Initiatives in infrastructure and natural resources have mainly spearheaded the push for wealth creation and better living standards in East Africa. However, the agricultural sector is rising to strive neck on neck with other sectors combined to spur growth and development in the region.
Foresight has been the decisive factor placing agriculture in the lead, as the regional governments are set on staying ahead of the curve of the super cycles of non-agricultural commodities.
And now that the demand for high-quality agricultural products is growing at an unprecedented rate, there is now an unprecedented opening for millions of East African farmers to be lifted out of poverty.
To explore this opening, the East African Community (EAC) have entered into a pact called the Comprehensive African Agricultural Development Program (CAADP).
The agenda of the new pact is to stimulate public investment in the region’s agriculture sector by raising the national budgetary allocation for agriculture in the region by 10%. This pact will bring about at least 6% growth in agricultural output and productivity.
Trumping the Pitfalls of an Oil-Dependent Economy
The discovery of oil reserves represents glimmering prospects for energy independence and the adequate funding of public budgetary items such as health, infrastructure, and education.
However, history is replete with cases where benefits of natural resources turn into banes which decimate national economic growth. One of the possible downsides of oil riches is an exchange rate that inhibits export growth. This can bring about a negative rippling effect on numerous sectors of the economy, primarily agriculture.
There’s also the probability of public fund mismanagement which a windfall of oil riches can bring about. With ineptitude and lack of transparency in public finance management, the oil riches may be squandered and diverted in a manner that is highly detrimental to the economic health of a nation.
However, East African countries face many more pitfalls of oil wealth. In the first place, the rate of oil production in East Africa pales when compared to those of other oil-producing countries in Africa and the world at large.
For instance, Kenya is looking to fast-track oil exploration by up to 4 times of its current oil production rate. At the targeted production rate, Kenya will be producing 80,000 barrels of oil per day. This would generate a revenue of $800,000. However, this will only contribute to less 1% of the country’s GDP.
This is a clear-cut case of the paradoxical resource curse, where a country is hoping to capitalize immensely on its oil resources, yet the oil resources do not generate any significant impact on the country’s economic bottom-line.
Overcoming the Paradoxical Resource Curse Through Agriculture
The new CAADP pact will install agriculture as the main driver of sustainable economic growth in East Africa. With the greater coordination of well-defined programs and priorities by all parties entering the pact, the inclusive pact will bring about a transformation in the agricultural sector over the next few years.
Other objectives of the new pact are the elevation of living standards, improved risk management in the agriculture and natural resources sector, improved access to farm inventories, development of rural infrastructure and a supercharged food supply chain.