest rate margins to cover risks. At current rates of inflation equal to 2 to 5 percent p.a., interest rates on the order of 15 percent for agro-industrial investments, and from 15 to 25 percent for farming may be likely. Such high rates of interest should not be set administratively by Government. Government policy should allow lending institutions to charge the interest rate necessary to cover all costs and to provide funds needed to cover loan defaults. Such lending rates are likely to be high, at least initially. This will cut off some private investment. The altemative however, would be for Government to decree lower lending rates, which in the past has been a major cause of insolvency. Banks will also have to be able to count on the legal system to honor default contingencies so they can recover on bad loans. 7.19 Other important issues for which immediate solutions are not apparent include (a) how to serve farmers who lack conventional forms of collateral; (b) how to overcome special constraints to credit eligibility by the large mass of poor and women farmers; and (c) how to overcome heavy transaction costs of rural credit operations in most of the coastal francophone countries caused by the small and geographically dispersed nature of farming and poor communications links between town and countryside. 7.20 Several recent World Bank-supported credit projects suppurt farmer-owned cooperative credit institutions, eliminating govemment management. The Benin Cooperative Credit Project now underway is- a good example. The project supports cooperative credit institutions owned and managed by subscribers from Benin's rural areas; these are autonomous from govemment. Lending is based on savings mobilized by these Banks rather than on donor credit lines. Donors provide technical assistance and flr'ancing of physical structures, as well as political support. Interest rates are set by the Banks themselves, and are now at high levels to cover costs and risks. A similar program is under preparation in Guinea. Other good examples are Rwanda's Banque Populaires, Burundi's Cooperative 4/ See World Bank, Rural Financial Markets, A Study Proposal, October 1991, Africa Technical Department. See also World Bank Operational Directive 8.30: Financial Sector Operatons, February 28, 1992. - 72 - Credit Banks, Cameroon's Camcul and Ghana's Rural Banks. Ghana's Rural Banks involve government equity investment and minority participation in management as a way of accelerating development. These experiments in non-Government or limited Government involvement in rural banking appear to be applicable in the coastal francophone countries. 7.21 Private commercial banks may also be assisted to develop rural lending capabilities. Lines of credit through apex organizations such as Central Banks, on-lent to qualified commercial banks, in turn on-lent for agriculturally-related (or private sector-related) investments, will be desirable in situations of capital scarcity for private investment. Donor financing of loan guarantee funds may be appropriate, initially, to reduce the risk of lending by private banks entering into the agricultural sector. When combined with financial market reform, technical assistance to private banks to develop agricultural lending, and other pro- active private sector agricultural development efforts; lines of credit may contribute greatly to private sector development in countries which have had successful adjustment programs. There are as yet no examples of such World Bank projects in the coastal francophone countries, in large part because the policy environment is poor. However, projects are under preparatior in Guinea, Cameroon, and CMte d'Ivoire. 7.22 In several countries, the World Bank is helping to prepare projects with the objective of developing private sector agro-industrial, agricultural marketing or export crop investment. Lines of credit through commercial banks would finance this investment. Although the focus is on private sector investment in agriculturally-related activities rather than on developing credit institutions, satisfactory financial sector policy or a satisfactory financial sector reform program is a condition for moving ahead as is satisfactory macro- economic and agricultural policy. The major issue is the validity of targeting credit to specific sub-sectors. Targeting to agriculture has worked well in China, Japan and Korea. The consensus of agricultural experts is that such targeting in the context of a reforming financial sector, using private and cooperative banks, at un-subsidized interest rates, is necessary to stimulate commercial agriculture in the coastal francophone countries. I. Private Sector Investment Projects 7.23 In addition to assisting cooperative and commercial banks to lend to agriculture and agriculturally-related industry, there are a number of areas in which donors can assist private sector development in the coastal francophone countries once the policy environment is appropriate. Assistance can be provided to stimulate equity investment in agriculture through the establishment of equity investment funds and the creation of capital markets. This is best done by IFC or grant donors though the Bank can and will help. No Bank financing shob'd be directed to equity funds, but donor financing can be mobilized. Private sector suppoIt projects can also contain assistance to private or mixed private and Government professional associations and trade associations, and privatization of agro-industrial parastatals and plantations. 7.24 Private sector support projects do not ordinarily select specific agricultural or agro- industrial products for special emphasis. There is an enormous number of agricultural and agro-industrial products that have potential on world and domestic markets. Obvious winners - 73 - include rubber, arabica coffee in Cameroon, * | . many fruits and vegetables (including some 2 .IkMBA... that are already exported from Cote .... ... . d'Ivoire such as bananas, pineapples, and ' . t Ex1ort mangoes), flowers, cotton, livestock r; tonProlec wtit AMrwove.1 th.e'vr-ent (including small ruminants), forestry R .1 fOPr:ve t lJflttif products, fish, and comm-rcial food crops and cap rovIid "'h quao"nnttes I4 oe for the local market. Generally, the -.**j# ' nd nne t o proposed projects would finance thIs tw the r'oJsOcr a investments by large and medium tCh.m.. i- of iierco and professional enterprises seeking to develop one of these :r-: _iertio and. assis t evato : o commodities. These enterprises could be :-o i:dtfYeid whenever possible by priYate concentrated on plantations, or be enterpr.s.. .. processing enterprises using contract : e:tl iop. a piit8 farmers, or be purchasers of farm products >tk ot elmen t on the open market. In some cases, the ludes a crehensive set 5f. easur development potential of a commodity will I ...ta.lsto.t be so great as to justify a project which r-the nerer hadio Aoo.les. finances private investment in that ctInat*; iha P.roitU e commodity alone. Possible examples are a so t p Xndu rubber, fruits, vegetables, and cotton. Such .e.e. ....rodu..i. xre projects were supported in the past, but : e were completely Government-owned. The mf r r major difference in the future is that they :oratto oGvr~n~eda would be privately-owned. 7.25 An example of such a project is the : bY the ongoing Cote d'Ivoire rubber project fpfivate conau ... ..;.. . .. .. .. . .. ..... ..,o :: ...X ...s. par^ w ,,,~~~ Coco in.he.ors0-e5 150D ntecttngx-tUrhenrim.iCDVfrgaM- . ... n ...* o t. ;.::. :ae ch ..ttut. C.a :a i ri.t.. RC. e. . .ex.t-ensicn hree t *.a:b..i.n 19.6c e.r.at thron thee pviastatat agecie A tMA h xthie orest. ritfon6' DT~I h otngei0Nrhr ein CIDV for grains in the outh To reserch intitute.~o~.ibare cc CJC n DESSA) A.uod If itd f Orm of the T&Y etension sstem was ntroduced with reglar exe sion gnt visIts to vont6ct ...f.> ar.ers, esi0gnof extension:messages' ased on trt... was por. in,:.4ti.y so messagesvwore ch,fn.gd).^, eof dem nstrat6iW t ot,in firmers.f ields, continuous s;fXtaif .fttsa'in end survfision o f *fhthe field . Iortant e isges .retated to: ~on-r1, we' rof pimlipt I oed ropn These> si e technorl.fgical' irmt.' ee converted i.nt p.atfal messages which......... . er by level of ..farm sophistication an .aigro.at:4timai toe The Fihae bent adopted byabut .. . O00 ...5 .fa .4. .1198.9/90. t60X of f .arms) fcoared to:X adoption of gimilar messages befor. this l; ..extesion sy steml bea ln. 15./86. M.'easuremnts of yield finpact, thogh- imperfect, a f....s.^,.t yle.ldf lorovements of...about .5Z~ ,..fSO.. ;.r' .. r , T - for irrtigted ric. 15 . . : .;te, l b.if n.d.. w to 10w fo:r coffee, .Thee l'creaese .ar.f st a l.. h.or.t .-of r.esearc. . tation yield. tn.fc.I. g . m..'. finig ..otential:. ,for ...I..'r.o.v..f t:. l .nfor..tufleteLy .lre'ts eoeom probtwvm h..veFesutted in anie,xtremel.sharp-de. line- l-ocal 1 Jfitif for extension. Despite t...ia .:ovetrmfe'* ai.been -r.etuctant un.ti I :recent.1y..to'.dons ize the: system to a smatler, more' u"ioptyarg tructure a ;f.'