Published by the Food and Agriculture Organization of the United Nations and the African Union Commission Addis Ababa, 2021
The Framework for Boosting Intra-African Trade in Agricultural Commodities and Services is built around the fifth commitment of the 2014 Malabo Declaration to triple intra-African trade in agricultural commodities and services by 2025. Increased trade will help create sustainable jobs, incomes and livelihoods while improving long-term agricultural productivity and food security on the continent.
Recent evidence suggests that the export of agroprocessed and other value added goods made in Africa is greater in regional markets than in external markets outside Africa, typically dominated by mostly low-value raw material exports. The African Continental Free Trade Area (AfCFTA), which will start trading in January 2021, is expected to accelerate economic integration and expand trade in Africa’s first single market of 1.2 billion people, valued at USD 2.5 trillion. The World Bank (2013) estimates that the value of Africa’s agriculture and agribusiness market could expand to USD 1 trillion by 2030.
The agreement establishing the AfCFTA entered into force on 30 May 2019, covering 54 of the 55 African Union (AU) Member States (except Eritrea), 36 of which have ratified the agreement so far. African countries have undertaken commitments to remove tariffs on 90 percent of over 5 000 tariff lines as well as liberalise services. It is estimated that tariff liberalisation in the transition phase could generate welfare gains of USD 16.1 billion, and growth in intra-African trade of 33 percent up from 15 percent (UNCTAD, 2019).
However, Africa’s growth is likely to be adversely affected by the COVID-19 shock. The health crisis has already erased some of the gains achieved by African countries over the last two decades, marking the first recession in the region in 25 years. Restrictive measures have disrupted essential services such as food production and processing, imports of food and other essentials, transportation and other key functions of agricultural supply chains. Lessons learned from the pandemic crisis include maintaining open trade channels safely, policy coordination and transparency between member states and protecting essential workers to ensure that public health and food systems continue to operate.
The pandemic has exposed Africa’s food insecurity and vulnerabilities to trade disruptions of food imports on which the continent depends. For example, the number of undernourished people in Africa increased to 256 million people in 2018, well before the current pandemic. In the next 10 years, it is projected that agricultural demand in Africa will continue to outstrip agricultural supply. Despite its vast agricultural potential, Africa remains a net importer of agricultural products with a food import bill of about USD 80 billion per year compared with exports of USD 61 billion in 2015–2017.
Africa is ranked among the lowest performing regions, according to the World Bank Doing Business indicators and as measured by the share of intra-African agricultural trade as a percentage of total African agricultural trade, which has consistently remained below 20 percent in recent years. Overall progress on achieving the Malabo Declaration commitments by 2025 and on regional integration, in general, has been slow due to country disparities in the levels of development, inconsistent and conflicting regulations and standards, as well as infrastructure and connectivity problems at the border and behind the border that add to the cost of doing business in Africa (Benin, 2020).
The Framework identifies several major challenges and constraints to food security arising from issues of limited productive capacity and intra-African trade. As documented in the AU’s 2019 Biennial Review and other sources, the poor state of infrastructure in Africa such as water, roads and telecommunications has reduced economic growth by 2 percent and lowered productivity by as much as 40 percent annually. Meeting the growing demand for trade and investment in the agricultural sector remains a major challenge in Africa, where it is estimated that only 10 percent of farmers have access to credit.
Food safety measures and other non-tariff barriers (NTBs) act as major barriers to trade compared to tariffs. Estimates show that domestic food prices in sub-Saharan Africa are 13 percent higher on average due to sanitary and phytosanitary (SPS) measures only. Other NTBs contribute to high domestic transportation costs, accounting for between 50 and 60 percent of marketing costs in the region, while roadblocks very often add to the cost of transport. In the agricultural services sector, several factors contribute to increased trade costs of services and decreased competitiveness, including compliance costs, regulatory barriers and language differences.
Tariffs, NTBs, gender inequality and poor skills limit access to the formal economy and therefore contribute to poor compliance with SPS measures and high levels of informality such that informal cross-border trade accounts for at least 30-40 percent of total intraregional trade. Women account for between 60 percent and 70 percent of informal cross-border traders while 90 percent of informal workers are women and youth.
While countries are beginning to trade more and more with one another, food security will continue to be underpinned by imports for the foreseeable future. Accordingly, AU Member States have undertaken commitments to accelerate the implementation of the Malabo Declaration and the AfCFTA Agreement to ensure increased levels of intra-African trade in agricultural commodities and services and reduce food insecurity – the basis and rationale for the Framework for Boosting Intra-African Trade in Agricultural Commodities and Services.
The Framework was jointly developed by the African Union Commission (AUC) and the Food and Agriculture Organization of the United Nations (FAO), in consultation with member states, regional economic communities (RECs), the private sector and civil society. The document is organized into ten sections: introduction, rationale and overview, methodology, policies and reforms, macroeconomic overview, trade and food security, trends of traded agricultural products, challenges to Intra-African trade in agriculture, sustainable financing, and the implementation strategy.
The Framework contains a roadmap with seven clusters based on the Boosting Intra-African Trade (BIAT) Action Plan adopted at the 2012 Assembly of the African Union. The roadmap translates BIAT objectives into tangible outputs and actions in terms of short, medium and long-term activities. The seven clusters are trade policy, trade facilitation, productive capacity, trade-related infrastructure, trade finance, factor market integration and cross-cutting issues, including the strengthening of trade and market information systems.
The implementation of the Framework will be led by the AUC at the continental level, by RECs at the subregional level and by Member States at the country level, building on and working with existing institutional and coordination mechanisms and structures. Other key stakeholders in the implementation process will include the private sector, civil society and development partners. The implementation of the Framework will require substantial investment from all key partners, repurposing of available resources where necessary and other innovative financing mechanisms.
Additionally, the implementation of the Framework will prioritise harmonisation of trade regimes, rules of origin and NTBs. Other actions will cover regulatory reforms to improve trade facilitation, enhance access to finance for the private sector, and address barriers to the movement of people. The Framework also addresses challenges in African productive capacity and poor physical infrastructure, and promotes the digitalisation of markets and information systems in coordination with new and ongoing initiatives such as the AU flagship programmes.
FAO and AUC. 2021. Framework for boosting intra-African trade in agricultural commodities and services. Addis Ababa.
https://doi.org/10.4060/cb3172en
