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African Agricultural Trade Status Report 2017: Chapter 8. Summary and conclusions

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In order to maximise the benefits of regional integration and look for new opportunities for competitiveness, policymakers, the private sector and development partners need access to accurate and comprehensive data on intra and inter-regional trade in Africa with respect to agricultural goods. It is in this context that CTA and the International Food Policy Research Institute (IFPRI) are launching the “African Agricultural Trade Status Report”, which examines the current status, trends and outlook in African trade performance, making an important contribution towards data and analysis of developments both at regional and at continental levels. The Report, which is released in conjunction with the Briefing, builds on the work by the Regional Strategic Analysis and Knowledge Support System (ReSAKSS) of CAADP and the African Growth and Development Policy Modeling Consortium (AGRODEP) trade and also reflects the CTA’s commitment to advancing knowledge and sharing of best practices relating to agricultural trade.
The Brussels Development Briefing n.47 on the subject of “Regional Trade in Africa: Drivers, Trends and Opportunities” took place on 3rd February 2017 in Brussels at the ACP Secretariat (Avenue Georges Henri 451, 1200 Brussels) from 09:00 to 13:00. This Briefing was organised by the ACP-EU Technical Centre for Agricultural and Rural Cooperation (CTA), in collaboration with IFPRI, the European Commission / DEVCO, the ACP Secretariat, and CONCORD .

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African Agricultural Trade Status Report 2017: Chapter 8. Summary and conclusions

  1. 1. Chapter 8. Summary and conclusions Extracted from African Agricultural Trade Status Report 2017
  2. 2. 192 CHAPTER 8. SUMMARY AND CONCLUSIONS The African Agricultural Trade Status Report (TSR) has examined recent trends, current status, and future outlook for African agricultural trade in global and regional markets. The report’s five substantive chapters provide descriptive assessments of trade patterns as well as econometric analyses of the drivers of observed trends. In this concluding chapter, we summarize the findings of the preceding chapters and draw general conclusions and policy recommendations. Chapter two reviews trends in Africa’s global agricultural trade since 1998. The chapter finds that although exports have increased over the period, imports have increased more rapidly, leading to a growing trade deficit. The increase in imports is due to demographic changes as well as the low competitiveness of domestic producers. Despite the increase in agricultural exports, the share of agricultural exports in Africa’s total exports has declined by half over the period, due to more rapidly rising exports in minerals and oil. Africa’s agricultural exports show signs of moderate diversification over the period, while imports have remained fairly stable. The EU remains Africa’s top trading partner, but both imports from and exports to the EU have dropped over the period, while trade with Asia has increased; Asia is likely to take the EU’s place as Africa’s top trading partner if these trends continue. Recent efforts to pursue increased economic integration have resulted in significantly increased intra-regional trade during the period, although the overall level of intra-regional trade remains low. Chapter three examines patterns in intra-regional trade at the continental level and among major RECs, namely ECOWAS, ECCAS, COMESA, and SADC. The chapter finds that intra-African trade has expanded significantly since 1998, increasing at about 12 percent per year. The largest increase took place in the ECCAS region, while the slowest increase was in the SADC region. The chapter finds that ECOWAS shows the highest regional trade integration, as measured by the ratio of intra-REC trade to the REC’s trade with Africa; ECCAS shows the lowest. COMESA and SADC play larger roles as destinations for and origins of African trade than do the other two RECs. Chapter four reviews the changes in competitiveness of exports of different countries and different agricultural products over the past three decades, and investigates the determinants of these changes through econometric analysis.
  3. 3. 193 The chapter finds that most RECs saw their member countries increase or maintain their competitiveness in global and regional markets, with the exception of ECCAS, whose member countries tended to lose competitiveness. Improvements in the competitiveness of COMESA, ECOWAS and SADC member countries took place primarily in intra-regional markets. The majority of African export commodities gained competitiveness in global markets, with some exceptions; however, the most competitive commodities accounted for fairly small export shares, suggesting potential for expanding exports by leveraging competitiveness gains. The chapter finds that determinants of competitiveness improvements include the ease of doing business, institutional quality, the size of the domestic market, and the quality of customs. Chapter five examines the factors contributing to Africa’s improved agricultural export performance, using a gravity model to assess the importance of different determinants of trade and of the constraints to further improving exports. The study finds that supply side constraints, including production capacity and the cost of trade, affect trade performance to a greater extent than demand side constraints, which include trade policies and agricultural supports in importing countries. This suggests a focus on removing domestic constraints to increased trade. The chapter also finds that non-tariff barriers to trade are increasing and present larger obstacles to exports than do tariffs. The chapter highlights the potential of regional economic communities to promote the removal of barriers to trade at both the regional and global levels, as well as the continued importance of global cooperation to facilitate trade. Chapter six examines the potential of increased intra-regional trade in West Africa, the feature region of this report, to stabilize domestic food markets in the region. The chapter finds that the distribution of production volatility among West African countries suggests significant potential to lessen the impacts of domestic shocks through increased regional trade, while patterns in agricultural production and trade show scope for increasing regional trade levels. Analysis of a simulation model shows that intra-regional trade is expected to increase under current trends. Intra- regional trade growth can be accelerated through small reductions in trading costs, small increases in crop yields, or a reduction in trade barriers. The increased intra-regional trade resulting from these changes would reduce food price volatility in regional markets. The TSR chapters demonstrate undeniable improvements in Africa’s trade performance over the past decade and a half, in both global and regional markets, as reflected by generally increasing
  4. 4. 194 competitiveness for the majority of countries and commodities. However, progress has been uneven, with some regions and countries consistently underperforming others. Challenges remain in further enhancing Africa’s competitiveness on the global market and in increasing intra-regional trade, which remains below its potential despite significant recent improvements. The findings of chapter four point to the importance of the institutional and business environment in improving a country’s export competitiveness, while chapter five also emphasizes the role of domestic factors in increasing exports, including production capacity and trading costs. Chapter six focuses on the West Africa region, demonstrating the role of potential domestic and regional policy actions to increase intra-regional trade and enhance the stability of regional markets. The chapters suggest a series of recommendations for policymakers, including efforts at the country and regional level to increase agricultural productivity along the value chain, improve market access, and improve the functioning of institutions; regional actions to enhance economic integration; and continent-wide efforts to promote trade facilitation in international negotiations. Policy actions such as these can influence the trends described in this report and accelerate improvements in Africa’s trade performance, thereby increasing incomes and improving food security across the continent.

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