NAIP Toolkit for Malabo Domestication: Economic Modeling of Agricultural Growth and Investment Strategy Case Study of Kenya

Abstract

The Malabo Agenda on Accelerated Agricultural Growth and Transformation has brought technical challenges to the development of agricultural strategies by expanding the number of commitments and goals under the Comprehensive Africa Agriculture Development Programme. In this paper, we describe and apply an economic modeling framework that was developed to identify the agricultural investment priority areas for a country and to define milestones to track its progress towards the Malabo goals. The framework consists of a three-layer simulation model that aims to capture multiple Malabo commitments and goals. First, the agricultural productivity analysis uses the stochastic meta-frontier technique to assess opportunities to increase agricultural productivity. Second, the economy-wide analysis uses an agricultural and investment focused computable general equilibrium model to capture the Malabo goals on agricultural growth, intra-Africantrade of agricultural commodities, and public and private agricultural investments.Third, the microeconomic analysis builds upon statistical economic modeling to allow direct measurement and simulation of the Malabo goals on poverty and hunger. The modeling framework is applied to Kenya using the most recent data. The Malabo Agenda simulation results indicate that Kenya’s current nonagriculture-led growth is not sufficient to achieving the Malabo overarching goals on poverty and hunger. Agriculture-led growth complemented by extended social assistance is more likely to close the income growth and inequality gaps and contribute to achieving the multiple Malabo commitments and goals by 2025.

Keywords: agricultural productivity, agricultural development, poverty, simulation models, national planning