The implementation of the African Continental Free Trade Area (AfCFTA) on January 1, 2021 can be regarded as a turning point for African regional and international trade.
Now that it is in effect, the AfCFTA will be one of the largest free trade areas in the world, covering a market of more than 1.2 billion people and up to USD$3 trillion in combined GDP. It also has the potential to increase intra-African trade by more than 50 percent, which would add an estimated USD$76 billion in income to the rest of the world.
African nations have already made determined efforts to increase trade among themselves through eight Regional Economic Communities (RECs) officially recognized by the African Union, and via many additional regional trade agreements.
In this context, intra-regional agricultural trade has played an important role in boosting Africa’s economic growth. It has also improved incomes and livelihoods and strengthened the resilience of the continent’s smallholder farmers, rural and urban populations, and national economies against shock or prolonged crisis, including the COVID-19 pandemic.
During the pandemic, women in Africa have been disproportionately affected by countermeasures such as border closures, curfews and other movement restrictions, as well as by increased gender-based discrimination and violence. AfCFTA can help lift up the continent’s women by generating an expected increase in wages for skilled and unskilled women of up to four percent by 2035 through new employment opportunities across the agriculture value chain.
As Africa’s agricultural trade intensifies, its food systems will benefit from more robust supply chains and more stable food prices, which is good for both producers and consumers. For now, however, formal intra-African trade remains at under 20 percent of total African exports and is dominated by a small number of products and countries. Moreover, Africa imports approximately USD$72 billion in food and agricultural products per year, a figure that is growing by 3.6 percent annually.
Every year, 10 to 12 million young Africans enter the job market, each vying for one of only about 3.1 million jobs created annually on the continent. Although the agriculture and informal sectors are already the highest employers in Africa, these sectors are nonetheless likely to create additional employment as the demand for food across the continent rises.
The Panel’s recommendations include improving information and data on cross-border trade, particularly on informal cross-border trade, in the areas of scale, product quality, and flow patterns. Better data would support efforts to simplify regulations, provide training on food hygiene, enhance access to finance, and address entrepreneurship skills.
Addressing tariff and non-tariff barriers is also key to boosting agriculture trade in Africa, for instance by streamlining or eliminating cumbersome customs procedures, roadblocks, subsidies, and technical barriers such as sanitary and phytosanitary rules.
Also helpful would be new digital solutions, such as introducing radio frequency identification or microchipping for tracking livestock, and using digital storage and exchange of safety certificates for easy and quick transmission of goods across African borders.
In addition, the development of rail and rural roads in Africa would expedite the adoption of productivity-enhancing technologies (fertilizers, seeds, irrigation, and mechanization), facilitate greater crop diversification, speed the transition from subsistence to commercial agriculture, and improve delivery of services such as finance and extension.
Another critical improvement would be to enhance Africa’s value chain competitiveness and strengthen its crisis preparedness and resilience. Emphasis should be placed on those food products that both generate high value and also contribute to improved nutrition. This step calls for investments in the design and development of technologies that improve both the quantity and quality of food produced in Africa. Furthermore, the provision of training facilities needs to be enhanced in order to expand opportunities for skill development and innovation capacity along the value chain.
As intra-African agriculture trade evolves and as mechanization and digitalization expand across food systems, new entrepreneurship opportunities—beyond the farm—will emerge in the continent’s agri-food sector, creating the potential for high-quality, sustainable jobs across Africa.
Prof. Sheryl Hendriks is a Malabo Montpellier Panel member and Department Head and Director of the Institute for Food Nutrition and Well-being at the University of Pretoria in South Africa.
To view the original blog post, please click here.