- A new report urges African governments to stop the new tendency of direct intervention in agriculture, with subsidising fertilisers as an example. Government should rather help markets by providing infrastructure than thwarting markets, it says.
Direct interventions of governments in providing agricultural inputs can be more disruptive than supportive, and in almost all cases, the resources used can be better spent elsewhere, according to a new report released today in Abuja by the Southern Africa Sub Regional Office of the UN's Economic Commission for Africa (UNECA).
The report, titled "Agricultural input business development in Africa: Opportunities, issues and challenges" was presented at a side event during the three-day high level conference on the development of agro-business and agro-industries in Africa, which opened today in the Nigerian capital.
The report says governments' provision of complementary public goods such as transportation, infrastructure, communication, research, extension and irrigation could foster a more successful commercial market for inputs.
The report says constraints to a successful agricultural input market in Africa occur on both the supply and demand sides and are unique to the African context.
"The general isolation of rural farmers from markets makes marketing costs prohibitively high for most suppliers while perceived demand for inputs is low, despite the contrary," the report says.
It says the private sector is more capable of providing inputs to farmers at lower prices and in reliable quantities, if the supply side constraints are overcome.
The report describes as "worrisome" the return to so-called "smart input subsidies", which, it says discourages private investment in the agriculture sector. "Although there are situations in which subsidies may be the most effective strategy (for example, in the immediate aftermath of an emergency), they are often difficult to phase out and present opportunities for capture and rent-seeking," it says.
It calls for revolutionising the input supply system in Africa, through a holistic approach which addresses access, affordability, availability and incentives.
"It is not surprising that the use of vouchers as an alternative distribution strategy for agricultural inputs is now rampant in many African countries but under-delivery and the disruption of agricultural marketing pose enormous challenges," the report says and argues that public-private partnerships could strengthen input supply systems.
It says the organised private sector should be mobilised, encouraged and given incentives to actively participate in the production and distribution of agricultural inputs through the provision of credit and micro-credit strategies.
Despite a new trend towards more agricultural inputs subsidies reaching Africa, the continent's agriculture is among the least subsidised on a global level.
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