.t.o reallocX,a.t,e fundfro staff sataries: t operations. fA. _ rei% petonshe bee gr=l cura lad. .Ttniae h mportance. of a . ' *eslisti,al Ly.si..ed ts system4 tailred :. lkely :: .:.:: ' : :: ::- . avaiabiit..... :: i .:. - 84 - 8.23 As a result of these constraints, women often need advice focussed on simple labor saving technology, food production as opposed to export crop messages, low input messages (due to credit constraints), post-harvest food storage and processing messages. Simple labor saving devices for transport, water pumping, and crop husbandry are often popular with women because they save time. It is probably through agricultural extension that the special role and needs of rural women can best be addressed. D. Farm Input Supply 8.24 Technology dissemination requires efficient mechanisms for the sale of farm inputs, equipment, and livestock. Governments in West Africa have failed to prpvide such mechanisms when Government itself has taken over this function. The import, domestic manufacture and marketing of farm inputs and investment goods, as well as inputs for livestock should be left primarily to the private sector. Govemments should have a facilitating role. Government should ensure that the regulatory environment does not discourage private sector participation in farm input supply. It shou1J also provide advice through the extension service to farmers groups interested in purchasing and distributing these goods to members. Govemment research and extension services, along with private voluntary organizations, should be active in developing prototypes of inputs and investment goods (new hand tools, animal-drawn equipment, crossbred cows, grain storage facilities, energy efficient stoves, hand pumps, small-scale agricultural processing technology, etc.). These innovations can subsequently be produced and distributed by the private sector. Production and marketing of farm inputs and investment goods is among the most promising for the development of the African "endogenous" sector, since these products tend to be relatively simple to make and are relatively small. They are easily handled by small entrepreneurs and tradesmen. The development of a free market in farm inputs and equipment, unfettered by Government regulation, except for that necessary to protect the environment is required. E. Livestock 8.25 Livestock is an important sub-sector of agriculture, responsible for up to 40 percent of agricultural GDP in several of the sub-region's countries. There are several different livestock systems in West Africa. An important one is that of the pastoralists, based on mobility of stock between grazing areas, following the rainfall. A second is smallstock (goats and chickens primarily) on smallholdings, based on feeding crop residues to animals. A third is cattle ranching. A fourth, practiced only to a limited extent is mixed cattle- cropping. In this system, animal feed is based on fodder cultivation and feeding crop residues to catde. Milk is produced as well as meat. Cattle are used for cultivation in some areas. Most analysis finds that livestock development is rudimentary throughout the sub- region. There is enormous potentdal for growth, based on these several livestock Gystems. 8.26 Govemment-managed livestock development projects aimed at capturing this potential have been particularly unsuccessful in pastoral areas and in parastatal cattle ranching. In pastoral areas, the failures resulted from poor understanding of pastoral production systems, and the assumption that well-intentioned Govemment efforts to control pasture use, improve - 85 - animal health, and managc livestock markets, could help. These efforts had little impact. The parastatal ranches had the same problems as other commercially-oriented parastatal operations, and nearly always failed. Dairy development in East Africa, animal health and animal traction in West Africa, were only a little more successful. 8.27 A survey of ongoing Bank-financed livestock projects found the most promising livestock investments to be: (a) smallholder cattle and sheep fattening; (b) poultry production; (c) basic animal health care including support for private veterinarians; (d) animal traction for cultivation and transport. Among the least promising activities found were: (e) water development in arid rangelands without an appropriate institutional framework (in part because it causes over-grazing around the water holes); (f) support of Government veterinary services including vaccine production; (g) artificial insemination using liquid nitrogen; and (h) support 0 Government ranches and breeding farms. 2' Pastoral Development a.. ...... .. . ... | ..... 8.28 A new approach to ivestock X '.e C..tra. Afl.a. t.. t..he... e.......I development in pastoral areas was f b developed several years ago, in which . t... M al ve ru. .. project services and pastures are managed p.ti by the pastoralists themselves thro mh pastoral associations. This approach emphasizes support to private veterinarians Source: Cornltis de Haan, unpublished note, (rather than exclusive support to public "Livestock Development and Bank Lending in Sub- Saharan Africa, Wortd Bank, Africa Technical veterinary services as in the past), the sale Department, 1990. by the associations of inputs needed for livestock raising (instead of sale by Governments), private sector livestock marketing (rather than public sector), and pasture management by the associations. Traditional methods of I/ Comelis de Haan, "Livestock Development and Bank Lending in Sub-Saharan Africa," World Bank, Africa Technical Department, 1990 (unpublished note). - 86 - dispute resolution and responsibility are incorporated into some of these projects. The associations should be broad-based so as to involve local communities. Preferably they are to be based on traditional associations. 8.29 The more limited role of Government should be focussed on quarantine, epidemiological monitoring, research, and extension. Livestock projects employing variants of this model are currently supported in Central Africa Republic, Guinea, and Cameroon. They show some success, but are highly dependent on the quality of association leadership. A/ In some cases Government officials view these associations as competitors, and consequent Government efforts to manage the associations are a continuous problem. Another issue involves the conflict between farmer settlers encroaching on pasture land, and pastoralists. In many cases farmers obtain land simply by settling on it. Animal Health 8.30 Minimal animal health interventions have high productivity because of the possibility of reducing losses caused by disease. The basic technology is available to control animal diseases, but is not applied because of poor veterinary services. Improved animal health care will lead to better livestock efficiency (better conversion of available feed), and higher off-take (sales by farmers). Animal health initiatives which work include Bfa s vaccination schemes in CAR, Cameroon, e a s a and Guinea (as well as in Nigeria, Senegal t__ and Chad). The aim should be to privatize . a ans fo. thei . veterinary services to the extent possible, psoti R.f rr - while focussing public services on livestock i Qf s f M research and extension. It has been found that livestock owners are willing to pay for .. ...t... ..ist -s .. good veterinary services. Where livestock ... .. ..storai owners are poor, and are for the most part *seo era er Iy:2ervtved unable to afford private veterinary care, eton; y private non-professional animal health care .S 'f.SS. S .f..i..S. .... assistans can be effective. These "para- X .vtp.n i macla professionals' or auxiliaries presently . ~ anzt~adiearemngmn provide animal health care for village eo.. poultry in Burkdna Faso, work- oxen in Chad, and serve nomadic livestock owners s ,,,,f n g m in CAR, Niger and Somalia. These ...J$9 ...........t.n. auxiliaries need supervision and training by L a professional veterinarians. Cornelfs de llaan, "Livestock Devetopment and Bank Lending In Sub-Saharan Africa, op. cit. This is a finding of the study "Resource Management and Pastoral Institution Building in Dryland Areas," World Bank, Africa Technical Depart1nent, Agriculture and Rural Development Series No. 3, June 1992. - 87 - Cattle Fattening and Poultry 8.31 Smallholder cattle fattening projects have been successful in Nigeria, Cameroon, and Senegal with stall feeding and fattening of small groups of cattle using agricultural by- products. This is a good model for introducing smallholders to livestock raising, and can be combined with animal traction. Both credit and feed are required. 8.32 Both industrial and smallholder poultry production can be developed in many countries when there is adequate supply of feedgrains. This should be an element of research and extension programs, and should be fully private sector-owned and operated. F Agricultural Education 8.33 Most West African countries have agricultural training institutions which produce large numbers of inadequately trained people, who typically find their way into the civil service. The impact is negative in several respects. The training is often not good enough to permit a significant contribution to agriculture. The cost of training and subsequently the costs of under-utilization of trained manpower in the civil service are high. Addressing these issues requires: (a) better quality training of fewer agricultural technicians who will serve as both staff or owners of private agricultural and agro-industrial enterprises, and staff of the research, veterinary and extension services; and (b) much better training of high level agricultural researchers and policy makers. Agricultural training is an area in which the Bank has provided virtually no assistance. The Bank could contribute to agricultural education projects designed not to turn out large numbers of poorly trained technicians, but to turn out the numbers of agriculturalists and veterinarians with the required skills, demanded by various private and Govemment services. More emphasis is needed on training content and on improving the capability of Africans to manage agricultural education. IX. DEVELOPMENT OF FARMER ORGA2NIZAThONS: EMPOWERMENL OF RURAL POPULATIONS A. Inportance of Farmers Groups and Associations 9.1 Group action is traditional in West African societies. This tradition needs to be built upon to advance agricultural development. Many groups already exist for managing land, for cooperative marketing and input supply, for developing savings and credit societies, for sharing livestock sc vices, for undertaking conservation work, and for other purposes. 