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Brussels Briefing 47: Ousmane Badiane "Trends in African regional trade"

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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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Brussels Briefing 47: Ousmane Badiane "Trends in African regional trade"

  1. 1. Trends in African Agricultural Trade Brussels Policy Briefings No. 47 Regional Trade in Africa: Drivers, Trends and Opportunities Ousmane Badiane, Director for Africa Brussels, February 3, 2017
  2. 2. Trends in African Agricultural Trade  Composition and Direction of African Agricultural Trade  Changing nature of African Agricultural Trade Balance  Competitiveness in Global and Regional Markets  Intra-African Trade: Trends and Outlook – The case of ECOWAS Outline Source: African Agricultural Trade Status Report (2017) Unless otherwise specified, graphs are based on data from Base pour le commerce international (BACI), Centre d’Etudes Prospectives et d’Information Internationales (CEPII).
  3. 3. Share of Top 10 Ag. Exports (value) - 1998 Share of Top 10 Ag Exports (value) - 2013 Change in African Trade Composition - EXPORTS  Traditional commodities continue to dominate African Exports  Coffee and cotton have lost ground  Cocoa remains dominant export  Citrus fruits and oilseeds have moved up
  4. 4. Change in African Trade Composition - IMPORTS  Wheat is by far the largest import  Rice has gained significant shares and now ranks second  Palm oil has made the largest gains; now ranks 4th, closely behind sugar  Meat has made its entry recently Share of Top 10 Ag. Imports (value) - 1998 Share of Top 10 Ag Imports (value) - 2013
  5. 5. Direction of Agricultural Trade by African Countries Exports Imports  African countries are destination of 20% of African exports  15% of imports originate from other African countries  EU is the largest trading partners for both exports and imports  Asia is a close second  Americas play a more significant role as a source of imports
  6. 6. Direction of Agricultural Trade by African Countries Exports Imports  EU has been losing market shares rather rapidly  Asia has gained shares and is now close to EU  African countries are also gaining shares, particular for exports  America’s shares have remained unchanged
  7. 7. African Share in Global Agricultural Exports Share of agriculture in Total African exports Source: Unless otherwise specified, graphs are based on data from Base pour le commerce international (BACI), Centre d’Etudes Prospectdives et d’Information Internationales (CEPII). Evolution of the Role of Africa in Global Markets and Agriculture in African Exports  Share of Africa in global Agricultural Markets within 3-4% range  Share of agriculture in African Exports fell by 50% in last 15 years
  8. 8. Total agricultural exports, current US$B Normalized Agricultural Trade Balance African Agricultural Trade Balance  African exports have increased more than 3 times  But imports rose nearly 5 times  Import gap started to widen in early 2000s  Import gap is now around 20% of total value of trade
  9. 9. -80 -60 -40 -20 0 20 40 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Africa ECOWAS ECCAS COMESA SADC Regional Dimension of Trade Imbalance  ECCAS has experienced rapid deterioration  Same with SADC which moved form net exporter to net importer  ECOWAS has the lowest gap, but also turned net importer  All regions have lost their next exporting position around 10 years ago
  10. 10. Main Commodities Contributing to Agricultural Imports Gap sugar maize wheat rice palm oil wheat wheat milk cream  Wheat is a major import from all regions  It is followed by milk products in Europe  Rice & Palm oil are the main net imports from Asia  Sugar and maize from Americas
  11. 11. • Agricultural production collapsed in the 1970s-1980s • But population continued to grow • Unmet demand continued to pile up • Rising incomes in post 2000s accelerate demand • Agriculture grows again but rates cannot keep up with demand Why the Growing Trade Gap Despite Rising African Production and Exports Source: Badiane et al (2016).
  12. 12. 0.95 0.98 1.01 1.04 1.07 1.10 COMESA ECCAS ECOWAS SADC Africa Averagecompetitiveness change 0.92 0.94 0.96 0.98 1.00 1.02 1.04 1.06 1.08 1.10 COMESA ECCAS ECOWAS SADC Africa Averagecompetitiveness change Global markets Regional Markets Average Change in Export Competitiveness: 1998-2013  Africa lost competitiveness in global markets but gained in regional markets  ECOWAS increased competitiveness the most in global markets  COMESA gained competitiveness the most in regional markets Value > 1 means increase in competitiveness
