The Director of Agriculture and Commodities division at the World Trade Organization Dr Edwini Kessie has indicated that need for the leveraging if trade to help achieve a sustainable development in Africa’s food and Agricultural sector
Speaking as a guest speaker at the University of professional studies law event in Accra he stated that Africa faces huge challenges in the global economy – but also opportunities; Trade, and trade policy, are key to addressing those challenges; and Africa’s food and agriculture sector is vital to achieving the continent’s full potential though the WTO is helping to Tackle some of these challenges.
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Leveraging Trade to Achieve Sustainable Development
in Africa’s Food and Agriculture Sector
University of Professional Studies (UPSA), Accra
UPSA Law School Lecture
3 April 2024
Statement by Dr Edwini Kessie, Director, Agriculture and Commodities Division, World Trade Organization, Geneva
Introduction
- Africa faces huge challenges in the global economy – but also opportunities;
- Trade, and trade policy, are key to addressing those challenges; and
- Africa’s food and agriculture sector is vital to achieving the continent’s full potential.
The WTO is helping to tackle some of these challenges, as I hope to be able to explain.
And before I begin my remarks, I should say I’m very conscious that many of you here today are much younger than I am! I mention this as I’d like to argue that young people really have a crucial role to play in Africa’s future.
- Africa faces huge challenges – but also opportunities
So let me start with the first of these points.
Africa faces huge challenges – but also opportunities.
The World Bank tells us that, in sub-Saharan Africa, economic growth is set to slow[1].
It was expected to drop to 2.5% in 2023 – after hitting 3.6% in 2022.
Why does that matter?
We know that economic growth is a necessary – although insufficient – condition for reducing poverty, sustainably.
Rising conflict and insecurity have dampened economic activity.
And climate shocks are compounding pre-existing risks and challenges.
In 2023, some 462 million people in the region were still living in extreme poverty.
And as of last June, some 21 countries in the region faced high debt distress risks.
Across the continent, economic growth remains uneven.
And low levels of value addition and limited economic diversification remain challenges across different sectors of economic activity.
I mentioned that young people are Africa’s future.
Again, the World Bank tells us that the number of people of working age will increase faster in Africa than in any other world region.
That means a projected net increase of 740 million people by 2050…
… or almost 25 times the entire population of Ghana[2]!
Up to 12 million young people are expected to enter Africa’s labour market every year in the coming decades.
But only about 3 million new formal wage jobs are currently created each year. That represents a 75% deficit.
So this is both a challenge and an opportunity that our policy-makers will have to grapple with.
- Trade, and trade policy, is key to addressing Africa’s challenges
And that brings me to the second point I’d like to make.
Trade – and trade policy – are key to addressing the challenges Africa faces.
There are a number of reasons why this is the case.
And I’d like to suggest that African policy-makers can usefully revisit policies that affect trade and markets within their broader thinking about development policy.
Today, that also means situating trade policy within the next big challenge we all face: climate change.
And it would be remiss of me not to mention here the trade policy “toolkit” that the WTO launched at COP28, the last big climate summit. It looks at precisely this question, and explores options for how countries can go about doing so.
So why is trade so important? I’d like to highlight three main reasons.
(i) Creating jobs, raising incomes
Firstly, trade has contributed to the historic progress that’s been made in tackling poverty, by helping create jobs and raise people’s incomes.
In 1980, close to 40% of the world’s population lived on less than the equivalent of US$ 1.90 a day. By 2019, it was less than 10%. Trade has helped lift a billion people out of extreme poverty, most of it occurring in China and India.
And this is in part because trade has helped galvanise investment – including in sustainable technologies, which are increasingly critical as we transition towards a low-carbon economy.
Trade has made economies more productive, in part by enabling competition and the gains from specialisation and scale associated with a wider division of labour.
Africa has participated in these gains – but there’s still more that can be achieved. Despite its size, the continent today still only accounts for 3% of global trade. The two largest economies in Africa – Nigeria and South Africa – account for roughly 0.5% each.
