Heterogeneity, transient, and persistent technical efficiency: implications for African agrifood systems

This study departs from conventional estimation of technical efficiency by distinguishing between transient and persistent technical efficiency while accounting for heterogeneity to gain insights for transforming agri-food systems in Africa. A four-error component stochastic frontier model with a translog specification, assuming a half-normal distribution, is applied to panel data comprising 980 observations from 49 countries between 2000 and 2019. Our results show that output is significantly explained by land, labor, and capital. In addition, technological innovation, represented by log (t), consistently emerges as a significant driver of output. The heterogeneity analysis reveals that Cameroon, Ghana, South Africa, Egypt, Cote d'Ivoire, Nigeria, Malawi, and Benin exhibit significantly higher output levels. Persistent technical inefficiency is dominant, with significant heterogeneity in agricultural output. Specific interventions to address persistent technical inefficiency in the agrifood system should include strengthening value chains and farm credit markets, stabilizing land reform policies, promoting the adoption of modern technology, and improving governance. Human capital development through training and education could help mitigate transient technical inefficiency. We conclude that a viable strategy for the transformation of agrifood systems in Africa is to clearly differentiate between short-term (transient) and long-term (persistent) policies, tailored to the unique characteristics (heterogeneity) of each country or region. Therefore, the results are crucial given the ongoing implementation of the Comprehensive Africa Agriculture Development Programme and Agenda 2063.