Trade and Marketing
New policies, free trade areas and digital projects are changing Africa’s regional food trade and opening up market linkages for actors of the agricultural value chain across the continent.
The growing population, increased urbanisation and burgeoning middle class in Africa is leading to increased demand for food, as well as greater calls from consumers for more varied and processed products. As a result, by 2030, the African food market is expected to be worth US$1 trillion (€900 billion). However, for Africa to benefit from this significant opportunity, continental trade needs to be enhanced; in 2017, intra-African trade accounted for just 17.6% of total African exports and, in 2016, agricultural goods represented just 20.7% of total intra-African export trade, according to estimates from the African Development Bank (AfDB).
To meet Africa’s growing food demands, regional trade and integration will be essential, as discussed at the recent Brussels Development Briefing No 58, which brought together a panel of experts around the topic, ‘Africa’s agriculture trade in a changing environment’. Antoine Bouët, co-leader of the Globalization and Markets Program at the International Food Policy Research Institute (IFPRI), presented findings from the Africa Agriculture Trade Monitor 2019 (AATM), a joint initiative of IFPRI and CTA. According to the AATM, African agricultural exports remain dominated by primary products, are not diversified enough to promote trading resilience, and are costly to export within and across Africa. Critical data provided in the AATM, and developed by AGRODEP – an African trade network of policy analysts – will be used to inform policymakers and value chain actors on regional trade investment opportunities.
Lessons of success
Key policy developments aiming to help tackle Africa’s regional trade challenges, including the development of the African Continental Free Trade Area (AfCFTA), were also discussed at the Briefing. The continental agreement, which was launched in July 2019, is expected to significantly boost intra-regional trade within an African market of 1.2 billion people, as long as issues of non-tariff measures, customs procedures and transportation infrastructure are addressed. Other trade-related factors, such as harmonised standards to achieve a single market, and a high level of domestic policy integration backed up by judicial enforcement, were highlighted as the key success factors of Europe’s Common Agricultural Policy. Such an example could be used to inform Africa’s regional trading policies, explained Professor Alan Matthews from Trinity College Dublin in Ireland.
Best practices, challenges and successes for regional trade in Africa were shared by Rose Mutuku of Smart Logistics Solutions (SKS) in Kenya, and Komi Agbokou of Choco Togo. An agribusiness with a focus on value-added and pre-cooked traditional foods, SKS produces ready-to-eat beans and pulse-based products, which are much appreciated in Kenya and the wider Eastern African region. To connect over 5,000 smallholder farmers with local and regional markets, SKS organises farmers and ensures the products meet national trading standards and those of neighbouring countries. The youth-led cooperative, Choco Togo, on the other hand, has built its success on targeting 100% certified organic cocoa varieties to meet a growing global trend for natural products, and placing more diversified chocolate products on the market.
“It is important for Africa to trade among itself, to collaborate and cooperate,” emphasises Irene Ochem, founder and CEO of the African Women Innovation and Entrepreneurship Forum (AWIEF), an annual event held to highlight the advancement of women in Africa as innovators and entrepreneurs. “What we need to look at is the roles that women have in this process,” she continued, speaking on the AfCFTA at the recent AWIEF, which ran under the theme, ‘Enhancing impact: digitalisation, investment and intra-African trade’.
At an AWIEF side-event, a digital platform, #VALUE4HERConnect, was launched to help women entrepreneurs harness the opportunities of the AfCFTA. The CTA and AWIEF initiative, which has already registered over 400 women, works by connecting women-led agribusinesses to potential investors and networks. “The platform will enhance the capacity of African women and youth to trade in agricultural commodities across borders, hence contributing to economic growth,” says Chris Kiptoo, principal secretary in Kenya’s Ministry of Trade.
Investments in digital projects and infrastructure will be key for enabling digital trading payments in Africa and promoting the emergence of digital entrepreneurs, according to Akinwumi Adesina, president of AfDB. Thus, as well as investing in physical infrastructure, such as roads, seaports and airports to enhance trading opportunities, the Bank is financing the development of digital structures to better connect African countries: “We financed what is called the Trans-Sahara Fibre Optic Network. It is linking Nigeria, Niger, Chad to Algeria,” he says of the project, which aims to reduce the cost of access to ICT-based services and support the development of mobile financial services and e-trade.