9.2 Cooperative-owned enterprises are the common formalized farmers organization, recognized by law in rtost countries. Cooperatives undertake agricultural marketing, processing and input supply activities. They may be particularly important when parastatals are closed as part of adjustment operations, and prior to the development of strong private sectors. But even wken there is a private sector, cooperative marketing, input supply, and processing enterprises increase competition, and thereby benefit farmers. Cooperatives can be efficient, using low-ost cooperative member labor, motivated by self-interest since the - 88 - cooperative members own the enterprise, Cooperatives are often found to provide an education function to members, in crop husbandry, credit and marketing. 9.3 Informal farmers groups can and do undertake all of the activities of cooperatives. In many cases, informal groups existed in ttaditional societies, and these traditional groupings (clan, tribe, etc) can in some cases manage agricultural service s and form the basis of farmer organizations. They are often effective contact points for agricultural extension and research services, and a source of feedback to these services. The partnership of farmers with Govemment in managing services might also help to disseminate simple labor- intensive agricultural and processing technologies, widely spread in the population. This appears to be happening with women's groups in Cameroon and C6te d'Ivoire for example. Water users groups have been found to be effective management organizations for water distribution at the field level in irrigation projects. Pastoralist associations are effective management organizations for pasture management and livestock input supply. Cooperative savings and loan associations are sometimes effective financial intermediaries. B. Problems of the Past 9.4 Farmers' groups are generally regarded in project design as vehicles -or the provision of services rather than as desirable objectives in and of themselves. A common mistake in donor assistance to cooperatives and to farmers groups has been the view that such assistance should be provided through Government, and that the objective is to provide a service of some Kind to farmer members of the group. Government staff were often placed in cooperatives as managers and financial controllers. Government funds were granted to cooperatives for investments, and farmers were not encouraged to put up their own equity. This approach redcuced members' management autonomy anu responsibility. It also did not consider the interests that the farmers might or might not have in cooperating; the objective was the service to be provided. The result was commonly that the cooperative operated like a Government parastatal, with only tepid farmer interest. Examples of these errors are found in most cooperatives throughout the sub-region. Donors have facilitated this approach by providing their funds for cooperatives through Governments, and by supporting ministries of cooperation as supervisors of cooperatives. A World Bank Operations Evaluation Report found that cooperative and group development suffered most when these organizations were used simply to facilitate p ject implementation without developing their capacity to assume management. Where farmer management, autonomous from Govemment, was allowed to develop, and where the farmer organizatdon/cooperative had a business reason to exist (i.e. made money for its members), there was success. I/ I/ "World Bank Experience with Rural Development, 1965-86," The World Bank, Operations Evaluation Department, Washington, D.C. 1987. See also, Pekka Hussi, Josette Murphy, Lyle Brenneman and Ole Lindberg, Rural Organizations and Pardcipatory DevelQoment, (Draft), World Bank Technical Paper, Africa Technical Department, Agriculture Division, World Bank, May 28, 1992. - 89 - C. The Future: Farmer Organizations as Autonomous Farmer-Managed Business Enterprises 9.5 There has been a recent increase of rural organizations other than cooperatives, as Governments have introduced more liberal marketing and investment regulations. The donors have begun investing more in cooperative enterprises and in informal farmer groups. One example is the effort by the French Caisse Centrale to support informal farmer groups. The core of the approach to supporting farmer groups of any kind is to establish an enabling environment for cooperatives and for farmers groups, where Governments do not restrict the scope of business activity by cooperatives. An enabling environment for cooperatives will be similar to that described in Chapter VII for private enterprises. On the other hand, farmer organizations should not be given monopolies for crop marketing, credit, or input distribution, as this inhibits efficiency improvements by the cooperatives. The regulatory environment should be very limited. Cooperatives or farmers groups should not for example be required to undertake economic and social functions peripheral to their business activities. However, legal protection for cooperative members, and instruments for removing unsatisfactory managers are needed. 9.6 Cooperatives and farmer organizations, with well-planned business activities, can operate efficiently without subsidies, and pay commercial rates of interest on loans obtained for business activities. Good management and financial strength are as impoixant for cooperatives and farmer organizations as they are for private enterprises. Cooperatives are unlikely to function well if farmer members have not made a financial or other contribution, creating a stake in them. Democratic control (one member one vote), and equitable distribution of cooperative income are also of vital importance. This is because cooperatives and other farmer organizations can only work if there is a felt need by members for them. There wir not be such a need if members obtain no benefit or have no voice in the association. Training of management and development of functional literacy for members are areas in which donors can help. This might be done through a form of cooperative extension, providing training at the cooperative site. 9.7 Following at least part of this philosophy, several donors are supporting "cooperative movement to cooperative movement" assistance in which cooperative associations from industrial countries provide advice and support to those in African countries. The French, German and U.S. bilateral aid agencies support this approach, and several international associations are involved (The International Co-operative Alliance, the World Council of Credit Unions, and the U.S. National Cooperatives Business Association). This helps avoid excessive Government interference. X. NATURAL RESOURCE MANAGEMENT, FORESTRY CONSERVATION AND LAND TENURE SECURITY A. The Problem 10.1 Naturl resource management and forest conservation are needed to preserve the productivity of land, water, forest, plant and animal life in the face of the widespread - 90 - environmental degradation in the coastal francophone countries summarized in Chapter II. This degradation is characteriied by rapid deforestation, disappearance of plant and animal life and extinction of some species, soil and vegetative degradation, and increased sediment flow as watersheds are denuded of vegetation. 10.2 The most important causes for natural resource degradation are agricultural encroachment, infrastructure development and timber and fuelwood harvesting in environmentally sensitive aeas. Crop land is expanding rapidly (Table 4.1). Additional crop land comes largely out of forest land, which is being destroyed rapidly (Table 2.6). Growing and migrating human populations as well as international demand for timber drive this process. Donors, including the Bank, have sometimes financed agricultural projects which facilitate the substitution of crop land for forests and pasture. 10.3 Studies have found that deforestation is positively related to population pressure if policies are favorable to agriculture, but deforestation is negatively related to the use of modern farm inputs. p The latter suggests that agricultural intensification slows deforestation, because it permits greater output without using more land. Government policy and market failures, including open access land tenure systems, exacerbate the degradation. Government forestry and park services have not been able to deal with natural resource and forestry conservation, because of poor management, inadequate funding, inadequately trained staff, and a policy environment that often encourages the destructive practices. Open access land tenure for example has been caused in part by Government land nationalization which displaced traditional forest people who had some incentive to maintain forests, when customary land rights conferred ownership of the forest on them. Governments have not been able to substitute traditional people's forest management with effective Government control of the forest. As a result, the forests are often exploited by loggers, poachers, and farmers who do not own the forests, and hence have little incentive to preserve them. Another result is that open-access forests allow free harvesting of woodfuel. The resulting price of woodfuel on urban markets is lower than the environmental cost of extracting the wood, or the cost of replanting. Woodfuel prices are often so low that alternative sources of household energy cannot compete unless subsidized. Woodfuel is not replanted in this situation, until transport costs to consuming centers exceed replanting costs around those centers. 