AGRA

Background

Increased intra-African food trade can contribute to food systems transformation by providing a channel for adapting and reducing the impacts of shocks, strengthening the competitiveness of food markets, and supporting inclusiveness and sustainability in food value chains. Currently, Africa is heavily dependent on imports and spends a significant amount of money to feed its population. According to the African Union, Africa currently imports approximately 40% of its food. In 2019 for example, Africa expended US$43 billion on food imports, and with the population growth rates and increasing demand for food, this is projected to increase to US$90 billion annually by 2030. This leaves the Continent vulnerable to foreign sources, risking food insecurity when global supply chains are disrupted. Facilitating socioeconomic activity along the agri-food value chains through increased trade can have significant impacts on income, livelihoods, and the welfare of millions of Africans. Ensuring the right policies for the transformation of food trade and food systems is important to provide incentives and remove barriers that shape the behavior of actors towards desired outcomes. Predictable, transparent, and coherent food trade policies that promote innovation in food trade are required to transform food systems to achieve food and nutrition security. In addition, improving policy coordination and harmonization among systems, sectors, and actors will be key to transforming food systems. 

A number of factors have contributed to the limited success of intra-African trade including lack of commitment from African governments to subordinate their national political interest in order to realize long-term regional objectives; instances of conflict and political instability within several member countries hindered progress; problems associated with poor intra-regional infrastructural linkages, low product diversification and low demand elasticity among sub-Saharan African countries. Intra-African trade has been restricted by high tariffs and other non-tariff barriers leading to low levels of trade between African countries as compared to other developing regions.

Food trade in Africa is at a critical juncture with trading starting in January 2021 under the African Continental Free Trade Area (AfCFTA). The AfCFTA, which creates the largest single market in the world in terms of the number of countries and people, is a critical opportunity for the continent to boost growth, decrease poverty, and reduce Africa’s dependence on the global markets. It is also a critical opportunity to increase food trade in Africa, transform Africa’s food systems and increase the Continent’s food security. However, intra-African food trade remains low, relative to other regions in the world, with the Africa Agriculture Trade Monitor reporting a decline by 3.5% in 2022 compared to 2019 on intra-African trade in agricultural goods. While the AfCFTA presents a critical opportunity, it simultaneously presents a critical challenge. Over the last decade, there has been progress in intra-African food trade, especially through the Regional Economic Communities, but this continues to be hindered by a number of challenges. These challenges include low-quality goods, poor infrastructure, low productivity, costly SPS measures, unstructured markets, lack of reliable and up-to-date data and information, among others. In addition to these challenges that impact intra-African food trade, climate change, the COVID-19 Pandemic, and the Russia – Ukraine Crisis have also played a role in Africa’s food trade. According to the Africa Agriculture Trade Report, the decline in intra-African trade in agricultural goods, in 2022 compared to 2019, is mainly explained by the COVID-19 Pandemic. 

Non-tariff measures constitute the biggest barriers to intra-African food trade. Implementation of the AfCFTA and other efforts to boost intra-African trade must address both tariffs and NTMs that impede food trade. Since NTMs are numerous and significantly reduce intra-African trade, the success of the AfCFTA lies in their elimination. Overcoming these barriers can facilitate formal trade and also contributed to efforts to formalize informal trade flows. With increasing incomes and urbanization, demand for processed foods and increasing intra-African food trade in represents an important channel through which producers and processors on the continent can access rapidly growing African markets.

Rwanda has developed and implemented several policies and strategies related to the promotion and facilitation of the country’s external and internal trade, as well as the industrialization of its economy. Some of these policies and strategies include: 

1. Rwanda Trade Policy; 
2. Domestic Market Recapturing Strategy (2015); 
3. Made-In-Rwanda (MiR) Policy; Industrial Development Policy Rwanda (2022); E-Commerce Policy (2021). 

These policies and strategies are components of Rwanda’s broader economic policy with the long-term goals of promoting the country’s social and economic development, and structural transformation. Defined in the “Rwanda Vision 2050” strategy document, Rwanda aims at becoming a middle-income country over a period of 15 years, and a high income status by 2050. In addition to structural transformation, the objectives include sound political and economic governance, transformation of the rural economy, development of services, industry and human resources, the development and promotion of the private sector, and regional and international economic integration. The policies and strategies were planned and have been implemented based on available and practical scientific evidence and data. There are areas, however, where evidence-based planning and implementation activities can be further strengthened to inform policy decisions. 

Critical to meeting these objectives, is better positioning of Rwanda in regional and continental markets. The structural transformation will consider industrial development which will require the restructuring of critical value chains, and backward integration. Mobilization of resources, coordination and partnering with development partners for the implementation of policy actions remains crucial. Additionally, it will be critical to build the Ministry capacities to support analysis to support evidence-based decision-making. 

In line with the policies and strategies, the Ministry of Trade and Industry is undertaking a wide range of initiatives that provide a number of opportunities, negotiations, and threats. Trade-related negotiations are taking place at a number of different levels, which major ongoing negotiations including:

1. At the Continental Level within the framework of the African Continental Free Trade Area, including Championing the development of the Africa Food Trade Strategy;
2. At the Regional Level, within the framework of the East African Community on various trade issues;
3. At the Regional Level within the framework of the Common Market for Eastern and Southern Africa (COMESA) specifically on trade in services; and,
4. At the Global Level, multilateral discussions at the World Trade Organization. 

In order to support the on-going trade negotiations and to bridge the evidence gap for planning, implementation and evaluation of agreed policies and agreements, it is crucial to build the Ministry’s data and analytics capacity through a specific and dedicated delivery unit able to generate, access, and communicate credible, comparable, and consistent data and analyses. 

AGRA, through its Regional Food Trade and Resilience Unit and the Food Trade Coalition for Africa works with governments, the public sector, the private sector, development partners and other critical stakeholders in food trade to support the creating of a predictable and coherence policy environment. The Regional Food Trade and Resilience Unit’s overall objective is to contribute to increased regional food trade from areas of surplus to areas of deficit, contributing to regional food security and inclusive growth in the region. By intervening through policy predictability and market-shaping workstreams, coupled with cross-cutting investments around climate resilience, gender, and nutrition, the RFTR unit’s interventions contribute to impact agriculture gross domestic product, food price volatility, the value of trade in food, including nutritious foods, increasing availability of food at the household level, and improving the level of climate resilience integration at country level.