Ghana S 10 Percent Agriculture Expenditure Saga Why Reported Expenditure Shares Are Not What They Seem

This note first discusses the differences between the general government sector and the public corporations sector, and then presents the rationale for when to add and separate expenditures in the two sectors in the accounting of government expenditures. It then presents revised estimates for Ghana on the share of GAE in GTE from 2001 to 2015, which exclude expenditures of Cocobod and expenditures on nonagricultural functions from GAE, in accordance with the official AU guidance note.2 The formula for this is given by GAE*100/GTE. It proposes another formula for obtaining parallel estimates if the Cocobod expenditures are included in the calcu-lations, as attempted in the agPER studies. This revised formula adds the expenditures of all of Ghana’s public boards and corporations (PBCs) to GTE in the denominator to make it comparable to adding expenditures of Cocobod to GAE in the numerator. The new formula therefore would be (GAE+PBCAE) *100/(GTE+PBCTE), where PBCAE denotes PBCs’ agriculture expenditure and PBCTE denotes PBCs’ total expenditure. The data used are from the two agPERs (MOFA 2013; 2017) and annual reports on the accounts and statements of the government (CAGD 2018), public boards, corporations, and other statutory institutions (AG 2018), and the Co-cobod (Ghana Cocoa Board 2018).

This paper conducts a political economy analysis to understand the factors that affect provision of and access to reliable agricultural statistics and data systems in Niger. A conceptual framework that identifies selected political economy aspects including political will, transparency and accountability, state capacity, and international commitments is developed. The predictions of the framework are tested using information collected through informal and formal interviews with professionals and staff of different institutions and organizations that provide or use agricultural statistics to analyze how different components of agricultural statistics and the underlying capacity and systems are differentially influenced by various political-economy factors. Implications for Niger and at the global level for developing an effective strategy to improve agricultural statistics and data (availability, quantity, and quality) that go beyond technological and methodological fixes are drawn.

When African leaders launched the Comprehensive Africa Agricultural Development Programme (CAADP) in Maputo in 2003, they committed to spend 10 percent of their national expenditure budget on the agricultural sector. This commitment, popularly known as the Maputo Declaration, was designed in pursuit of a 6 percent agricultural growth rate each year. The African Union (AU) developed a guidance note on the measure to use to track progress in the commitment on government agriculture expenditure (GAE). The measure is based on the classification of the functions of government (COFOG), and the definition of GAE as the expenses of the government sector on agriculture—crops, livestock, forestry, and fishing and hunting (AU-NEPAD 2015). Specifically, the measure is the share of GAE in government total expenditure (GTE), which is GAE*100/GTE. Two recent agricultural public expenditure reviews (agPERs) conducted in Ghana show expenditure shares that are overestimated for measuring progress toward the Maputo 10 percent target, ranging from 6.5 to 21.2 percent in 2001–2011 (MOFA 2013) and from 5.8 to 7.5 percent in 2012–2015 (MOFA 2017). This is because the studies used concepts like “COFOG-plus” or “enhanced-COFOG” to include expenditures that are not meant to be included according to the AU guidance note. One example of this discrepancy is that the studies included government expenditures on feeder roads in GAE, although feeder roads promote socioeconomic development of entire rural communities and not just the agricultural sector. Also, expenditures of the Ghana Cocoa Board (Cocobod) were included in GAE, even though Cocobod, although responsible for the management and development of the cocoa subsector, is not part of the government sector. It is a public corporation that engages in market-based production activities financed entirely by the cocoa subsector that it serves, and there is no transfer from taxpayers through the Cocobod to the entire agricultural sector.2 Along with these inconsistencies with the official AU guidance note, the estimates and analyses in the two agPER studies mask the relatively low government expenditure in the noncocoa subsector, and may undermine efforts to boost provision of public goods and services in this subsector, which accounts for about 90 percent of Ghana’s agricultural gross domestic product (GDP). The cocoa subsector accounts for the remaining 10 percent of agricultural GDP.

