I Intersection between fiscal policy and market institutions. Food policies in most African
countries are strongly influenced by the basic need of the state to raise public revenues.
Given the low levels of literacy, administrative capacity, and written records concerning
earnings and land ownership, most African governments rely heavily on indirect taxes
(especially import and export levies and license fees) to finance their operations. In Mali,
Senegal, and Côte d'Ivoire, for example, import taxes on rice have been a major source of
government income. Decisions to import may be driven more by the immediate financial
needs of the state than by market conditions within the country. Calls for reforms of
marketing policies (e.g., abolishing trade taxes at grain checkpoints) that fail to account
for the basic need of governments to finance themselves are likely to be ignored by hard-
pressed officials unless accompanied by workable alternatives for raising revenue.
The coffee board in Rwanda is another example. It was used to promote coffee
production and export and to generate revenue and foreign exchange controlled by the
government. External economic advisors generally opposed the board and taxing of
exports. At the same time, advisors recommended programs to promote health, education
and infrastructure. Coffee export taxes were one of the few practical sources of
government revenue to finance such programs. The problems arose with the details of the
operation of the coffee board and the government's diversion of the funds from
development projects to expenditures on arms and other interests of the political
authorities (Tardiff-Douglin and Shaffer 1994).
Abolishing such indirect taxation could also hurt the private sector if it led to reduced
expenditures on market infrastructures and delays in the payment of public salaries.
Deteriorating infrastructures increase marketing costs. Failure to pay public employees on
time can dramatically reduce urban effective demand for basic staples and soak up much of
the informal credit in the marketing system that otherwise would finance working capital
(Staatz, Dioné, and Dembélé 1989). Experience throughout Africa has also shown that
when public employees are not paid on time or are not paid a living wage, they frequently
use their positions to extract bribes that greatly increase the transaction costs of
marketing. Hence, a major challenge is to fashion reforms that reduce perverse incentives
on marketing agents while still providing the state with a workable means of financing its
legitimate operations.
• Collaboration between policy and research. A key challenge in many African countries is
to build the tradition of researchers working collaboratively with policymakers to identify
ways of spurring productivity growth. Building this tradition requires recognition by
policymakers that "facts make a difference" and that not all conventional wisdom about
the food system is necessarily true. It also requires that researchers take seriously the
political-economic constraints often facing policymakers. Local researchers have
sometimes been perceived by governments as hostile critics, more interested in exposing
weaknesses in policy than in working to constructively identify useful alternatives. On the
other hand, researchers have sometimes been harassed, sacked, or killed for going public
with research results considered offensive to the state. The historical lack of collaboration
24