Agriculture’s declining fortunes

By JEVANS NYABIAGE

KENYA: Agriculture is slowly losing the shine as East Africa’s biggest contributor to economic growth to services and industry, a new report reveals.

 The State of East Africa 2013 Report by the Society for International Development (SID) says agriculture’s contribution to the overall economy has been declining for at least a decade. “It has been the slowest growing sub-sector of the regional economy since 2005,” says the report authored by Aidan Eyakuze, Associate Regional Director, SID East Africa Regional Office.

In Tanzania, agriculture’s share to the economy fell to 24 per cent from 28 per cent between 2005 and 2012, while both Kenya’s and Uganda’s agricultural sector stayed relatively stagnant at 24 per cent during the eight-year period.

Between 2006 and 2011, the share of agriculture in Burundi’s economy shrunk by 12 percentage points from 48.4 per cent to 36.4 per cent.

Industrial output expanded its share of the economy from 10 per cent to almost 15 per cent, while that of services jumped from 41 per cent to almost 49 per cent.

“It is interesting to note that in 2011, the services sector has as large a share of Burundi’s economy as the agricultural sector did just seven years earlier,” says the report which is co-authored by Ahmed Salim and Stefano Prato, also from SID.

 In Kenya, the service sector accounted for 47 per cent of the economy in 2012, marginally lower than in 2005. Agriculture’s share of the economy expanded from 24 to 26 per cent between 2005 and 2012, while that of industry shrunk from 17 per cent to 15.4 per cent during the same period. Surprisingly, the share of manufacturing industry in Kenya’s economy was the lowest in East Africa in 2012.

 Rwanda’s service sector expanded its share of the country’s economy from 41 per cent in 2005 to 45 per cent in 2012. Agriculture shrunk from 38 per cent to 33 per cent while industry had a marginal increase from 14 to 16 per cent.

In 2012, the services industry in Tanzania accounted for 49 per cent of the economy, a three per cent increase from 2005, while agriculture’s share shrunk from 28 per cent to 24 per cent during the same period.

Industry grew its share of the economy from 20 per cent to 22 per cent in 2012.

The share of agriculture in Uganda’s economy remained essentially unchanged at 24 per cent between 2005 and 2012. Interestingly, the services sector shrank from 47 per cent in 2005 to 44 per cent in 2012, the only East African country to record such a significant reduction.

Industry expanded its share of the economy from 23 per cent to 26 per cent during this period.

major threat

 The drop poses a major threat to the economy since more than half of the region’s population depends on agriculture for jobs.

 However, experts say the fall in agriculture is not just unique to East Africa, a number of developing economies have seen declining share of the agricultural sector to overall economy.

But the trouble is that the speed of change exceeds the capacity of the industrial and services sectors to provide the jobs or livelihoods needed.

 For instance in Kenya, the region’s biggest economy, agriculture  employs 40 per cent of the total workforce and 70 per cent of the rural population.

Agriculture employs the majority of the labour force in Uganda — 66 per cent and Tanzania — 75 per cent of population is rural areas.

 In Rwanda, agriculture’s share of the economy dropped from 38 per cent to 33 per cent, while absorbing between 73 per cent and 80 per cent of the country’s labour force. In Burundi, it dropped from 48 per cent in 2006 to 36 per cent in 2011.

In the manufacturing sector, the report says jobs are growing but much too slowly and are unlikely to match the contribution from agriculture.

 The share of manufacturing in the economy increased modestly in four of the five EAC countries and ranged between 15 and 26 per cent.