This paper examines whether the consensus reached by the late 2000s among African Union member countries and their external partners on the need to reverse the decades-long decline in spending for essential public goods and services in agriculture has begun to result inimproved levels and quality of national expenditure programs for the sector. It synthesizes evidence from 20 Agriculture Public Expenditure Reviews (Ag PERs) that have been carried out in countries in Africa South of the Saharan (Botswana, Burkina Faso, Cameroon, Chad, Côte d’Ivoire, Democratic Republic of the Congo, Ghana, Guinea, Liberia, Madagascar, Mozambique, Rwanda, Nigeria, Senegal, Sierra Leone, South Africa, Tanzania, Togo, Uganda, and Zambia) with World Bank assistance during 2009–2015. This synthesis focuses on several measures: (1) the level of expenditures on agriculture, with particular reference to the explicit target by African heads of state in the 2003 Maputo Declaration on Agriculture and Food Security (reconfirmed in the Malabo Declaration) to allocate 10 percent of national budgets to the sector; (2) the composition and priorities of expenditures with respect to stated national strategies, evidence of impact, and sustainability; and (3) budget planning and implementation that aims to strengthen public financial management in general, and budget coherence, outputs, outcomes, and supporting mechanisms, such as procurement and audit, in particular. This paper uses Ag PERs to analyze budgetary trends across countries, identifies major expenditure issues, and synthesizes lessons regarding spending efficiency. The analysis results in evidence-based recommendations that address, inter alia, budget planning, budget execution, and monitoring for accountability; the creation of a reliable database; more effective intra-and intersectoral coordination; and the cost-effectiveness of different spending policies for meeting various objectives

This paper is part of four country case studies that take a detailed look at public expenditures in agriculture, and at how the data on expenditures are captured in government financial and budget accounts. The objective of these studies is to unpack the black box of public expenditure statistics reported in various cross-country datasets, and ultimately to enable the use of existing government accounts to identify levels and compositions of government agriculture expenditures, with better understanding of what these data are in fact accounting for.

Growth in Ghana during the last decade has not translated into meaningful benefits for rural households who experienced an increase in poverty in recent years. This reflects, among other factors, the relatively weak performance of the agricultural sector and its general lack of competitiveness. The government has identified agriculture as the backbone of its development strategy and is committed to address the numerous challenges faced by the sector. However, it is likely to encounter fiscal constraints in a postdevelopment assistance era. It is therefore crucial to understand the trade-offs associated with alternative spending strategies. In this study we develop an economywide modeling framework for analyzing returns to public spending in support of agriculture. The model is used to evaluate the effect of compositional shifts in spending given marginal returns to different areas of investment. Our analysis focuses especially on extension services and input subsidies as two important components of the government’s agricultural development strategy. The objective of the study is to advise policymakers on which spending strategy is the most likely to contribute to government’s development goals, such as poverty reduction or economic growth. We find that a doubling of the share of agriculture in total public budget would accelerate agricultural growth to somewhere between 7.6% and 8.6% against the business-as-usual scenario of about 3.5%. The level of growth achieved depends on the types of policies that are favored. In the examples presented here, we show that an input subsidy-oriented spending strategy may yield significant benefits in the short run (1–5 years), and especially in an expansionary fiscal environment, but investments in effective extensive services are more sustainable and rewarding in the medium- to longer-run (6–10 years), especially when public resources are more constrained. These results demonstrate why short-term political goals might result in policy choices that are suboptimal from a longer-term development perspective.

The vast majority of the world's poorest households depend on farming for their livelihoods. During the 1960s and 1970s, most developing countries imposed pro-urban and anti-agricultural policies, while many high-income countries restricted agricultural imports and subsidized their farmers. Both sets of policies inhibited economic growth and poverty alleviation in developing countries. Although progress has been made over the past two decades to reduce those policy biases, many trade- and welfare-reducing price distortions remain between agriculture and other sectors and within the agricultural sector of both rich and poor countries. Comprehensive empirical studies of the disarray in world agricultural markets appeared approximately 20 years ago. Since then, the Organisation for Economic Co-operation and Development had provided estimates each year of market distortions in high-income countries, but there have been no comparable estimates for the world's developing countries. This volume is the third in a series (other volumes cover Africa, Europe's transition economices, and Latin America and the Caribbean) that not only fills that void for recent years but extends the estimates in a consistent and comparable way back in time--and provides analytical narratives for scores of countries that shed light on the evolving nature and extent of policy interventions over the past half-century. 'Distortions to Agricultural Incentives in Asia' provides an overview of the evolution of distortions to agricultural incentives caused by price and trade policies in the 12 largest economies of East and South Asia. Together these countries constitute more than 95 percent of the region's population, agricultural output, and overall GDP. Sectoral, trade, and exchange rate policies in the region have changed greatly since the 1950s, and there have been substantial reforms since the 1980s, most notably in China and India. Nonetheless, numerous price distortions in this region remain and others have added in recent years. The new empirical indicators in these country studies provide a strong evidence-based foundation for assessing the successes and failures of the past and for evaluating policy options for the years ahead.