Boosting Intra-African Trade: A Key To Africa’s Agricultural Potential
A 2019 publication by McKinsey & Company has it that more than 60 percent of sub-Saharan Africa’s population is smallholder farmers, and about 23 percent of its GDP comes from agriculture1. On the other hand, intra-African trade is considered an essential driver of economic growth and a strong pillar of the continent’s sustainable development drive. This establishes a substantial nexus between the continent’s agricultural potential and its trade capability and shows that promoting intra-African trade is central to unlocking the continent’s agricultural potential. Key to this is effective leadership that promotes cordial political relations among African leaders, pragmatic trade policies, good road connectivity, collective productive capacity, and an accessible financing scheme.
A historical barrier to intra-African trade is the unfriendly political relations among African leaders. Most of them are rivals rather than friends. A classic example of this is the evergreen political tension between leaders of Uganda and Rwanda, Ethiopia and Eritrea, Somalia and Somaliland. As a result, the continent lacks a genuine political environment that facilitates intra-African trade of agricultural goods and services as borders between these countries spend more time closed than opened. As a leader, my first step will be to build or strengthen friendly political relations with my regional counterparts through engagement geared towards entering into regional trade and economic ties. This is so because no single leader has the capacity, regardless of their strength, to address the many challenges that confront the continent’s trade barriers without the support and idea of others.
Just like a cordial political relation, liberalized trade policies are essential to promoting intra-African trade and key to unlocking the continent’s agricultural potential. It’s an open secret that Africa trades more with Europe than it trades among itself. According to Brookings, intra-African trade constitutes 17 percent of the continent’s net trade and the lowest rate of the internal trade of any continent. While this is attributable to several reasons, the primary factor is due to unflexible or rather protectionist national policy differences. With already established good political relations, I will lobby to set up an inter-ministerial committee that will revisit existing trade policies, strengthen them toward a regional approach, and create new ones meant to establish a free trade zone, especially for agricultural goods and services of the continent. This will take into consideration the comparative advantages of various African countries vis-a-vis the import and export of their agricultural products and services.
Apart from the addition of friendly relations and pragmatic policies, a good road network is essential to facilitating cross-border trade of goods and services. However, Africa’s intra-country and inter-country road connectivity are either deplorable or limited, making it hard for one African country to trade with another. As a result, it’s much easier for Liberia to export rubber latex to the United States for processing, for instance, than to Ghana or Nigeria despite the need for it there. This stalls the growth and development of trade within nations and between nations. As an African leader, I will mobilize other stakeholders of the region, especially in the trade and agriculture sectors, to invest in building not only good abstract road connectivity that facilitate the transport of goods and service from national farms to regional markets, but also express ones such as railroad that enables the transport of perishable goods from the farms or market to regional processing centers.
Furthermore, an often neglected but very important promoter of intra-African trade is a coordinated productive capacity. That is because, in a system where countries produce the same agricultural goods and services, intra-trade is often unfavorable, leading to a trade zone in which everyone is a seller and none a buyer. This remains a fundamental challenge in the current trade system of the continent. To solve it, I will advocate for an inter-Africa trade leadership that regulates collective production based on the comparative advantage of individual countries. This will be based on sectoral weaknesses and strengths and will dwell on economic complementarity in which Ghana can export its excess energy supply to Liberia at a lower cost which allows Liberia to process her rubber latex and in return export it to Ghana and other Africa countries at a cheaper, and affordable price. This production based on comparative advantage and the exchange of rubber for electricity between Ghana and Liberia and other African countries will create a common market system in which goods are traded quickly and conveniently, thus leading to a promoted intra-African trade and an untapped agricultural potential.
This is probably the most important because no matter what we do if local farmers are not empowered financially to produce, the continent’s agricultural potential cannot be said to be unlocked. For the longest, the government has been the sole financier of agricultural activities on the continent at an almost complete exclusion of the private sector. As a leader, I will prepare, organize and engage the question of a public-private financing scheme that hinges on increased budgetary allocation from political leaders and a robust private sector presence around the continent. Key to this will be the involvement of institutions such as the African Development Bank and other financial institutions. Local farmers, private films, and agribusiness tycoons can borrow money, invest in their agricultural activities, and pay back at a flexible rate. The effort will also be made to finance the mechanization of agricultural production and capacity building of farmers in order to operate new technologies towards an expanded and large-scale production.
Promoting intra-African trade to unlock the continent’s agricultural potential is critical to effective leadership that prioritizes each country’s economic and political interests. This will happen by developing cordial relations between and amongst regional stakeholders, pragmatic trade policies, good road connectivity, coordinated production of goods based on the comparative advantages of members, and creating access to finance for agro investments with the singular goal of unlocking the agricultural potential of the continent for rapid socio-economic transformation.
Goedde, et all, 2019, Winning in Africa’s agricultural market, McKinsey & Company. Available at: https://www.mckinsey.com/industries/agriculture/our-insights/winning-in-africas-agricultural-market#:~:text=Yet%2C%20Africa’s%20full%20agricultural%20potential,2.6%20billion%20tons%20of%20output.