  13. 13. 0.7 0.8 0.9 1.0 1.1 1.2 1.3 EquatorialGuinea WesternSahara Angola Chad SaoTome&Principe CentralAfricanRep. Zimbabwe Gabon Mali D.R.Congo Madagascar Eritrea Benin Libya Guinea Sudan Mauritius Senegal Congo Côted'Ivoire Burundi Seychelles Malawi Comoros Cameroon SACUcountries Gambia Kenya Mauritania SaintHelena Togo Morocco Uganda Tanzania Niger Tunisia Mozambique BurkinaFaso GuineaBissau SierraLeone Liberia Zambia Ghana Rwanda Ethiopia Nigeria Egypt Djibouti Algeria Somalia CapeVerde Changeincompetitiveness Country Competitiveness in Global Markets: 1998-2013  Around 40 percent of all countries have become more competitive  About 50% have seen no major changes  10 percent have become less competitive Value > 1 means increase in competitiveness
  14. 14. 0.90 0.95 1.00 1.05 1.10 1.15 1.20 1.25 Groundnutoil Meat&edibleoffal Organicchemicals Poultry Cotton,notcardedorcombed Coffee Canesugar Spices Palmoil Fish&seafoods Hides&skins Othercereals Ediblepreps.ofmeat,fish&crustaceans Tea Preps.ofvegs.,fruits&nuts Gums&resins Cocoabeans Otheranimalproducts Groundnuts Cotton,cardedorcombed Ediblefruits&nuts Essentialoils&resinoids Sugarconfectionery Oliveoil Otheroilseeds Othervegetabletextilefibres Misc.ediblepreparations Rice Furskins Beverages,spirits&vinegar Millingindustryproducts Vegetableplaitingmaterials Finishingagentsfortextiles&paper Sorghum Maize Potatoes Tobacco&substitutes Tomatoes Albuminoidalsubstances Residuesfromfoodindustries Cocoapreparations Medicinalplants Wheat Onions&substitutes Otherlivetrees&plants Otherediblevegetables Otherliveanimals Otheroils&facts Soybeans Wool Preps.ofcereals,flour,starchormilk Sheep&goats Animalfats Roots&tubers Dairy,eggs&honey Silk Cattle Soybeanoil Rye,barley&oats Changeincompetitiveness Value > 1 means increase in competitiveness Commodity Competitiveness in Global Markets: 1998-2013  Competitiveness increased for 75% of export commodities  Little change / modest loss of competitiveness for 25% of commodities
  15. 15.  Land productivity  Public ag. expenditure to ag. GDP ration of exporter  Efficiency of customs clearing index  Quality of port  Exporting countries’ GDP  Importing countries’ GDP  Road density Key Determinants of Trade Performance
  16. 16. Evolution of Intra-African Trade  The share of intra-African trade has increased sharply since 2000  But the level is still a fraction of what is observed in other regions
  17. 17. 0% 5% 10% 15% 20% 25% 30% Africa ECOWAS ECCAS COMESA SADC 1998-2006 2007-2013 Overall Growth in Intra-regional Trade (Value)  Intra-trade has grown by an average of between 10 and 15%  Growth has accelerated over time for ECOWAS and SADC  It has fallen drastically in ECCAS
  18. 18. 2001-2005 2006-2010 2011-2013 Live animals 87.7 155.6 95.7 Fish & animal products 165.7 348.4 439.2 Vegetables 27.3 28.1 133.7 Cereals 30.1 81.5 64.5 Oilseeds 16.8 17.8 31.8 Edible oils 75.8 137.4 307.3 Other food crops 20.6 28.5 54.8 All staple food products 424.1 797.3 1127.0 Trends in Intra-regional trade in West Africa (US$Mill.)
  19. 19. 0 500 1000 1500 2000 2500 3000 2008 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2025 Thousandmetrictons CEREALS ROOTS OTHER FOODS ALL FOOD CROPS OTHER CROPS Projected Increase in Intra-regional Trade Based on Current Trends With current growth rates in yields, area, population and incomes:  Regional trade is expected to increase significantly, except for cereals  Most growth in cereals demand is captured by rice imports from outside
  20. 20. 0.0 1.0 2.0 3.0 4.0 Average number of checkpoints per 100 km 0 2000 4000 6000 8000 FrancsCFA Average bribe taken per 100 km 0 20 40 60 Minutes Delay per 100 km Cross-border Trade Obstacles in West Africa
  21. 21. 0 5 10 15 20 25 30 35 40 CEREALS ROOTS & TUBERS OTHER FOOD CROPS ALL FOOD CROPS OTHER CROPS %ofbaselinequantity 10% reduction in trade costs Removal of harassment costs 10% increase in crop yields Selected Interventions to Further Boost Regional Trade  Local cereals / roots & tubers gain the most from yield increases and trade reforms  Removal of cross border trade harassment would have the most effect on trade  Reduction in overall trade costs is good for both extra and intra-regional trade
  22. 22. Thank you!

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