Folly of economic growth amid struggling agricultural sector

By John Njiraini

The paradox is confounding. Who needs a highway, electricity or high-speed Internet connection but sleeps on an empty stomach?

In the mad rush to transform Kenya to a middle-income nation within the next 20 years, the level at which the Government has ignored the agricultural sector, while engaging in massive investments to stir economic growth is unravelling as a house of cards.

Analysts reckon that unless economic growth as designed in the Vision 2030 is structured around the agricultural sector, it will amount to nothing but a delusion.

"No country has developed without fast securing the agricultural sector," says a report by think tank Tegemeo Institute.

"We should not think we can reinvent the wheel."

The impact of neglect is already biting. Recurring hunger, joblessness as agriculture-related industry thins out, declining export earnings, rural-urban migration, deepening poverty as rural economy collapse and creating a society of dependency as rural folks depend on their relatives in cities and towns for support.

Now the Government seems to have woken up to the reality that no matter how many super highways it builds, how many households have electricity, telephone or Internet, this would amount to naught if the agricultural sector continues on a nosedive and the country continues to suffer food scarcity.

The allocation of a staggering Sh381 billion to agricultural development in the 2010/11 budget compared to Sh78 billion to roads and Sh34 billion to energy projects, and the launch of the Kenya Agricultural Sector Development Strategy, is a pointer to a new dawn in the sector.

Though still considered as the backbone of Kenya’s wobbling economy, the agricultural sector has in recent years been shoved to the backbench and more ‘appealing’ sectors elevated to the forefront as the key drivers for economic growth.

Reality unmasked

In retrospect, the decline of the sector over the past decade even as other sectors soared has unmasked the reality that sustainable growth is a fallacy without a vibrant agricultural sector.

Although agriculture constitutes about 24 per cent of the country’s Gross Domestic Product (GDP), and is the main source of livelihood for over 75 per cent of Kenyans, the sector is currently on its knees with the ramifications being felt is every aspect of the country’s psyche.

According to 2010 Economic Survey report, from posting an impressive growth of seven per cent in 2005, the sector shrunk by 4.3 per cent in 2008 and contracted by a further 2.7 per cent last year.

This contrasts sharply with other sectors like financial, retail and services, infrastructure, ICT and tourism, which have been on a steady climb.

This contradiction has created a scenario where gains realised in other sectors are wiped out as resources generated are transferred to feeding a starving nation and households.

As a result of recurring food shortage in the recent past, billions of shillings meant for key projects have been transferred to emergency responses.

Last year, at the height of a severe food crisis caused by prolonged drought, they spent a whooping Sh30 billion to avert a catastrophe, money that could have been used in other sectors if the country.

A total of Sh10 billion was spent on maize importation, while Sh22 billion went to other necessary interventions to support about 10 million people who faced starvation. Around the same time, the Government also spent another Sh300 million to compensate livestock farmers who were watching helplessly as their herds died in dozens.

And as soon as the drought was over, some Sh2 billion was pumped to buy maize that was going to waste in parts of Eastern and Coast provinces after a bumper harvest and another Sh1 billion used to rescue dairy farmers from massive loses as a result of milk glut.

These recurring circles, analysts contend, are like taking a step forward towards economic development and two steps in retrogression.

"Realisation of the Vision 2030 goals will hinge so much on Government commitment to improving the agricultural sector," a researcher at Kenya Agricultural Research Institute (Kari), says. "In other words, the country first needs food before we can think of sustainable growth."

There is a strong case towards investing in the sector. Besides the fact that the sector employees majority of Kenyans and constitutes of 80 per cent of the country’s exports, the World Bank states that lack of a vibrant agricultural sector contributes to deepening poverty, is a source of conflicts and hampers economic growth.

The bank argues that for Africa, Kenya included, to achieve sustainable growth, the continent needs to increase grain production by almost four times and animal production by seven times going by the current population growth rates.

In the case of Kenya, it is tragic case in as far as Government concerns for the agricultural sector is concerned.

The Government has perfected the art of developing impressive master plans for revitalisation of the sector, but resorts to cosmetic interventions instead of long-term programmes to improve the sector.

Only recently, President Kibaki launched the Kenya Agricultural Sector Development Strategy and witnessed the signing of the Comprehensive African Agricultural Development Programme (CAADP).

Crafted on the premise of transforming the country’s agricultural sector as a key driver for sustained economic growth, the strategy is aimed at forcing the State to increase budgetary allocation to the sector to 10 per cent from a mere 2.5 per cent currently.

　

Profitable level

This in effect, should propel the sector to achieve a growth of seven per cent annually over the next five years and propel it to profitable levels capable of attracting private investments and providing employment to Kenyans.

"While the completion of this new strategy is a major step forward, the main challenge is the implementation of the policies contained in it," admitted President Kibaki, probably in realisation that many other impressive blueprints are gathering dust in Government offices.

Yet, analysts reckon, if the Government implements the recommendations of the programme, the sector will strongly stand on its own and constitute a strong foundation for sustainable economic growth.

"What is required is Government commitment to ensure farmers access affordable credit and farm inputs and markets are accessible to farmers," notes the Kari research, adding the institution has been developing high quality seeds capable of producing bumper yields.

But as Kenyans wait to see if the Government will this time act on its promise, a vicious circle of poverty continues.