Only nine African governments have met the target of allocating 10% of their national budget to agriculture, in spite of promising to do so seven years ago, a report by the United Nations’ Food and Agricuture Organisation (FA0) has said.
“Furthermore, the share of overseas aid from rich countries spent on agriculture has fallen from 19% in 1989 to about 5% today,” it said in a recent report on the global economy.
Supporting the FAO’s complaint, the Fairtrade Foundation said inadequate agricultural funding by African countries and the donor community was a big factor.
One bright spot in the economic picture, however, is the projected growth rate for Africa. In a separate report the UN Conference on Trade and Development (Unctad) said that the growth rate on the continent was expected to be 5% in 2010, with even faster expansion of 6% pencilled in for sub-Saharan Africa.
According to the Unctad report, after a contraction of 2% in 2009 — the fastest fall in global output since 1945 — the world economy would grow by about 3.5% in 2010, spearheaded by the three leading developing countries of China, India and Brazil.
But Unctad expressed scepticism about the idea that countries could compensate for fiscal belt-tightening by selling more goods and services overseas. “It is becoming clear that not all countries can rely on exports to boost growth and employment: more than ever they need to give greater attention to strengthening domestic demand.
“This is especially true today, because it is unlikely that the United States’s former role as the global engine of growth can be assumed by any other country or countries,” the report said.
With global unemployment estimated at 210-million people, Unctad said tackling joblessness was “the most pressing social and economic problem of our time, not least because, especially in developing countries, it is closely related to poverty”.
Unemployment rates in many countries were already high before the financial crisis of 2007 and many were now facing the highest jobless rates of the past 40 years.
In developed and developing countries economic policy in recent decades has been based on the demand to boost international competitiveness by squeezing wages.
“Past experience and theoretical considerations suggest that a sustainable growth strategy requires a greater reliance on domestic demand than has been the case in many countries in the past 30 years,” Unctad said.
“In such a strategy, job creation for absorbing surplus labour would result from a virtuous circle of high investment in fixed capital leading to faster productivity growth with corresponding wage increases that enable a steady expansion of domestic demand.
Especially for developing countries, this may call for a rethinking of the paradigm of exportled development based on keeping labour costs low.” —