Strengthening intra-African trade can build resilience to shocks like COVID-19

Before the COVID-19 pandemic took hold in Africa, its impact on trade was already being felt. In an ordinary year, Africa imports more than US$70 billion in food and agricultural products.

But as a result of Covid-19 restrictions, imports are expected to fall by 16 per cent and exports by eight per cent in 2020.

For a continent so reliant on international trade, the pandemic has delivered a hard lesson on the importance of building resilience through strengthening intra-African trade and diversifying economies. But it has also helped reveal how this can be done.

Alongside hindering trade, the pandemic also postponed the launch of the African Continental Free Trade Area (AfCFTA) until January 2021. Set to be the world’s largest free trade area in terms of the number of countries covered, it presents a timely opportunity to bolster and scale-up intraregional trade throughout the continent.

Existing intra-African trade flows, in particular within regional economic communities (RECs), enabled countries to minimise disruptions and keep food supplies flowing in the face of the Covid-19 crisis.

Benefitting from geographic proximity, similar cultures and long-standing trading relationships, RECs play a key role in advancing Africa’s regional and continental integration, increasing opportunities for African producers and consumers beyond their own borders.

Now, these successes can be harnessed to boost the continent’s trade even further but will rely on a number of factors.

Firstly, governments must embrace digital innovations to accelerate the process of strengthening intraregional trade and to help overcome non-tariff trade barriers. As highlighted in a recent report from the Malabo Montpellier Panel, non-tariff measures including quotas and subsidies are a major hindrance to intraregional and intracontinental trade.

With significant progress already being made to transform Africa’s food systems through digitalisation, innovation to improve trade flows has been kickstarted by the pandemic. For instance, some countries have introduced centralised testing and certification databases to speed up Covid-19 inspections for lorry drivers and reduce border delays.

Removing these non-tariff trade barriers would not only boost the availability of diverse and nutritious foods but also crucially help to reduce levels of food waste or loss, which currently stands at around 40 per cent of all food produced in Africa.

Secondly, measuring and managing informal cross-border trade must be prioritised, particularly for bolstering resilience during times of crisis.

Informal trading across borders is a key channel for imports and exports within Africa, particularly for staples including beans, rice and maize, as well as livestock. When properly harnessed and measured, it can contribute towards economic growth, job creation and poverty alleviation.

However, many of those reliant on cross-border trade for their livelihoods are women, who have been disproportionately affected by restrictions, border closures and curfews enforced due to Covid-19, alongside gender-based discrimination and violence.

With greater support and protection, women traders would be able to trade more safely as well as being able to contribute more to domestic economic development. Once the AfCFTA is in place, wages for skilled and unskilled women are expected to rise by up to four per cent by 2035, through new employment opportunities across the agriculture value chain.

Thirdly, expanding and optimising infrastructure is key, including transportation and production resources.

Boosting domestic processing capacity for agricultural products could significantly increase economic growth, with the export of processed goods tending to be more profitable than that of raw products. For instance, producing and selling cocoa butter or chocolate would be a far more lucrative operation than exporting cocoa beans.

Covid-19 has highlighted the importance of building agricultural value chains that can withstand shocks and stresses. Developing processing industries and strengthening intraregional transport links would not only enable countries to tap into regional, continental and global markets but would also help manage risks for domestic markets, ensuring food supply chains can keep moving and feeding communities in times of crisis.

Before the pandemic struck, intraregional food and agricultural trade across Africa’s eight regional economic communities already played a key role in boosting economic growth, improving livelihoods and strengthening resilience to shocks.

Strengthening these regional economic communities and the links between them will help cement a solid foundation for the AfCFTA, which is set to represent a market of more than 1.2 billion people – presenting the potential for increasing intra-African trade by more than 50 per cent and adding an estimated $76 billion to global income.

With the impacts of the Covid-19 pandemic set to spill over into the New Year and beyond, there has never been a better time to unlock the benefits of trade for food and economic security.