10.4 Another set of Government policies which encourage excessive forest exploitation include low stumpage fees on logging, low export taxes for logs, and generous logging concession agreements providing few responsibilities for loggers. This has stimulated more logging than is ecologically sustainable in most of West Africa, and in parts of Central Africa. With weak supervision by Government forestry services, the result is widespread abusive logging and felling. I/ Kevin Cleaver and Gotz Schreiber, The Population. Agriculture. and Environment Nexus in Sub-Saharan Africa, World Bank, Africa Technical Department, Agriculture and Rural Development Series No. 1, May 1992. - 91 - B. Dealng with the Broad Causes of Natural Resource Degradation 10.5 In most of West Africa the most important actions to deal with degradation of natural resources are to: (a) reduce population growth; (b) intensify agricultural production at a rate which exceeds population growth, in order to encourage sedentary agriculture and livestock raising, and to discourage shifting cultivation; and (c) develop other industries as an alternative source of livelihood for people now engaged in non-sustainable resource extraction. 10.6 These aspects of natural resources management strategy are outside the immediate preview of natural resource and forestry projects, but without success in these domains, natural resource management appears doomed. C. Fuelwood, and Forests Fuelwood 10.7 Woodfuel is expected to continue to provide the main form of energy for rural people for several decades. Rural needs will need to be met increasingly by trees planted on farms and in rural areas. Forestry and agro-forestry needs to be a much greater focus of agricultural research and extension. Urban supplies will have to be met from: (a) farmer and industrial wood plantations; (b) conservation: fuel-efficient stoves, more efficient wood harvesting; and (c) progressive substitution of other fuels. This will require incentives, since it is people rather than Governments who must act. The most important incentive is land ownership. People are more likely to harvest fuelwood in a manner consistent with long-term maintenance of wood, if they own or have exclusive use over the land. Land tenure is discussed below. Forests 10.8 The major action needed to conserve forests is to reduce farmer encroachment through agricultural intensification outside forest areas, reduction of population growth, and poverty alleviation. In addition, improved management of forests for multiple uses will be required. These uses include tourism, timber, non-timber products, mining, and preservation. It is unrealistic to expect that all forests can be conserved as they are now. In West Africa, the adage "use it or lose it" strongly applies to forests. If people and - 92 - Governments think that there is little benefit from forests, those forests will be converted into agricultural land. 10.2 The degree to which sustainable management of primary humid forests is possible within logging concessions is a highly contentious question. Although the evidence available at present may not be sufficient to make a definitive and categorical statement, there is increasing support among experts for prohibiting logging in intact primary hurmid forests. Logging should be stopped in ecologically delicate and in environmentaly important areas. There clearly should be no logging where it is not possible to log on an ecologically sustainable basis. In secondary forests (those consisting of regrowth where primary forests have been logged or otherwise significantly disturbed before), on industrial plantations and on tree farms, logging in accordance with sustainable management practices should be encouraged. These areas should in many cases be specifically designated and managed as permanent sources of timber, pulpwood and woodfuels. Logging companies unable to log in a sustainable manner should not be given concessions and permits, even in secondary forest areas. 10.10 Loggers will have to improve their performance and show themselves to be responsible in their logging activities. In order to induce this behavior, logging concession agreements providing for logging company responsibilities as well as rights will be necessary. Payment of taxes should be more the norm than is tax evasion. Management of secondary growth forests and industrial plantations would then become more important in the share of the business of logging companies than mining of primary forests. Where governments and local people choose to continue to allow logging in primary forests, management of secondary growth should still be encouraged by levying much lower taxes on trees taken from replanting schemes and from industrial plantations than on trees harvested from primary forests. If international prices for tropical wood increase as currently projected (Chapter 6), the profitability of forest plantations will increase, making such an approach even more feasible. 10.11 Taxes on logging in those primary forests where logging is still permitted should be increased, through area-based taxes levied on concessions. Concession agreements should be auctioned to t.. highest bidder. These measures would serve to return more of the benefit to the community and, in effect, impose a charge on the companies for the public resource (the forest) exploited. Taxes should be high enough to reflect the economic and social value of the forest, including the environmental services it provides, and the costs of rehabilitation if the public sector or the local community undertakes that rehabilitation. 10.12 The above restrictive environment for logging must be made consistent with management of the resource by local owners. Governments would set the framework: standard concnssion agreement, establishing and collecting taxes and stumpage fees, creation of conservation areas. But implementation would be undertaken by local communities, with Government technical support. This means that ownership of must of the forests should be held by loal forest populations. Only through ownership will local populations have an incentive to conserve the forests. Extension services, including those provided by the - S3 - forestry department, are of vital importance to helping these populations to manage the resource. 10.13 Governments will maintain certain areas as Government property: parks and certain forest lands owned by Governments for several decades (such as the gazetted forests in West Africa). Local populations need to participate in management and planning even in these areas, but within a more restrictive framework since traditional land rights have in many cases long ago vanished, and land will continue to be the responsibility of Government. However, even in these areas, collaboration with local people will be necessary. Continued hunting and gathering by traditional forest users is not inconsistent with conservation, even ir- Wks. D. Pastureland and Dryland Areas 10.14 Reviews of natural resource problems in the Sahelian Zone suggest several requirements of sustainable management. These include: (a) the research and extension of appropriate crop and livestock technologies which are both soil-conserving and profitable for farmers and herdsman; (b) land tenure reform to eliminate open-access (as above); (c) reduction of population growth through out-migration; and (d) promotion of non-agricultural rural industries to reduce the pressure on land. It has been suggested in some literature that a return to holistic and integrated planning and execution be undertaken for the dryland areas. This would mean a return to the concept of integrated regional development based on land use plans that allocate land for pasture, cropping, reserves and parks, fuelwood production, forests and other uses. Agricultural and livestock technology would be developed to suit each particular agro-limatic situation. The technologies would include soil conservation. 2i 10.15 Local initiative and management need to be mobilized to manage pastureland and dry areas. Where traditional authority still exists, group land titles should be provided. It is through the ownership of land and of natural resources that local participation can be mobilized. In better-watered grazing lands, individual ownership of ranches will be possible, but this will not be generally feasible on dry lands due to the patchy availability of water and the need for seasonal livestock movement. But exclusion of others - elimination of open- access conditions - is essential. At the same time, local communities and individuals need 2/ Walter Lasigi and Bengt Nekby, "Dryland Management in Sub-Saharan Africa: The Search for Sustainable Development Options," World Bank, Africa Region, Environmental Division, November, 1991. This approach is also suggested in Cleaver and Schreiber, op. cit. - 94 - to be taught to plan and manage resource use. Communities will require funding to do this (such as the micro-project funds which some donors, the EEC in particular, have begun to establish). Technical assistance will have to be provided to communities to assist them in this planning and technical assistance should come through extension agents, knowledgeable about conservation techniques. E. Land Use Planning and Land Tenure Land Use Planning 10.16 Because of the multiple uses of forests, pastureland and cropland, there can be no substitute for planning. Land use plans should identify conservation areas, parks, areas allocated to sustainable logging, farming areas, grazing areas, and areas allocated for infrastructure development. Agricultural technology is location-specific and should be identified within these plans. Land tenure problems, fuelwood problems, and even cultural patterns defining human fertility are location-specific. Regional plans should identify these problems. 