(ii) Meeting demand growth
Secondly, trade has helped to meet rising demand.
It’s done so by expanding consumer choice and by lowering prices for goods and services, in Africa and around the globe.
The African Continental Free Trade Agreement is a significant milestone in this respect.
It will create a large, unified market of 1.4 billion people – as well as a strong base for exporting Africa’s output to the world.
And it can help improve value addition and enable firms to participate effectively in value chains.
(iii) Cushioning sudden shocks
Thirdly, trade has been important in cushioning sudden shocks.
We’ve seen what has happened in recent years: markets have been roiled by the 2008 financial crisis, the COVID-19 pandemic, and events such as the outbreak of war in Ukraine.
Climate-related shocks – such as droughts, floods, heatwaves, or tropical storms – are all affecting how markets function, and undermining development prospects.
When unexpected events do occur, trade can serve as a lifeline in ensuring people can continue to obtain the goods and services they need. It can also ensure people maintain access to markets abroad that may be critical for employment and livelihoods.
Ethiopia’s experience shows how this can happen. It relied on Ukraine and Russia for 45% of its wheat imports before the outbreak of war in Ukraine – but was able to cushion the shock by sourcing its imports from Argentina and the US instead.
- Africa’s food and agriculture sector is vital to achieving the continent’s full potential
And this brings me to the third main point I’d like to make today.
Africa’s food and agriculture sector is vital to achieving the continent’s full potential.
Agriculture, forestry, and fishing represent almost half of all employment on the continent.[3]
So any solution to Africa’s challenges has to place food and farming at its heart.
And while demand for more and better food is growing quickly from Africa’s urban areas, I’d argue that the food and agricultural sector remain key to ensuring living standards also rise in rural areas.
The sector must also be a central part of our efforts to address food insecurity. We know that one-fifth of Africa’s population continue to face hunger – over 250 million people[4].
And in some African countries, undernutrition is estimated to affect between one-third and one-half of the population[5].
Trade has a critical role to play in connecting producers and consumers across the continent and beyond.
Africa’s exports have more than quadrupled over the last two decades, while imports have grown five-fold.[6]
And by strengthening agricultural productivity, sustainably, Africa can make better use of its untapped potential – including its arable land and freshwater resources.
This means governments need to take steps to reinforce the provision of public goods – for example, by improving the availability of extension and advisory services, investing in research, promoting access to technologies and innovation, and improving infrastructure in rural areas.
It also means African countries must take action to adopt domestic policies that help achieve efficiency gains in the agriculture sector. This means supporting farmers with seeds, providing weather forecasting services, and supporting the development of cold storage facilities and agricultural cooperatives.
Doing so not only helps support livelihoods and improves food security. By reducing food loss and waste, it can lessen the environmental footprint of the food and farm sector as well.
While data in this area is often patchy, Ghana stands out in the latest Food Waste Index Report, issued by the United Nations Environment Program last Wednesday.
An in-depth study of 1000 Ghanaian households found that we waste 84 kg of food, per capita, per year.[7]
Many of the policies that could tackle these problems are allowed without limit under current WTO rules, on the basis that they cause no more than minimal distortion to trade and markets.
In Africa, governments have repeatedly committed to strengthen their support to the farm sector – for example, in the Maputo Declaration, and again in the Malabo Declaration.
The challenge now is to follow through on these commitments in way that strengthen the provision of public goods, so as to galvanise the growth and investment the sector needs.
Governments also need to make sure markets for food and agriculture function better for those who in the past have been excluded from them, including smallholder food producers, and small and medium-sized firms.
As I’ve mentioned, trade integration can help – including through the African Continental Free Trade Agreement.
New digital technologies are already paving the way for this to happen.
Drones for planting and for controlling pests and diseases; GPS tools in tractors and combine harvesters; and better market information through farmers’ phones are among the factors already changing how agricultural markets function – both in Africa and around the world.
