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Infrastructure
In Africa, 60 percent of farm enterprises say they cannot expand due to a lack of necessary infrastructure. On an international level, a disconnect exists between the acknowledged benefits of and need for adequate infrastructure. This has led to a lack of strategy for how infrastructure development might be stimulated and used to promote agricultural production.
According to some critics, the terms of the structural adjustment programs imposed by international lenders such as the International Monetary Fund (IMF) and the World Bank in the 1980s and 1990s forced governments to cut their budgets. At the time, agricultural productivity on a global level was experiencing an upswing, so many African countries decreased the funds available for investments in domestic agricultural projects. The legacy of Africa’s underinvestment in agriculture is reflected in the amount of money the continent now spends on agricultural research – about one half of one percent of its agricultural GDP, while the United States allocates between three and four percent.
Alex McCalla, professor emeritus of agricultural economics at the University of California at Davis and past employee of the World Bank, offers another explanation. He asserts that the priority of other international issues, like the environment, surpassed infrastructure development in the 1990s. McCalla claims, “as a result, physical infrastructure investment took a back seat.”
Shenggen Fan, a senior research fellow at the International Food Policy Research Institute (IFPRI), blames the lack of investment on the difficulty in concretely linking infrastructure development and poverty reduction. He has determined, however, that road development significantly reduces poverty, stimulates agricultural growth, and improves food security. In India, he discovered that constructing roads reduced poverty more than improvements in agricultural R&D and education did. In China, Fan found that road construction was the third most effective poverty-reducing investment. In Costa Rica, he observed that the construction of a new highway increased domestic trading, specialized regional production, and export growth. Overall, this new highway caused national welfare in Costa Rica to rise by 1.5 percent per year.
In light of its obvious benefits, how can infrastructure development be encouraged? Rather than relying on international institutions to develop infrastructure, perhaps development practitioners should look to the private sector. Beginning in the 1990s, Latin America allowed greater private sector participation in infrastructure development, which resulted in the investment of $290 billion in energy, water, sanitation, and telecommunications between 1990 and 1999. Greater freedom for the private sector may also lead to ventures that add value to the crop product. Rather than providing just raw materials to be traded, food-producing countries can stand to earn more money by processing their products as well.
In order to allow African farmers to expand their enterprises and capitalize on the current high food prices, better infrastructure must be developed. International organizations have tried for decades to do this, but varying incentives have colluded to prevent adequate infrastructure development. As in Latin America, infrastructure development should be freed from the auspices of international organizations and even governments, and private businesses should be encouraged to step in.
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