On September 27th the 2022 edition of the Africa Agriculture Trade Monitor 2022 (AATM), a flagship of IFPRI and AKADEMIYA2063 in cooperation with the BMZ, was launched. The report analyzes short- and long-term trends and drivers of African agricultural trade flows, including regional policies and the role of global markets. For 2022 it examined, e.g. the impact of the Russian war against Ukraine, the potential of the African Continental Free Trade Area (AfCFTA) to contribute to growth, the development of intra-african value chains for processed products and Africa`s importance in the coffee, tea, and cocoa value chains.
Dr. Ousmane Badiane is the founder and Executive Chairperson of AKADEMIYA2063. He is distinguished Fellow of the African Association of Agricultural Economists, recipient of the Africa Food Prize in 2015 and member of the World Academy of Sciences. As the Director for Africa at the International Food Policy Research Institute (IFPRI), he was instrumental in developing and guiding the implementation of the Comprehensive Africa Agriculture Development Programme (CAADP).
Agricultural trade and global food security have been dramatically affected by a series of unusual events. While the global economy is recovering in 2022 from the COVID-19 pandemic, the Russian invasion of Ukraine has aggravated challenging problems. Although this conflict cannot be held solely responsible for the current global food crisis, it has intensified tensions in the markets. These tensions emerged in agricultural, fertilizer, and energy markets in 2020, and are related to both structural factors such as climate change and policy reactions such as export restrictions and support for biofuels. The war has amplified the increase in food prices and inflationary pressures during the first half of 2022 and increased volatility throughout the year.
The combination of these shocks affects agricultural trade and food security throughout Africa. However, vulnerability of African countries is particularly varied. North African countries such as Egypt, but also Mauritania, Sudan, and the Republic of Congo, appear particularly vulnerable, notably because of their diet based on wheat and their dependence on imports of cereals, vegetable oils, and fertilizers. Other regions including Central Africa, Eastern Africa, and Western Africa appear less vulnerable due to diets based primarily on local or regional crops that are not widely traded on the world market and have relatively stable prices. Examples are teff for Ethiopia and Eritrea as well as fonio for West Africa. Additionally, some African countries can compensate for the increase in the price of their imports by increasing the price of their exports (oil, natural gas, metals).
In this scenario, Africa’s agricultural trade capacity and policy are increasingly important as global volatility in agriculture and fertilizer markets is increasing risks for many importing and exporting countries. Our analysis concludes that:
First, the insertion of African countries in global and regional value chains is low but has recently improved.
Compared to developed economies, African economies contribute with more value added to other countries’ exports than other countries contribute to theirs. This is characteristic of countries with a weak manufacturing base but with abundant natural resources. African countries are providing un- or semi-processed raw products and participate more intensely in agricultural value chains than in those related to textiles and wearing apparel, food and beverages, fishing, and mining and quarrying sectors. Hence, Africa should broaden its manufacturing sectors. To that end, policy interventions should be designed to attract foreign direct investment by eliminating restrictions in factor markets and improving the continent’s business climate.
Second, intra-African trade increased significantly prior to the pandemic in most regions, especially in processed products.
Yet, this trend was halted by the COVID-19 shock. However, with increasing incomes and urbanization, the demand for processed food products in Africa will continue to expand. This represents an important channel through which producers and processors on the continent can access rapidly growing African markets. However, trade barriers and factors such as costs and time required for border and documentary compliance present significant constraints for intra-African trade.
Third, in terms of nutritional content, extra-African trade is concentrated in high-value products with a low caloric content such as stimulants like cocoa, coffee or tea. In comparison, intra-African flows are more intensive in calories, fat, and protein.
Finally, the African Continental Free Trade Area (AfCFTA) is a historic opportunity for the African continent. This agreement will establish the largest free trade agreement in terms of the number of countries involved. While the negotiations point to an ambitious agreement, its implementation should follow through on this beginning. The strengthening of trade links between African countries may make it possible to decrease the risk of food insecurity in the long term through diversification of supply sources and increased ease of access for all farmers to a larger market.
The full publication can be accessed here. Also find the recording of the event here.
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