This week I’m focusing on the riveting Market Access Africa conference which was organised by our partner, African Agri Council, yesterday and today. I had the privilege to moderate three sessions, one themed “Increasing Food and Agriculture Trading and Market Opportunities through the African Continental Free Trade Area (AfCFTA)”. I had an hour long conversation with Dr Babafemi O. Oyewole, Managing Director/CEO at African Agribusiness Alliance in Benin. We were mindful of the fact that African countries import just 15% of all food from other countries on the continent. Benefits for food and agricultural trade are projected to be among the most significant during the operational phase of the African Continental Free Trade Area (AfCFTA). We then pondered how will cross country and continental collaboration be enforced to benefit the sector?
Agriculture and the entire agrifood sector is a productive sector with great job creation potential. However, this implies prioritising the modernisation and intensification of many family farms on the continent.
In light of expected population growth, with millions of young people entering the labour market every year, promoting sectors with many job opportunities is a challenge of paramount importance.
Africa has cultivable land and water available that could enable it to significantly boost its production.
But to avoid jeopardising natural resources, the potential for agricultural growth, higher incomes and a reduction in inequalities is, above all, based on the potential for improving labour productivity and land already developed in Africa.
Feeding 1.5 billion people by 2030 and 2 billion by 2050 is the challenge that Africa can meet.
Success requires a vision shared among the different stakeholders in agricultural development and food security.
Growth in demand and its diversification, offer a new opportunity for African agricultural producers and subsectors.
This market potential is a veritable economic tool for transforming the agricultural sector.
This transformation must assist in providing solutions to Africa’s challenges: creating jobs, protecting natural resources, and meeting the needs of consumers.
But to meet this challenge and to avoid dependence on international markets for its food, Africa must reinvest heavily in agriculture.
Economic and budget stability allows countries to put agriculture back in its rightful place within national budgets.
Regional market integration and controlling the international integration of African economies are two other conditions for finding the way back to sovereignty.
Agriculture in Africa must accelerate growth by exploiting its potential to achieve food security, reducing its dependence on the international market and contributing to global economic growth and regional integration.
It must do this by helping to create jobs for young people, integrating women and reducing social inequalities, while preserving natural resources and the environment.
Promoting diversification based on high quality processed products.
The markets opened up by the emergence of an African middle class, in urban areas in particular, are unprecedented.
In reality, demand is highly segmented according to LSM level, area (rural, secondary towns, capital cities, working-class neighbourhoods and other demographic segments) and lifestyle and age (rise in popularity of fast food restaurants and supermarkets).
This segmentation is reflected in the need for diverse products depending on the degree of product processing and packaging and many other issues.
Nonetheless, these lucrative markets are likely to be highly competitive and African farmers are not always in the best position to supply them.
In order to exploit such opportunities, agriculture in Africa must often meet several major challenges.
Producing for markets with higher value-added means offering more standardised products, in terms of taste, shelf-life and, increasingly, compliance with health and environmental standards.
Meeting this challenge means investing in training, regulation and monitoring.
Although we’ve published Dr Oyewole’s speech in this edition, our question and answer session was riviteting. I will just quote our conversation in verbatim as I asked the questions:
Question: Are regional markets the future of agribusiness?
Agriculture offers great opportunities for intra-African trade, but the performance is still very poor. Imports are still substantial and reducing imports could reduce poverty through smarter intra-regional trade, especially considering the adverse effects imports have on reserves and employment opportunities for the youths in Africa.
Question: How can standardisation of products enhance intra-African trade?
This is one of the areas that AfCFTA would have to work on to come up with the implementation of standards that will make the exchange of goods among countries easy. It has been suggested that Africa can adopt shared standards based on the European model through a collaborative efforts between the governments and the private sector.
Question: For intra-regional trade in agriculture and agribusiness to thrive in Africa, there is need for an efficient payments system, how can AfCFTA facilitate the adoption of a regional payments instrument?
African Export Import Bank (Afrexim) is working with the AfCFTA to develop the Pan African Payment and Settlement System (PAPSS) as the first centralized payment market infrastructure for processing, clearing, and settling of intra-African trade and commerce payments to facilitate intra-African trade. The mechanism will facilitate payments as well as formalizesome of the unrecorded trade due to prevalence of informal cross-border trade in Africa. It will also provide alternative to current high-cost and lengthy correspondent banking relationships to facilitate trade and other economic activities among African countries through a simple, low-cost and risk-controlled payment clearing and settlement system. The benefits of PAPPS for cross-border payments include cost reduction; reduction in duration and time variability; decreasing liquidity requirements of commercial banks; decreasing liquidity requirements of central banks for settlement as well as its own payments; and strengthening Central Banks’ oversight of cross border payment systems.
The second session was themed “Accelerated adoption of digital technologies and supply chain improvements to increase productivity” and the panelists were, Dr David Burton – AgriTech Director, UK Department for International Trade, and Dr Dan Asare-Kyei – Chief Executive Officer, Esoko Limited, Ghana
During my intervention I mentioned a few quick points that included the fact that most e-platforms in Africa are owned and run by Africans. In terms of socio-geographical spread, Africa should be perfect for the use of digital e-commerce/ or distance selling. If internet use across the continent can be expanded at the same rate as in high-income countries, 140 million new jobs and $2.2 trillion will be added to Africa’s GDP. Without robust, cutting-edge enforcement, the African e-commerce market is vulnerable to exploitative practices that could harm African businesses and consumers alike. If trade can flow freely between AU member states companies can benefit from economies of scale to grow their sales and therefore their production capacity.
Yes, we need to build trust in e-commerce and reliable payment systems for consumers and businesses. Public and private funding needs to be encouraged to support the digital economy. Training for the digital economy and, in particular, for B2B e-commerce is essential. Women, the youth and entrepreneurs from rural areas should be encouraged to enter the digital economy. Vital to ensure that addressing the unaddressed is achieved throughout Africa. All Africans should have an address to enable e-commerce deliveries.
My graveyard shift was a session aptly themed “Linking Agribusinesses to New Markets to Facilitate the Growth of Commercial Farming and Export-oriented Agro-processing”. The panelists were Dr. Thulasizwe Mkhabela, Group Executive Impacts and Partnerships, Agricultural Research Council (ARC) and Paul A. Venter, Chief Executive Officer and Managing Partner, ONTDEK. United States. Africa is referred to as the food basket of the world but we still need to work hard to overcome non-trade barriers in opening market access opportunities such as protectionist regulations in other countries and agriculture subsidies granted to farmers which gives their products price competitive edge over ours. As a brand architect, I also chipped in to argue that we need to invest sufficient resources into promoting our products. Dr Mkhabela said something profund that it is only farmers who define themselves first as farmers before they see themselves as business people, and he argued this anomaly needs to be redressed urgently.
These were two highly informative days for me. Congratulations to the African Agri Council for a successful event.
Before signing off, let me congratulate Tanzania in being the 42nd country to ratify the AfCFTA. Indeed our forebears’ dream of Africa’s integration is happening as I type this.
Enjoy your weekend.