Public policy and spending

Rationale:  Agriculture provides the main support for Zambia’s rural economy, and because of this, growth in the agricultural sector is the clearest avenue through which poverty reduction can be achieved in Zambia. Sixty seven percent of the Zambian population depend on agriculture, primarily through smallholder production for their livelihoods and employment (CSO, 2012). Zambia recognizes agriculture as one of the key priority sectors in achieving sustainable economic growth and poverty reduction as outlined in the Sixth National Development Plan (SNDP) and the National Agricultural Investment Plan (NAIP).   Also, agricultural-led development has been identified by African Heads of State and Governments as key to achieving food security and rural development in Sub-Saharan Africa. Through the African Union’s Comprehensive Africa Agricultural Development Program (CAADP) framework, Zambia, like many other members of the union, has targeted to achieve a minimum of 6% annual agricultural growth by making available 10% of the national budget towards the sector. Yet, despite this widespread recognition of the strong connection between agricultural development and poverty reduction, there is continuing under-provision of public goods investments. 

The distribution of the agricultural budget in the recent past has not placed enough emphasis on broad-based public investments. Most of the funds allocated to the sector over the years have been spent on fertilizer subsidies through the Farmer Input Support Programme (FISP) and maize price stabilization through the Food Reserve Agency (FRA), which together have accounted for between 50-70% of the total budget over the last seven years. Despite high volumes of spending on input subsidies and maize price support, the returns on these investments have been low; agriculture’s contribution to the economy has not been growing and rural poverty levels remain high.  Evidence shows that agricultural growth reduces poverty by twice the rate of growth in nonagricultural sectors (World Bank, 2007; Diao et al., 2007) but to achieve this the right public investments need to be made. Zambia’s primary policy objective of achieving accelerated growth and competitiveness in the agricultural sector cannot be achieved unless adequate public resources are committed towards catalyzing the desired growth. 

Research Priorities:  IAPRI’s Research under this thematic area intends to provide an understanding of factors driving the current government expenditure in the agricultural sector and their effective use.  This research is intended to influence policies to achieve sustainable pro-poor poverty reduction in Zambia.  Research under this theme falls under four (4) sub-themes: a) Agricultural public expenditure analysis; b) Agricultural budget process and mapping; c) Returns to public investments; and d) Public Private Partners (PPPs).