Increasing Agricultural Productivity:
Encouraging Foreign Direct Investments in the COMCEC Region
50
and agricultural trends, it is important to recognise key sources of growth in agricultural
production: arable land expansion; increases in cropping intensity; and yield increases 67. Since
empirical research on FDI in relation to agricultural potential is relatively limited, the study will
also illustrate measured effects in non-COMCEC countries.
It is estimated that during 2010 - 2050, yield increases and arable land expansion will remain
the two most important contributors to overall crop production in the COMCEC region,
particularly in Sub-Saharan Africa. In the next 40 years, on average, yield increases, arable land
expansion and increases in cropping intensity have the potential to contribute 69, 25 and 6 per
cent respectively to future growth in crop production 68.
The ratios of current yields to estimated potential yields (i.e. also referred to as yield gaps) for
maize, oil palm, soybean and sugarcane in Sub-Saharan Africa are 0.20, 0.32, 0.32 and 0.54
respectively. 69 There is considerable ‘low hanging’ crop intensification opportunities for major
cereals such as maize in Sub - Saharan Africa. 70 Recent analysis indicates that Sub-Saharan
Africa could have large production gains if crop yields were increased to only 50 per cent of
attainable yields. Recent analysis has shown that raising investment expenditure by 1 per cent
on irrigation infrastructure, rural roads and agricultural R&E (research and extension) could
lead to an estimated 0.06, 0.08 and 0.13 percent increase in agricultural GDP respectively in
Kenya71. Even though Kenya is not a COMCEC Member Country its natural environment
resembles to many COMCEC Member Countries. Other work in this field has shown that policies
and programs promoting fertilizer use, for example, will have considerable agricultural
productivity and poverty - reduction effects. The estimated agricultural productivity and
poverty elasticity with respect to fertilizer use are 0.16 and 0.04, respectively.72
When considering the critical production factors for agricultural production the following FDI
potential destinations can drafted. Figure 21 outlines those COMCEC Member Countries with a
significant labour force potential, while Figure 22 and Figure 23 indicate which COMCEC
Member Countries enjoy a relatively high market potential in terms of arable land and
availability of water resources.
67 Bruinsma, 2009.
68 ibid
69 Deininger (et al 2011)
70 Mueller et al (2012)
71 Recent analysis by Thurlow et al (2012)
72 Analysis by Fan and Zhang (2008)