IMPROVING REGIONAL FOOD TRADE David Adama, Alliance for a Green Revolution in Africa

1 2 3 4 5 Outline The Case for Regional Food Trade and Markets in SSA Key Drivers and Constraints   Challenges of intra-African trade 4 5 The Value of the African Continental Free Trade Area Enablers for changing the tide

THE CONTEXT OF REGIONAL FOOD MARKETS IN SSA In 2050, 1 in 4 people on the planet will be African Urbanisation and secondary town growths; African Urbanisation growing by +4% PA – By 2021 – (625 million) Increasing and more diversified food demand Stagnating productivity Climate dependent and constrained Investment growing but not enough and risks (perceived and real) still very high Growing food import bill, (US$35 billion/Yr -2014) Export of raw commodities to other countries Intra-African trade and regional integration is a sure vehicle to speed up Africa’s economic transformation.

URBANIZATION IS DRIVING INCREASED DEMAND FOR FOOD PRODUCTS THAT ARE NOT MOSTLY SUPPLIED BY AFRICAN PRODUCERS Increasing urbanization across Africa Shifting consumption preferences to “premium” rice

Is REGIONAL FOOD TRADE really important ? Improves prospects of investments in value addition and agro-processing with access to wider markets and more stable supply chains Create additional jobs and increase farmers’ access to markets, linking them with consumers in rapidly growing urban areas and beyond national boundaries; Improved adoption of input technology thereby increasing productivity Promotes specialization and efficiency, boosting agriculture productivity and enabling manufacturers and traders gain efficiencies in the use of resources, including labor and technology. Food trade between surplus and deficit areas also allows markets to mitigate food shortages, increasing resilience and food security at a regional level.

Continent-wide: More than 80 % of Africa’s exports are destined for outside markets, with EU and the USA accounting for more than 50 % of this total Despite the potential and vast opportunities, intra-regional trade in SSA remains consistently low compared with inter-continental trade. Varied : Africa 11.9 % in Intra- regional trade E.G. Only 5% of Sub Saharan Africa’s (SSA) imports of cereals come from other SSA countries.

what are the challenges of regional food trade in Africa Policy unpredictability Political Economy of Food is complicated; Seasonal surplus and Annual deficits High price fluctuations Infrastructure deficit and logistics – can be cheaper to import into Kenya from Mexico than from Zambia; …… But Demand is growing ..creates new opportunities Low productivity; climate change; Disaggregated supply; poor adoption of input technologies Technology and Innovation National level Food Security considerations are one of the main issues driving government interventions that dis-incentivise investment; (NTBs)

Two Key Issues to focus on There are several but …Based on feedback and learning from our programme, the following affect the whole market system: Coordination of players and sectors- investment in one bit of the value chain does not work without other bits; creating institutional configuration for productive public-private partnership Unpredictability policy environment and government interventions – Non-Tariff Barriers, Non-Tariff Measures, Companies can work with any policy as long as they know these policies.

What is NTBs Non-Tariff Barriers (NTBs) are restrictions that result from prohibitions, conditions, or specific market requirements that make importation or exportation of products difficult and/or costly. In many cases, NTBs are unjustified and not evidence based purported to deal with food security concerns or advantage for local markets. improper application of Non-Tariff Measures (NTMs) such as sanitary and phytosanitary (SPS) measures and other technical barriers to Trade (TBT) NTBs arise from different measures taken by governments and authorities in the form of government regulations, policies, and restrictions or specific requirements, on private sector business practices, or prohibitions in a bid to protect the domestic industries from foreign “competition”.

Do we agree on the importance of regional food trade? Do we agree on the importance of improving value chain coordination and predictability of policy that effects cross border food trade? what instruments have we tried – as a sector – to put in place to address those issues? what lessons can we learn and what should we do differently? To the Session…..

Value of AfCFTA The AfCFTA will have a combined GDP of about $2.3 trillion and a population of more than 1.2 billion people, with more than half comprising the youth. It will tackle the fragmentation of African economies through elimination of tariffs and removal of non-tariff barriers The ratification and implementation of the Continental Free Trade Area (CFTA) and the tripartite Free Trade Agreement (FTA) will be crucial to building a single continental market for goods and services, along with free movement of labor and capital Increasing the volumes of intra-African trade in agricultural products and the elimination of Non- Tariff Barriers

Boost industrialization and enhance competitiveness, at country and industry levels, through higher investments in connectivity and infrastructure, both physical and digital Greater harmonization in standards and procedures strengthening food safety Create additional jobs and increase farmers’ access to markets, linking them with consumers in rapidly growing urban areas and beyond national boundaries. Regional market development will promotes specialisation and efficiency, boosting agriculture productivity and taking advantage of the complementarity of agro-ecological zones.

AfCFTA modalities on goods: implications for Africa/East Africa Largest increases (i.e. over 30%) in intra-African exports for Eastern African countries are found in the following sectors:   Ethiopia Kenya Madagascar Rwanda Tanzania Uganda Rest of Eastern Africa Agriculture and foods Oilseeds Vegetable oils Rice Milk and dairy Crops Vegetables, fruit, nuts Red meat Sugar White meat Other food products Beverages and Tobacco Energy and mining Mining Energy Industry Textile Fishery Wearing apparel Leather Wood and paper Metals Chemicals Vehicle and transport equipment Electronic Machinery

What will be the enablers for improving intra-African trade? Integrated National development plans and policies Well functioning and resilient infrastructure Strong capacities and skills at all levels Digitalization of economies

Conclusion Implementing the AfCFTA will catalyze Africa’s industrial transformation Improved productive potential for agriculture in Africa, value-addition and manufacturing Boost trade and investment between countries and regional economic communities Generate prosperity for citizens achieving agenda 2030 and agenda 2063 Increase market volume and value for producers and manufacturers alike