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Saturday, October 31, 2020

Rising from a crisis – A more self-reliant Africa after coronavirus?

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By Jean Senahoun,
Senior Economist at FAO’s
Regional Office for Africa

World count: 715
When the African Continental Free Trade Area (AfCFTA) Agreement was launched on 21 March 2018, African leaders did not imagine that the tenets of the agreement could possibly save the continent from a pandemic-fueled food and economic crisis. The world has been grappling with the crippling economic effects of the COVID-19 pandemic since February 2020.The crisis persists, threatening to affect the entire food system, especially in Africa. The pandemic has created shocks globally with negative impacts on intra-African trade, with GDP expected to drop precipitously from 2.4 percent in 2019 to -2.1 to -5.1 percent in 2020 according to the World Bank, marking the first recession in the region in 25 years. Most African economies, especially those of commodity exporting countries, will be the hardest hit.

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However, there is a lifeline for Africa. One of the principal objectives of the AfCFTA is to expand intra-African trade, improving the flow of goods and services across countries and boosting economic growth through increased agro-processing and a strategy of diversification and industrialisation. Since its signing by 54 states, few tangible results of AfCFTA can be identified and most states are still in the ratification process. The process has been slow, with the bureaucracies of countries and existing economic blocs churning to make it a reality.

Africa is a net importer of food, with staple foods such as wheat, rice and maize being some of the largest imports. With current lockdowns leading to delays in ports and critical connection points for trade, Africa faces the risk of disruption to its critical supply chains. If this happens, the most vulnerable 200 million people in Sub-Saharan Africa, identified by FAO as already food insecure, will be the ones to bear the brunt of this shortage. There is also the potential disruption in the supply of crucial agricultural inputs (fertilizers, pesticides, livestock feed, etc.), crippling local production.

COVID-19: an opportunity to expedite the launch of the AfCFTA
COVID-19 presents an opportunity for African countries to accelerate the shift towards a single market and for the continent to make a paradigm shift to be able to fend for itself and reduce its dependence on food imports. This will open up continental trade routes and economic opportunities in the long-term, but presents an even greater short-termadvantage: it allows African countries to keep their food systems alive to avert what could be one for the worst food crises in its history.

The question is, how can countries do this? Lowering intra-regional import tariffs facilitatesthe movement of agricultural products that will help address the immediate concern around the possibility of low food supplies and general food insecurity, while laying the foundation for long-term policies. Africa’s agricultural exports comprise mostly cash crops like cocoa, coffeeand spices, which have relatively limited markets in Africa, whilebasic food productsare imported, indicating the need to prioritise a more diverse trade basket of goods. Governments must also build buyer-supplier networks, connecting small and medium scale producers, including smallholder farmers, to buyers locally and regionally. A large part of this step is the removal of discretionary constraints such as import and export restrictions that distort trade, to connect these producers to their markets. It is essential to remove non-tariff barriers like transport and logistics bottlenecks, which have long been a deterrent for the efficient movement of goods and services between African countries. Finally, governments must implement policies to support local production. These policies must seek to develop regional value chains, strengthening national food production capacities and linkages to regional markets, which in turn provide a strong basis for countries to export and boost inter- and intra-regional trade in the long-term.

AfCFTA provides a viable platform for import substitution, promotion of regional agricultural value chains and more diversified supply chains, and local production and consumption of goods and services. This is a golden opportunity to expedite the launch of the AfCFTA in phases to mitigate the food-system and economic effects of the COVID-19 pandemic. Regulatory bodies must ensure that governments do not use trade-related measures such as import and export restrictions irresponsibly, keeping the spirit of the agreement at the forefront of its implementation. The circumstances are unfortunate and the stakes are high, but if handled properly, Africa could emerge from the shadow of COVID-19 a stronger, more self-reliant continent.

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