10. 17 Land use planning, regional planning and integrated rural development programs have not worked well in most of Africa, in both forest and non-forest areas. The reasons for this included the excessive compl-xity of such plans, lack of Government capacity to prepare these plans, and lack of capacity to implement them. Frequently there was a lack of incentive to cooperate for people living in the areas for which a plan applies. Land tenure issues, identification of appropriate agricultural technology, participation by local people and by the private sector, and establishment of adequate price incentives were completely neglected in past rural development projects. What was nearly universally applied was an engineering solution, implemented by Government administrative services or donor project management. A new approach is necessary both for planning and management. 10.18 People participation. Local people must participate in both the planning and execution of land use plans. This is best done through their ownership of land and of resources on that land. Ownership creates an incentive to conserve. Loss of ovnership creates an incentive to exploit without investing. Government should therefore divest most forest, crop and pasture areas to local people, assisting them through Government forest and extension services to manage these resources properly. Traditional owners could obtain group title. In forest areas, management plans allowing some industrial logging and artisanal logging on a sustainable basis, setting the level of rent, specifying infrastructure development, allocating land for agriculture, could be prepared with Government and NGO assistance. Local populations could exploit fuelwood, hunting and gathering, and agricultural activities. They would also collect the rent from logging, or a share of it. This would create an incentive for local people to conserve the forest, in partnership with Govemment. Pastureland and cropland use is more straightforward: use would be the exclusive right of the owners. - 95 - Land Tenure 10.19 Incentives for planting and conserving the land can be created firstly by eliminating open-access land and tree tenure, providing security of ownership to traditional or private owners. People will have an incentive to replant fuelwood and to conserve forests if they own the land and the trees on the land. The same land tenure problem, and solutions, are applicable to agricultural and pastureland, Strengthening land tenure security will require that Government ownership of farm laid, forests and pastures be reduced. Where traditional tenure arrangements can continue to work, traditional communities should be provided with community tenure security. Land within the community can continue to be allocated according to customary practice. Traditional tenure arrangements need protection under the law. This can be assisted by mechanisms to provide land titles to traditional communities. Where traditional mechanisms have completely broken down, land titling is likely to be necessary. This should be provided however, only on demand. 10.20 Actions to strengthen land tenure security will require Government mechanisms to assess and provide legal protection to traditional and to modern land owners. Since women heads of households are increasingly frequent in rural areas, efforts must be made to assure their security of tenure. In many forest areas, traditional tenure mechanisms are still potentially operative, and Governments can divest ownership and control of forest land and the trees on them to local communities. This must be done with care however since many of these communities have broken down under the pressure of migration, logging, and Government land ownership. Where forest communities have broken down, the people occupying the forests may simply complete the destruction if given the opportunity. In these cases, continued Government ownership and control may be necessary. 10.21 An example of the breakdown of traditional tenure systems is in Cote d'Ivoire's gazetted forests which were expropriated by the French colonial government for use as production (logging) forests. In this, and in similar cases, a partnership between Government and local people will be necessary to properly manage these forests. The ongoing Cote d'Ivoire Forestry Sector Project is endeavoring to establish a workable partnership which will preserve these forests in perpetuity as productive forests, with some taken out of production for protection. The provision of secure land rights to people living around the forests will be one part of this partnership (see Box below). - 96 - m ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. ::. . .-.*.....0 nman of 'the recmm'dtion.s a '''.e~ ut hre.1 bectie of the ' Gvriten Forestry'-' P'';r: -r t' arrest-' . ..trcto ofg' trpica porests. an restor oes oe i' abu 2 0 azrent fthecut About 2 ig o t he ofo eltM porestet. lan a beenf lot since he . urn'toea. of. the.ctuy Source :h, Jhan-Ppul ..n..su. Wfol toud b9es F. Strengthening Government Sereceslk the'coutry 10.2 Goernmken ts will beter t d.evueltop oetheere finstotuitional and which capaiyre econdary m a paroecteInduced t arets -teouid tce nswmstury. and astre (nThishproces)rsucs beamit eaide alabdlue ptnfor explitatin. aeTted forst impreanttn ensure thant iro desnted are r aeinhe pftctiponete aognd~ fhatmn theo othera sesad Parkareabl o hxliav tieonee eiitdai are todi poutv bed fulainrotete n mananed. A n thompeprt of thnaemn .a*tdforsstiablty ishinchsn thve bea rvaioulaty of woode products to rmatch produlation fgrewts,- resour-e esrg o exmene plan, thandt e e rsion exedcilng.ehs coulged be donw by ing tcal poplarticipate seot aiesuffittednto log.ano ex the td for awount Iofncentested Valude fri .xadtherficalinenties oParoshmave beentsree ant cn cesti eing a c ktion toftae. Thistv arquires pla ing and ovanaged.e capacity fromGove rnen eutef thosrso prks oal ppl ions reer wictull m arte rorie.o hd e r f.. est wels qjdelft idn th _oeta ol areslvn nlndwihI Le in the frest setor wil be strngthene tofcu orncosrtto fn toorc mana emet rather the ..o. .q cn..ttie:Lof . cengt-ondurstr-yI conservation ~ ~ I. ... ........It. .:lgriclultu~ra .nt. sifc.ton nd.r.ro.n..en....r would ontinu ownin the lnd in he gaztted frest~ ut woud pay art`ofthe roaltie to. local populations to induce their support. ~ ~ ~ -ansgd'.4o - Source: Jean-Paul Chausse, World Bank, 1992. r ~ F Strengthening Government Services~~~~~~~~~~~~ ensure that protecteda Rreas c-are '_ infcartc'dadtateaesmd avilben for exploitation are ued in a productiv anIutinbemner neamlofm nag en for sustaiability isincreasingthe availaility of ooproduts7 o mtc pouato rowh local populations to set asid sufficien land fOr woo prducion r nnivsincudeprice tax and other fiscal incenivest whic'h maetree plnig aretn n makein prftabe populations actually manage, the resource.,: - 97 - 10.23 Government forest services can also help land owners re-forest degraded forests, through provision of seedlings, training, and extension services providing technical know- how. But local people must do the planting and harvesting. NGO's should be given a role in assisting local people to do this. Governments should also provide environmental education to local people through the school system. Governments will have to develop capacity to undertake environmental assessments of development projects :n order to avoid excessively negative environmental impact. 10.24 Lack of operationally meaningful and reliable environmental data is a major problem. Urgent needs include assessment of forest cover, soil erosion and soil capability, desertification risks and the distribution of human and livestock populations. This is an area in which donors can provide support and expertise. Since the focus of change must be at the national level, information must be geared to national use. 10.25 In many cases Governments can launch these processes through preparation of environmental action plans. These can set the broad environmei. .-I policies, propose areas for land use planning as well as the parameters of such planning, prepare fiscal policy changes, prepare for land tenure reform, among other measures. Environmental action plans are being prepared in Guinea, C6te d'Ivoire, Togo, Benin, and Congo. ,05 ~ Th v=,o,e,iv^ io_id protect a atIFC[ gnfcftnout of y. C no idisty throu ..Sytemti-C pt~nn a iandcoorntton of conservet(n aetivities at thu na sttioa evel1 an alentv ativitiesfar Lcl pouaion f tth Loha Lee '' '''i:': l::@ : 'f::"g: -1::':g.::." ' ..:-:'::..- ..s: .......: a -.a... .. . . -- .: '::::..f a '::: ::"'':: .-'.'.'. ..' ft,.X,X W .thV pro..t*..t{<^-..i .. l.ll. .X.".....*.... ....... ......f ..-. .... .te.nte:eco PrW vJ.feOPS.io.th esres.:1i.b-ldn:heatfont.s:. i.'.o.:::.I ti. 1 .. . . .... ...t ,.1 >a:for 1eoraph*cX and CartograpMc Prodction an-d:ratnationalNOGQs :(c}addres.sngthetn p.robters.f Os. Rf t.. " I h .t.i f.h.- . : ..... - ~~~~~~~~~~~~~~~~~i . d}. .c t..^ -* h tev*rM ilflernotionbl eon* ervetIan NG0s0 .* .... - The 0d be infld ~*.t NQ :@ @ a . Sou.:.rce. .......... . . : : : . : . .........Jean-Claude a o a J 1992. ...... . ~~~~~~~~~. ...... . -. . . ........ . - I ... ..;:.. -;::.. ,> Source: Jean-Ctaude Batcet, World Bank, June 1992. -98 - G. FInancing 10.25 The benefits of improved conservation of tropical forests will accrue to the entire world, while the costs will have to be borne almost entirely by the countries in which the forests are located. This situation has stimulated efforts to reimburse the producing countries for losses incurred when forests are taken out of production and put into reserves. The first such efforts were "debt for nature' swaps. Although no swaps have been organized in West Africa, there is potential for them. The principle is that governments agree to set aside as a protected reserve large tracts of forest or wildlife area, usually administered with the help of an N4GO, in return for the purchase of some a'nount of the country's discounted debt by the NGO, or organized by the NGO. 10.27 A recently launched initiative is now underway to provide about US$1 billion for a Global Environmental Facility (GEF). These funds would be made available to countries as compensation for reducing activities that are remunerative but which significantly compromise bio-diversity (such as logging), contribute to carbon dioxide emissions (such as forest burning), or produce CFCs. Setting aside of tropical forest land as reserves and parks in Western and Central African is a good candidate for funding under this Facility. H. Bank Projects 10.28 There is as yet little experience in the coastal francophone countries with natural resource management projects, or with initiatives to improve land tenure security, as they have only now started. A great many more natural resource management, environmental protection, land tenure and forestry projects are programmed by the donors in the future. Ongoirg projects incorporating some of these elements include the Cote d'Ivoire Forestry, Central African Republic Natural Resource MIanagement, Benin Natural Resource Management, and Guinea Natural Resource Management Projects. Future projects incorporating many of these elements include Gabon Forestry and Environment, Cameroon Ecological Protection, Congo Wildlands Protection and Management, Equatorial Guinea Forestry, and Togo Environmental Action Plan. - 99 - bens' i.e topiCO. orqstdc, 't o V-. gaofn' .territory, and ,t,ns uore than 100 tr.,eee..xcis of poential ,omi rie.il-.tvalue.: Totat dense forest cover lb stinwted At, t multTon hes, o.fsh 12'.5X" i6li $h a.re oonsiderW to .be va btu e -.fl,e.t.el ,t'tA'd.s *..eforestatl*n .tte r*v ' t^ ,.lOA s,tha n,1 X 0 rn) mnd of allt the ' A'f~ent,' c ,t,,t'ies, ,Gabi W 15-'4,X t t tO's he 'i I t orti of Its forest ea dr .:..th .neat.50,yeer,*s. .:. ..f..... ..5..:. .'.,',...... . .. T.::.,.,.: :...,ro further enhance .it:s.queo:positon in the.area of forest conservation, the . f Biboneie. GovernMent, with the-asmiotance of the W.or.d `ank hasitiated a project which w.l' '..l-(ea).'.preserve the.;ecol'ogicail b,,a'l'ance'''end maintain'the long-t*rr productive potential of .x..:the aonese forest;a'nd b nc"re.as.e the.contrlb.tIon of: the forestry sector to thc national 01onoythrou#h the rational mane#eme0tt nd,::ons,etvAttfo:.f.exfsting forest resources.' to. :attAin':tahe:jbov 'obJjctiveis.:the .Rpect-d.es:g proce8s will:be.highly 'particfpatory, :v. t sewne'* nts,'of s.ocety. Th ,he:asis fs n.ot-placd n key sectorat'miniatre 6* > buf r.ither in locaZl nstitutions,; .n*ir.'orFn tal NGOWe'.o of the prIvate sector and vfilLage nrot.e 'n-the project are. The tacit i pess, atfo adio), seinar .and large meeiongs wkerA meibers of -th 0pub lic.-r,. .nite ,r.wios ElarOtes'.provided a platform : :- rou,hW hi,c,h .:al'l Interested ,.rt1es... .. o u.d'1cQR t -. the ,project viabitity,'content and obale impact:. ,:Thi- approachn rject .,d,esign tdto (a) futt:.identf f ication of alt 4w*vironnental-',ssue end ,,,,Cab)l,,Inter,,, l ,,,,l*b2."t,1.o,:.al ,,l,eYAofsoci,etY.fthe,.r..eshsibilit R. . 1~~~~~~. .......... . en J ;~e,. .rted ,:,,:a.,,,, >,,,,.8. Umi-.te. y r i.ct t 2 i.t.. ;. : was agreed that te pro *~ ;z (a) ::i:-.:::: eimt on ;:: :S. baSis, a fo'st au S*:.:vir : .or:- :e:::::. Ws ... ;-.- :..... r-r .cti-ti . ;; :;: -: -......, - g :: a t to 4euradati~~ and Cf) upport th - ovet eh mnteceton rcte 4-::s tenaneg ofL" dif reserves.~ ~ ~ 'v40Wre:_o .-'- 6. . . g . ''................................. .....................''' ?. E .' . '. Source: Madani Tall, World Bank, June 1992. XI. DEVELOPING RURAL INFRASTRUCTURE INCLUDING IRRIGATION, DRAINAGE, WATER SUPPLY, AND RURAL ROADS A. The Need for Infrastructure Development 11.1 The most basic elements of rural infrastructure comprise rural roads, markets in rural towns, and rural water supply facilities. In some areas, irrigation and drainage facilities are also essential to facilitate agricultural production. At a somewhat higher level of development, it also includes rural electrification as well as telecommunications facilities and access to electronic mass media. Defined more broadly, rural infrastructure also includes education, health and sanitation facilities. 11.2 The importance of basic rural infrastructure for agricultural development is well established. Recent research in Asia found that in villages with better infrastructure, ferilizer costs were 14 percent lower, wages were 12 percent highei, and crop output was - 100- 32 percent higher. 1/ Research in a number of SSA countries has shown that adequate transport links to product markets stimulate agricultural intensification - even where population densities are comparatively low. / Farmers with access to good infrastructure use land more intensively, adopt efficient techniques and modern inputs, produce more for the market, and employ more labor. 11.3 Infrastructure development also has a major impact on the productivity of rural labor and on key determinants of fertility, such as infant mortality and fema!e education. Roads provide access to health facilities and schools, and water supply schemes and sanitation facilities have significant impact on health and on labor productivity. B. Transport 11.4 Transport infrastructure is essential for intensifying agricultural production. Remunerative output prices accelerate the pace of agricultural intensification - provided these are transmitted to the farm. Incentives to increase production and marketed output are blunted if the physical barriers and, hence, the costs of moving goods to and from local markets are too high. This is equally true of the national transport system linking local markets to cities and to ports. 11.5 Rural transport infrastructure in particular is highly deficient in most countries, and throughout most of the francophone coastal countries distances from villages to major towns and all-weather roads are substantial. Rural road density has been estimated about 32 m/km2 in Western Africa, compared to India's road density of 90 m/km2 in 1951. A reasonable target density, based on Indian areas with comparable population densities, would be 730 m/km2. a/ Where rural roads exist, they often are poorly maintained. Indeed, maintenance standards have deteriorated considerably during the 1980s: 42 percent of unpaved roads in West Africa were in poor condition in 1988, compared with 28 percent in 1984. 4/ The situation in CMte d'Ivoire, Togo and Cameroon is better, but even in these countries improvements are necessary. 1 IFPRI, Annual Report, 1990. y Prabhu Pingali, Yves Bigot, and Hans Binswanger, Agricultural Mechanization and the Evolution of Farring Systems in Sub-Saharan Africa, World Bank, Johns Hopkins University Press, Baltimore and London, 1987. a' John Riverson, Juan Gaviria, and Sydney Thriscutt, Rural Roads in Sub-Saharan Africa: Lessons from Wo,A - Bank Experience, World Bank Technical Paper No. 141, Africa Technical Department Series, World Bank, July, 199Q. Steve Carapetis, Hernan Levy, Terje Wolden, Sub-Saharan Africa Transport Program. The Road Maintenance Initiative. Building Capacity for Policy Reform Volume I: Rert on the Policy Seminars, EDI Seminar Series, EDI, World Bank, Sept. 1991. - 101 - 11.6 The availability and reliabilitv of transport services is often further compromised by restrictive transport sector policies and truckilg regulations. Transport monopolies, for example, are often granted to parastatal companies or to well-connected individuals, and entry into the industry is often restricted even where there are no monopolies. Inefficient procurement and distribution of motor fuels by monopolistic parastatals is often another impediment. And price controls on motor fuels tend to reduce fuel availability in the countryside because they make it unprofitable to invest in transporting and selling motor fuels in locations distant from the port cities. 11.7 As a result, markets are poorly integrated, inter-regional and inter-seasonal price variations are far greater than they would be in the presence of efficient transport facilities, and incentives to switch from subsistence to market production are ofLen weak. Any surplus farm produce, often has to be carried over considerable distances to markets or to roadsides from where vehicles can move it to processing facilities or consuming centers. 11.8 Rural roads and improved tracks navigable for animal-drawn vehicles are crucial for rural development. Planning, construction and maintenance should involve the local communities as well as local contractors and technicians. This will help ensure that siting is in accordance with local needs. Small local contractors and local communities are more likely to use labor-intensive techniques to keep down costs and to provide local off-season employment in construction and maintenance. 