Assessing the status of Africa’s agricultural exports

During the last two decades, African agricultural trade has increased internationally and intra-regionally. However, from 1998 to 2013, the balance of African trade has undergone significant change. Exports from Africa to the rest of the world have increased and diversified, in both the commodities being traded and the partners that are being traded with, but imports have increased more rapidly.

The driving forces behind increased agricultural trade, at global and regional levels, and the effects that this is having across the continent are outlined in a new report, The 2018 African Agriculture Trade Monitor. Key findings from the report were presented and discussed by a ministerial panel at the 2018 African Green Revolution Forum in Kigali, Rwanda. CTA director Michael Hailu, who participated in the panel said, “The Africa Agriculture Trade Monitor 2018 highlights how increasing the volumes of intra-African trade in agricultural products has the potential to boost industrialisation and enhance competitiveness.”

Trade imbalance

With a fivefold increase in the value of Africa’s imports, the continent has recorded a trade deficit since the early 2000s; in 2011, this stood at €34.1 billion. Demographic changes have resulted in a rapidly increasing young and wealthy urban population, driving the demand for high-quality, processed food products, which are predominantly imported. At the same time, despite global exports of African agricultural products tripling between 1998 and 2013, the share of agricultural products in Africa’s total exports has halved. Furthermore, Africa’s agricultural exports have long been concentrated in a narrow range of products, such as cocoa, coffee and cotton, which has prevented the continent from keeping up with growing global demands for a diverse range of products.

Trade constraints, such as poor quality infrastructure, inefficient customs processes and inconsistent regional standards, limit regional and international trade. Broader challenges, including climate change, also effect the availability of agricultural products for export as increasingly frequent and more extreme climatic events negatively impact Africa’s agricultural yields.

Regional success

Despite the challenges, there has been recent growth in trade between Africa’s four regional economic areas (the Common Market for Eastern and Southern Africa, the Economic Community of Central African States, the Economic Community of West African States [ECOWAS] and the Southern African Development Community [SADC]).

Intra-African trade increased, on average, by around 12% per year between 1998 and 2013. This is still low compared to regions such as Asia and Europe, but it is indicative of African agricultural exporters experiencing stronger gains in competitiveness in intra-regional markets than in global markets. This is, in part, due to efforts related to the Malabo Declaration – a commitment made by African governments in 2014 to promote inclusive growth and sustainable development – which aims to triple the level of intra-regional trade in Africa by 2025 (see Spore’s interview with the African Union’s Dr Godfrey Bahiigwa).

In the ECOWAS area, member countries are facilitating trade by removing tariffs in an effort to form a regional free trade area and, in the SADC region, states are working to improve port facilities and transportation networks. Policies which promote regional trade in Africa, such as the legislation for the Continental Free Trade Area (see Sporearticle, Trade A promising new continent-wide trade agreement for Africa), will open up the continent to new investors and create new opportunities for entrepreneurs.

Ousmane Badiane (see his Spore interview), editor of the report and Africa director for the International Food Policy Research Institute (IFPRI), emphasises that, “Increasing the ability of African countries to participate in regional and global trade helps to improve well-being of consumers, raise incomes of farmers, build resilience of food markets and, ultimately, it also helps to boost economic growth and reduce poverty."

Policy implications

Nevertheless, even with the recent developments in intra-regional trade, two-thirds of African countries lost competitiveness in global agricultural markets during the period 1998-2013. As the success of intra-regional trade looks set to continue, the report’s authors recommend that policymakers build upon regional achievements. This should include concerted efforts to integrate more smallholders into the agricultural value chain, by helping them to access inputs and connecting them with processors and markets.

Investment further along the value chain would also enable the development of value-added products that are more internationally competitive and respond to consumer demand. Strengthening market institutions and investing in infrastructure helps to provide an enabling environment for value chain development. Ultimately, increased public expenditure in agriculture and agricultural research is needed to improve productivity and build the resilience of the agricultural sector so that producers are better prepared to meet international trade requirements.

As the report notes, African countries have limited control over trade policy in other countries, but they should continue to participate in efforts to lower trade barriers around the world and lead the way in addressing domestic trade constraints.

Note: Africa Agriculture Trade Monitor 2018 is a collaborative endeavour between IFPRI and CTA, which builds on the work of the Regional Strategic Analysis and Knowledge Support System and the African Growth and Development Policy Modelling Consortium on trade.