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African Continental Free Trade Area agreement to accelerate trade in agricultural goods

An article by Jean Senahoun, Senior Economist of FAO Regional Office for Africa

Despite its vast agricultural potential, Africa has remained a net importer of agricultural products in the last three decades. Currently, many African countries import basic foodstuffs such as dairy products, edible oils and fats, meat and meat products, sugars, and cereals especially wheat and rice to meet the consumption needs of their nationals.

This implies that the importation of food plays and continues to play an increasingly important role in ensuring food security on the continent. The situation is of utmost concern particularly for a continent endowed with vast unexploited arable land. 

According to the FAO Africa Regional Overview of Food and Nutrition Security (2018) report released recently, Africa had a balanced agricultural trade when both exports and imports were at about US$14 billion in 1980s, but by 2010, its agricultural imports exceeded exports by about US$20billion. The report further stressed, ’’today, Africa’s food and agricultural import bill averages US$72 billion per year growing annually at 3.6%.’’

One of the key aspirations of the African Union’s (AU) Agenda 2063, as expressed in the Ten-Year Implementation Plan (2014–2023) adopted as the Malabo Declaration in 2014 is regional integration, including greater trade in goods and services, leveraging on the growing population and increasing intra-African market opportunities.

Within this context, establishing the African Continental Free Trade Area (AfCFTA), a flagship programme of the Agenda, is expected to significantly accelerate growth and sustainable development through a doubling of overall intra-African trade by 2022, and a tripling of trade in agricultural goods by 2025.

FAO Senior Economist, Jean Senahoun, believes that the signing of the AfCFTA by 44 African countries is an important milestone. “The AfCFTA is expected to soon come into force as 22 countries have already ratified the agreement.’’ he emphasized, pointing to it creating a single market of up to 1.2 billion people, which will generate substantial economic gains.

Senahoun added, “Agricultural trade will also benefit significantly, as the creation of a single market will stimulate economies of scale that are essential for a more efficient, market-oriented farming sector.” 

Prevailing Situation and Trends in Intra-African Trade 

Most of Africa’s trade is with countries outside the region. Overall, intra-African trade (or trade amongst African countries) is about 10 to 20 percent of the total and this figure has grown only slowly over time, the report said.

At sub-regional level, intra-regional trade is about 5 percent for Common Market for Eastern and Southern Africa (COMESA) 10 percent for the Economic Community of West African States (ECOWAS) and Southern African Development Community (SADC) and less than 2 percent for Central Africa.

At the continental level, South Africa, Nigeria and Côte d’Ivoire account for 20, 10 and 7 percent, respectively, of total intraregional trade. These countries play a particularly important role in intra-regional trade. For example, in the Community of Sahel-Saharan States (CEN-SAD), 28 percent of imports come from Nigeria and another 22 percent from Côte d’Ivoire.  

Trade and Food Security 

The African regional overview report stressed that trade affects each of the dimensions of food security through its impact on incomes, prices and inequality, stability of supply, linking food-deficit areas with food-surplus areas, as well as food safety, variety and quality of food products, all of which help determine the food security and nutrition of individuals.

Economic growth has been essential for driving down poverty rates, and although it is difficult to establish a clear link between trade and income growth, many agree that economies that are more open tend to grow faster. Strong economic growth helped reduce the global poverty rate from 46 to 27 percent between 1990 and 2005.

The income and poverty effects of agricultural productivity growth are strongest in countries where agriculture is a large part of the economy and employs a large share of the labour force. Growth in agriculture has been estimated to reduce poverty more than three times faster than growth in non-agricultural sectors. 

FAO’s Commitment  

As a demonstration of the organization’s commitment to intra-regional trade, FAO and AUC recently singed a Technical Cooperation Project (TCP) agreement. It was in line with FAO’s vision of playing the lead role toward achieving the Sustainable Development Goals (SDGs) on the continent and working for Zero Hunger.

The Organization has over the years partnered with the AUC, especially through the Department of Rural Economy and Agriculture (DREA) in promoting inclusive and efficient agricultural systems.  The partnership aimed at meeting the Malabo Commitment of accelerated agricultural growth and transformation for shared prosperity and improved livelihoods.

The commitment includes harnessing market and trade opportunities at local, regional and international levels by creating and enhancing policies, institutional frameworks and support systems so as to triple the volume of intra-African trade in agricultural commodities and services by 2025.


Source: GNA Story (https://ghananewsagency.org/africa/african-continental-free-trade-area-agreement-to-accelerate-trade-in-agricultural-goods-149805)
Published: 2019-05-15 08:01:09
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