11.9 Major efforts are also needed to promote the use of locally appropriate intermediate means of transport, especially animal-drawn implements, and off-road transport. Governmental involvement in these areas would have to be largely facilitative and promotional. Improvements in off-road trar.sport are essential for rural people's well being and productivity. The extremely poor state of off-road transport in much of the sub-region severely reduces the timeliness and quantities of agricultural iiiputs and outputs moved to and from motorable roads, thus acting as a strong brake on agricultural productivity and growth. Rural women in particular will benefit from such improvements, since they do most of the off-road transport. C. Water Supply and Irrigation 11.10 The rural watter supply situation constitutes another key constraint to rural development in the sub-region. There is a direct link between safe potable water and the reduction of infant mortality. Water-borne and water-related pathogens are major causes of seasonally or permanently debilitating diseases which severely affect labor productivity. 11.11 Women's stake in convenient access to safe water and sanitation facilities is particularly high, given their almost exclusive responsibility for collecting, transportirg, boiling and storing water for drinking and cooking and for washing household effects and laundry, for disposing of waste water, and for maintaining household sanitation standards and facilities. Access to sufficient quantities of quality water is an increasingly more time- consuming problem for many rural women. Assuming a daily requirement of about 10 liters of water per pera3n, a six-member household needs 60 liters of water daily - almost 22 - 102 - tons of water each year. If a women carries 20 liteis of water per trip, this implies that she would have to make three trips daily to the water source. If the water source is 20 minutes away from the home, about 2 hours daily will be needed to meet the household's wattr needs. 11.12 Convenient sources of safe water are of enormous importance to improve human health and, hence, labor productivity, and to contribute substantially to a reduction in infant mortality. A major benefit to women and girls of better access to safe water is that time for.Aierly spent fetching water from distant scurces and preparing such water for human use can be used instead for other productive activities, attending school or technical training, tending to children's health and education needs, or simply rest and recuperation. Water supply efforts/projects must be planned and implemented, if not operated, with and by local women. 11.13 There is potential for irrigation development in the drier parts of Cote d'Ivoire, Cameroon, Benin, Togo, and CAR. Generally, the best approach is to focus on small-scale farmer-managed schemes. These schemes are usually based on river diversions, or pump schemes in which individual farmers or small groups undertake the investment, operation and management. This is a typically productive use of rural credit funds. In some cases, small schemes, assisted by Govemment or NGOs at construction, but managed by farmers groups, work well. Examples are found in Guinea, where farmers assisted by Government extension services have drained bottom lands, and constructed simple gravity-fed canals for irrigation. In existing large-scale schemes, the thrust should be to divest Government operation and management to farmers groups. :fn severe disr.ePair. The proj]ect aiSthe ff~tt aI operatiO tl th"e QIJrto aedres :in~ ca-cr^ehsive faphlori @11 Sspec.t f NIi IlfItNtng: d5viOqn. I .s ipeat.. . the framework for sietor wide roticy:hnes d dthe s, . t in-p)coa cdtiat mas finfrastructur investmet It Is-prov din A eict fO.... Ovr*a t etec f the. servsires8 tthatane ffient . ....m ..to h : .^Sc Aintitutions so that they ian effectivety aast pli in wor s v in v .: respaibiities -to *ecentr 4l.1ezgoverrvaent services so Uint they an provide tec al support iOcat ly and to promote p`rtt...to" by the :. ....ficiari..t..e Srass Source: Jea ~n-Cludnale, Wol:ak Jn 92 ..... .b*.... ... evel hr Gvrun ~.... iietspot opvt peAtorI Aqc) 4'pca rga a encetdfo h rmto fSaledNdu Cntra.tors, fill ~~~~ by , an .... tVtW aqie xreci ontutO n odwr.i laborbase mPp r4ogrm wit- ItO iioe. . I, oels h atcpto fs .1~ b5ing ~** tamet5dIit th sftrc f O ~ r .so(m r Source: Jean-Claude Salcet, World Bank, June 1992. - 103 - D. Infrastructure and Enviromnental Conservation 11.14 Infrastructure development is a major determinant of the way people use land as well as of the spatial allocation of people on land. Sound infrastructure policy is a powerful instrument in the two-pronged strategy to intensify agricultural production and to limit further destruction of forest and pasture areas. The development of infrastructure tends to attract and retain people. The many instances of colonists invading forests via abandoned logging roads provide a powerful illustration. Conversely, the absence of infrastructure in areas that are environmentally delicate will tend to induce people to stay out of those areas. Careful locational targeting of infrastructure development can guide spontaneous population movement into environmentally resilient areas with agricultural potential, and into secondary towns and cities. It will help keep migrants out of areas that should not be opened up to farming. 11.15 Infrastructure development, and especially road construction, should therefore be focused where the potential for agricultural intensification is highest or where settlement is to be encouraged. It should be avoided in forest areas which are to be conserved and in other environmentally fragile areas where an influx of people will lead to environmental degradation and destruction. Concentrating infrastructure development and thereby attracting and retaining people in areas of high production potential, and keeping them out of environmentally fragile areas, also allows considerable efficiencies in investments and service provision. The per capitv cost of infrastructure development and maintenance is inversely related to population density. E. Urbanization 11. 16 During the past three decades, the urban population of West Africa has been growing roughly twice as fast as its total population. The rapid growth of cities is due not only to the persistent high fertility rates still observed among urban women, but in large part to the very high rate of rural-urban migration. This "land-flight" is caused in part by the strong urban biases inherent in most countries' economic and investment policies. However, experience throughout the world suggests that urban populations have grown and will continue to grow much faster than rural populations - even if governments were to pursue policies that do not favor urban over rural dwellers. 11.17 Some countries havepursued policies that have led to the emergence of numerous and geographically dispersed secondary cities and rural towns closely linked with their surrounding rural areas (Cameroon, CMte d'Ivoire, and Togo). They also have a few very large cities (notably Abidjan, Douala, and Lome), but urbanization in these countries has also been characterized by the development of many smaller cities and rural towns throughout much of the national territory. This has had important positive effects on agriculture. These towns and cities have created non-agricultural employment opportunities for some of the rural population. Industrial and service sector development in secondary towns and cities have been much more closely linked to agriculture and to the needs of rural populations. Cash remittances to home villages are an important source of financing of both consumption and investment expenditures in rural areas. Urban growth creates expanding markets for - 104- farm products and tends to lead to increased supply and availability of farm inputs and services. This can make agriculture more profitable - provided there are adequate transport links and marketing arrangements. Where networks of rural towns and secondary ,ities exist, these links are far more direct, immediate and efficient. Spread-out rural towns and secondary cities tend to be associated with far greater penetration of rural areas with adequate transport links and marketing arrangements than when urbanization is concentrated in a few mega-cities. For areas that are approaching the limits of sustainable agricultural land use under existing tenurial, technological and climatic conditions, migration to these secondary towns and cities reduces the population pressure and provides an important safety valve. 11.18 Where government policy discourages agricultural production and encourages agricultural imports to supply urban needs, there will be no positive impact of urbanization on agriculture. This has tended to be the case in the other coastal francophone countries where urban development policy has focused heavily on the capital or on a few dominant cities, inevitably more distant from rural hinterlands. This bias is increasingly evident in Cote d'Ivoire and Cameroon as well, as the urban population becomes increasingly more vocal compared to the rural population. Manifestations of such policy and expenditure bias are the subsidization of consumption of urban populations (often based on imported food), preoccupation with large urban infrastructure projects in the mega-city, and focus of social expenditures irn a few cities. The political influence of vocal urban populations results in political pressure to keep food prices low and to target public investments and services disporportionately to the big cities. Elsewhere in Africa, where governments have effectively resisted this pressure, the results have been positive for agricultural profitability and growth: Kenya, Ghana, and Zimbabwe are cases in point. Furthermore, cities often draw the most talented, enterprising and educwted people from rural areas. When there are no rural towns and secondary cities to go to, these people flock to the mega-cities and their energies, enterprise and talents are lost from the rural areas. Less talented and less educated farmers are less likely to be innovators and more likely to be steeped in destructive traditional farming and land use practices. 