Sigwele dissects agro economics
Joseph Balise | Monday November 27, 2023 06:00
What does this negative rate of return mean? Dr Howard Sigwele, a retired agricultural and trade economist explains that the country is spending more to realise a single pula. The reality is that the investment in the agricultural sector is not profitable but rather a loss as contained in the World Bank report of 2017, which acknowledges, “the rate of return (ROR) to total agricultural spending is the lowest in Africa”. In fact, it was a negative 25%.
According to Sigwele, who is currently a practising agricultural and trade consultant, over the years Botswana has spent lots of public funds to improve the agricultural sector, without much success as shown by the persistent negative rate of return. “All independent assessments have found that the country spends more to generate a single pula than is necessary,” he said. Sigwele added it has now become critical than ever to improve the sector’s productivity in terms crop yields, beef per animal production, milk per animal production, output per unit of labour and other productivity variables. It is also imperative that to support the agricultural sector, a strong provision of the necessary infrastructure, effective extension services, water, energy and others is urgently undertaken. The agricultural sector’s contribution to the gross domestic product (GDP) has been poor over the years, averaging two percent. But how did the decline occur?
Sigwele explains that the main contributor to the low and declining performance of the agricultural sector is the perennial low productivity in both livestock and crops, especially in the traditional areas where over 90% of farmers are found and more land used for production. For instance, maize and sorghum yields per hectare have been below 500 kilograms for more than 50 years yet the Southern African Development Community (SADC) and the African Union (AU) have set a grain yield of 2,000 kilograms or two tons per hectare for sorghum, maize and other crops. The other factors that contribute to poor performance and low production include poor management, weak extension services, underdeveloped infrastructure and untargeted subsidies.
Though the agricultural sector contribution to the national economy has remained low and stagnant, the future is still not bleak, as there exists prospects for a turnaround. Sigwele maintains, “If intensive and coordinated efforts are made to increase agricultural productivity based on the suitability of the land, technology and provision of cutting edge skills by all players including farmers and officials, the sector could be turned around. Populist programmes will not help”. In order to succeed, the programmes need to ensure quality and consistent monitoring and evaluation of policies and programmes.
It is Sigwele’s conviction that the current policy framework is still very relevant to prop up the ailing agricultural sector because its thrust captures the main elements.
These elements being sustenance of increased domestic production, ensuring economic access to food by the entire population through amongst others, employment and income generation and the improvement of food quality and safety.
Furthermore, increasing local production through the value chain also leads to the provision of raw materials for agro-processing and international trade, and thus contributing to the African Continental Free Trade Area. Sigwele also reckons that as part of the commitment to transform the agricultural sector under the Malabo Declaration of the AU to address poverty, unemployment, food security, sustainable and inclusive economic growth, each member state is required to prepare and implement a National Agricultural Investment Plan to guide its sectoral transformation through purposeful, targeted and impactful public and private sector investment. Botswana has fortunately already prepared the National Agricultural Investment Plan and has also therefore complied with all the AU requirements under the Malabo Declaration.
Sigwele, who helped to develop the plan, adds that the scheme covers all the sectors including human capital and research and technology development.
However, he is quick to lament the weak implementation of policies and programmes. “Implementation, coordination and monitoring of the policies, its sustainable programmes and others, have been very weak and less impactful despite relatively satisfactory funding of the agricultural sector through public assistance programmes and projects,” Sigwele said.
The agricultural and trade consultant also explains that low productivity or simple domestic agricultural production has not achieved much with respect to exports. “Botswana has hardly met its quota at the European Union (EU) whilst it has not exported much to the United States through the African Growth and Opportunities Act (AGOA) under the special tariff-free trade agreement. “As a consequence of limited domestic agricultural production, the total food import bill grew up from about P4.6 billion in 2010 to P13 billion in 2022,” said Sigwele, adding to the urgent need for the turning around of the agricultural sector. Asked to expound more on food and income security, Sigwele said based on the definition by the Food and Agricultural Organisation (FAO), essentially food security occurs in a country when an individual or household has available food, economic access to it and the food is nutritious and safe for consumption at all times for a healthy and productive life. “Simply put, having enough or being self-sufficient is not food security, but only addresses food availability/supply and access, or quality and safe food,” he said, adding that Botswana boasts of beef self-sufficiency while it suffers protein malnutrition mainly due to the fact that many people cannot afford local beef prices.
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