Public Sector Budget Allocation to Agriculture and Efficiency of Resource Use: A Review of Status, Trends and Implications Babatunde Omilola Africa-wide Coordinator Regional Strategic Analysis and Knowledge Support System (ReSAKSS) CAADP Donor and Partners Meeting, Addis Ababa, Ethiopia September 6, 2009
23
Embed
Public Sector Budget Allocation to Agriculture and Effeciency of Resource Use: A Review of Status, Trends and Implications_2009
"Public Sector Budget Allocation to Agriculture and Effeciency of Resource Use: A Review of Status, Trends and Implications." presentation by Babatunde Omilola at the CAADP Donors and Partners Meeting, Sept. 6, 2009.
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Public Sector Budget Allocation to Agriculture and Efficiency of Resource Use: A Review of Status, Trends and Implications
Babatunde OmilolaAfrica-wide Coordinator
Regional Strategic Analysis and Knowledge Support System (ReSAKSS)
CAADP Donor and Partners Meeting, Addis Ababa, EthiopiaSeptember 6, 2009
Background
• Recent increase in attention and financial commitments for agriculture for development– WDR 2008, CAADP and Maputo Declaration, G-8
pledge in 2009
• These are positive developments in public sector budget allocation to agriculture, but now focus needs to shift from quantity to quality of spending
• This will require a review of recent spending levels and areas to identify challenges and opportunities for improvement
Outline
• Regional review of public expenditures: How is Africa performing compared to other regions?
• Overview of trends of agriculture spending in Africa– Spending levels: Progress towards the Maputo Declaration
CAADP 10% target– Spending intensity– Donor financing to agriculture
• Case studies of 3 African countries to highlight spending patterns, looking at:– Sources and composition of spending– Efficiency of resource use
• Summary and conclusions
1. Regional review of public expenditures:
How is Africa performing compared to other regions?
Public expenditures across world regions, 2000 international dollars, billions
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
SSA (13 countries) N. Africa (3 countries) LAC (16 countries) Asia (11 countries) Total (43 countries)
20
00
inte
rnat
ion
al d
olla
rs, b
illio
ns
1980 1990 2000 2005
Total spending increased by 6 percent from 1980-2005, the
majority of which was from Asia
Spending in SSA and N. Africa increased by 3.7 percent from 1980-
2005. In SSA alone, spending increased by 4.9 percent
Source: Calculated using data from International Monetary Fund’s (IMF) Government Financial Statistics Yearbook
How have governments allocated their total spending?
• Agriculture has not been prominent on the donor agenda, perhaps not because of any conscious decisions but due to pressure to broaden the aid agenda• It is crucial for development agencies to also commit to the 10% budgetary allocation to agriculture Source: OECD statistical portal, accessed November, 2008.
0
1
2
3
4
5
6
7
8
Ave
rage
agr
icu
ltu
ral a
id a
s a
shar
e o
f to
tal
aid
, %
All countries spent less than 10% of aid
budgets on agriculture
3. Country case studies
Nigeria, Zambia and Malawi
Public spending for agriculture has been increasing in the case study
countries
0
2
4
6
8
10
12
14
16
18
20
2000 2001 2002 2003 2004 2005 2006 2007 2008
Agr
icu
ltu
re e
xpen
dit
ure
sh
are
in t
ota
l (%
)
Malawi Nigeria Zambia
Sources: Various, compiled by ReSAKSS.
And this funding increase has predominantly come from government sources
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
ZMK
' bill
ion
GRZ spending Donor Spending Total Public Spending
In Zambia, fiscal dependence on development partners in agricultural spending declined from 48% in 2000 to 18% in 2008
Sources of agriculture spending in Zambia (ZMK billion) 2000-2008
0
5000
10000
15000
20000
25000
2000 2001 2002 2003 2004 2005 2006 2007
Mal
awi K
wac
ha
(mill
ion
s)
Total agriculture spending Gov. of Malawi Ag Spending Donor Ag Spending
Likewise, in Malawi, the donor share of total government spending on agriculture declined from 41% in 2000 to 23%
in 2007, with a low of 12% in 2006.
Sources of agriculture spending in Malawi, 2000-2007
Spending has been directed to different priority areas: Ghana has focused on one particular crop (cocoa),
while Nigeria, Malawi and Zambia have invested most heavily into input support.
Malawi’s input support programs fall under their nutrition
and food security component.
Investment gap ratio• Ratio of actual expenditures to budgeted expenditures• Public Expenditure and Financial Accountability (PEFA)
best practice standard is no more than 3% discrepancy between budgeted and actual (equal to a ratio of 97%)– If the ratio is <97%, it means that the government is
underutilizing approved funds– If the ratio is >100%, it means the government is
overspending
• Inefficient budget execution may negatively impact policy planning, design and implementation and make it difficult to attain goals and expected outcomes– Programs may have to change or end midstream if
promised funding does not materialize– Also erodes the credibility that approved projects will
actually be financed
Budget execution in case studies is poor, but improving
0
20
40
60
80
100
120
140
2000 2001 2002 2003 2004 2005 2006 2007
Rat
io o
f ac
tual
to
bu
dge
ted
agr
icu
ltu
re
exp
end
itu
res
Nigeria Malawi PEFA target
• From 2000 to 2004/5, both countries’ budget execution was poor at a range of 48-85%
•This meant that up to 52% of budgeted resources for agriculture were not being spent
•In recent years, both countries have overspent the budgeted amount
What are the reasons for poor budget execution?
• In the countries studied, the gap between budgeted agriculture spending and actual has largely been driven by deviations in capital outlays, rather than recurrent spending
• Budgets are formed based on demands of constituencies, while implementation often is tracked by fiscally restrained Finance Ministries
• The trend of poor budget execution is not limited to agriculture, suggesting it is a general issue – not just an agricultural one
• The recent overspending in Malawi is largely due to overruns in the costs of the subsidy programs
Conclusions• Governments and donors are increasing the quantity of
agricultural spending: – In response to the 2003 Maputo Declaration– Donor spending has increased slightly, but not at the same
rate as government spending• While this is good for national independence, it calls for development
partners to step up to their commitments (“10 for 10”)
• Now there is a need to focus on the quality of agricultural spending:– The investment gap ratio is dwindling, but more focus is
needed to continue this trend, due to its importance for program effectiveness
– Spending by the case study countries has focused largely on inputs – fertilizer, seeds – at the cost of investments that may have more long-term impacts• Investments in agriculture R&D, irrigation and rural infrastructure have