11.19 In much of the sub-region, rural out-migration involves predominantly young men. Where policy has a heavy urban bias, this has been particularly pronounced. As women, children and the old stay behind, farm management is increasingly left to women who already have multiple and very heavy responsibilities and work loads, and who face greater constraints in access to resources and services than men. Many rural areas are today characterized by severely imbalanced gender ratios in their adult population, with women substantially outnumbering men. 11.20 A recent analysis of farm-nonfarm linkages in rural Sub-Saharan Africa found that each US$ of increased agricultural income generated an additional increase of US$ 0.5 in non-agricultural rural incomes. I/ The direction of causality was largely agricultural I/ Steven Haggblade, Peter Hazell, and James Brown, "Farm - Non-Farm Linkages in Rural Sub-Saharan Africa," World Dixl pment, Vol. 17, No. 8, 1989, pp. - 105 - growth stimulating services and manufacturing. This is less likely to occur when biased policies retard or prevent the development of secondary towns and cities and instead cut off rural areas and agriculture from the mega-city and making the latter more dependent on imports. 11.21 The net impact of rapid rural-urban migration on the environment and on agriculture is impossible to determine a priori. J. some countries, the positive effect will offset the negative; in others, the reverse will be true. Ensuring that urbanization has positive impact on agricultural development and environmental resource conservation requires economic policies that do not discriminate against rural areas (no price and investment discrimination), good education in rural areas, effective agricultural extension to maintain rural talent, efficient ministries of agriculture providing useful services to farmers, and considerable decentralization of decision making to local people and communities to avoid excessive dominance of the cities and their populations in national political decision making. Sound urban policy is an important element to assure balanced urban and rural development. 11.22 The elements of sound urban development policy include relatively more public expenditure in secondary towns and cities and less in the largest cities than has generally been the case to date, and spatially well-distributed infrastructure investment throughout the country (not merely in the largest cities). It also requires market-based petroleum pricing to promote the development of efficient transport fuel distribution systems throughout each country. It will include the promotion - through industrial extension as well as fiscal and credit policies - of small and medium industry. And it will include greater community control over urban resources. Given adequate financial resources and the requisite technical and administrative assistance, local and community governments are far more likely to create and maintain appropriately scaled and sited urban infrastructure facilities than are central governments. Investment in urban development should be responsive to demand for suich investment, not be driven by political considerations. XI. IMROVING FOOD SECURITY 12.1 Although problems of food security and malnutrition are less severe in the coastal francophone countries than in most of Sub-Sahamn Africa, large pockets of rural and urban poor are food insecure. In each of the sector analyses undertaken for these countries, food security problems have been found to exist primarily among rural women and child; -n, in regions where agricultural potential is low, and among the very poorest of the urban population. All the strategies developed to deal with this problem put first priority on employment and income generation for the poor. In rural areas, this translates into measures to stimulate agricultural growth which involve all of the farming population. Labor-intensive agricultural technology and technology directed to women are important elements. Investment in rural infrastructure, built and maintained by rumral people, with some targeting to the poor, is also an important element of food security strategy. Financing of handicrafts, small-scale industry, and food marketing activities in rural areas can help by providing 1173-1201. - 106 - income and by improving food marketing and processing at the local level. All of these components of food security are integral parts of the agricultural strategy, because a food insecure rural population is unlikely to develop a commercial agriculture or to take tie risks of agricultural innovation. 12.2 Even if both the overall food production position and incomes improve in the next few years, the distribution of income and wealth and the regional concentration of food production will leave large numbers of West Africans without either their own fooi; production, or the necessary purchasing power to buy adequate food. In addition, marketing constraints will continue to impede many people's access to food in the next decade at least. 12.3 Therefore, for the next decade, and probably beyond, interventions in the form of targeted food subsidies, public works to employ the poor, nutrition and health programs targeted to the poorest women and children will be needed in West Africa to ensure adequate food intake to chronically food-deficit households, as well as to people having transitory food problems. Food distribution and subsidies are notoriously difficult to target to vulnerable groups. Food subsidies and food distribution managed by Government are also inconsistent with the objective of removing Government from food marketing, and allowing prices to respond to the market. Free distribution of food may also act as a disincentive for local production. Some compromises will be required between the immediate need for food by vulnerable groups, and the general policy direction required for agricultural development. 12.4 Unless food is being distributed directly to people affected by an emergency, or to vulnerable groups such as those affected by famine, food aid from foreign donors should be sold through commercial channels. This will minimize the impact on agricultural prices and private marketing agents. The counterpart proceeds from the sale of food aid through commercial channels could be used for income support schemes for vulnerable groups, and for people affected by emergencies. Income support schemes could provide cash in return for work. Income generation through public works which add to public infrastructure is particularly relevant in West Africa. Such projects should be justified economically and sociaUy. To the extent that the extremely malnourished need direct feeding programs, health facilities have been found to be useful centers from which such programs can be managed. 12.5 It would be useful to have a food security strategy for each country. Strategies develop specific action programs encompassing the elements listed above. Planning for emergencies, pre-positioning of stocks, early warning systems, development of public marketing infrastructure, locust control, may all be useful. As with other agricultural services, the building of West African capacity to manage food security strategies will be critical. This will include substantially better management by West African Governments of food aid. Increased use of cost effective trangular food trade arrangements in Afrca may be helpful, allowing easier flow of food financed by donors from surplus African countries to deficit countries. 12.6 The Bank is assisting in the implementation of two food security projects; in Benin and in Cameroon. These began with completion of comprehensive food security strategies which have been approved by the respective governments. The projects finance those parts - 107 - of the strategy not already financed by ongoing agricultural and infrastructure projects. This means a project focus on support to rural women, improvement of food marketing and processing at the local level, development of some rural infrastructure by communities in poor areas, early warning systems for drought and for crop failure, contingency planning for drought, financing of small rural investments by target groups of the poor, and a nutrition imrnrovement program. An important element is the creation of a fund which permits local communities to manage investments themselves. Similar projects may be developed in some of the other countries, once food security strategies can be agreed with Governments. E~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ....g . .... . lb Investwentl4idjfor Sl nrcturltttcs~FNC A. . l.rge .n ber 4 nof norm al rura ttgroups, especi a .lly : onare r roe p operate a. X ameros:igricultural sector, some in the poorest areis .,of: tec try.;:the famiies ofvd these omen nare among Cateroon's food. inscure. the majority of these people are: epr.ved.... f .:fin. an l :.upport needed to enhance productivity, td rue Ot6 harVt loS1 an to ineees egicutuLra,L :production.4 Various" studies hyavesontato*nhlcn tn exists m these pooar people ft Sall tools, puharvt euient, i- tor sh- BaiS^ricUlt ual itnveistmnts'an ::toglttO si.wort. Forl ':finnil ia ntermediar'eS :are~ te..a,- toa 9,p rov..ide micro:'c.redts In rural areas mna co'st-effec'tve way s-nce the --t. of.:e recoer isa often hgher''than''the actual l'ans made';----.`' . . lr