TRALAC - Trade Law Centre

Nigeria: ‘Agriculture possesses greater potential for Africa’s transformation’

Monday, 11 October 2010

Source: Vanguard (Nigeria)

Agriculture and agri-business have been identified by as vehicle that offer the biggest transformational potential for Africa, with an even greater positive impact on ordinary people’s lives than the mobile phone boom.

At an investor forum organised by Africa investor, weekend, the world Bank Vice President for Africa Ms Obiageli Ezekwesili said “If you ask me what the next ‘big thing’ in Africa will be, I’d say without hesitation agriculture and agri-business,” The World Bank is bullish on Africa,” Ms Ezekwesili told participants at the summit, which took place alongside the Annual Meetings of the World Bank and International Monetary Fund.

Africa is “on the cusp of an economic transformation”, summit participants noted, suggesting that the continent is probably at the same point where India and China were 20 and 30 years ago respectively, just before their own economic take-off.

“We can now boldly say with confidence that Africa has awakened, Ms Ezekwesili said. “Her time has not only come but that continent is actually the future.” Mobile phones which today serve 450 million Africans (i.e. more than the US, Canada and Mexico combined have proven the most liberating asset for the poor, who use it not only for communication but also as a social, economic, banking and even political tool.

Its impact however, could prove to be minor, compared to the massive potential inherent in the agriculture sector. Agriculture currently accounts for about 40 per cent of the region’s GDP and is a source of jobs and livelihoods for 70 per cent of Africans. With only one-fourth of its arable land currently in use, contributing a mere 10 per cent to global food production, it is clear that Africa’s enormous potential essentially lies fallow.

The most dividends in agriculture and the agribusiness sector—as with mobile phones—will accrue for the “early bird” investors, Ezekwesili said.

A holistic approach is needed if the modernization of Africa’s agriculture sector is to raise productivity, ensure food security, expand exports, raise incomes and profoundly improves living conditions in rural Africa, she noted.

According to Ezekwesili, smallholder farmers must gain access, not only to more productive seeds and other farm inputs, but also to finance, irrigation, research and technology. Equally important are land reforms, the building and maintenance of adequate infrastructure (farm_to_market roads, for example), and the implementation of effective post_harvest marketing strategies.

At another forum on Africa can trade with Africa in Which Tony Elumelu Former UBA Managing Director was a panelist, the panelist agreed that there is strong consensus among African leaders that regional integration is indispensable to unlock economies of scale and sharpen competitiveness. And promoting intra_African trade has emerged as a top priority, in recognition that the African market of one billion consumers can be a powerful engine for growth and employment.

According to them despite the introduction of free trade areas, customs unions, and common markets within the Region, the level of intra_African trade remains among the lowest in the world __ only about 10 per cent of African trade is within the continent, compared to about 40 per cent in North America and about 60 per cent in Western Europe.

The discussion at the seminar drilled into the actions that are required to accelerate intra_African trade. The most important message was the need for stronger implementation of political commitments under existing regional trade agreements. Pravin Gordhan, the South African Minister of Finance, acknowledged that governments have fallen short on some of the difficult political actions that are required to enhance regional integration, like the overlapping membership in regional economic communities. There was a strong sense that African leaders need to be held accountable for their performance against agreed commitments as a result the participants urged Maxwell Mkwezalamba from the African Union to hold a summit with heads of state this year to agree on a time-bound action plan to fulfill their regional integration agreements.

The discussion also stressed the urgency to diversify economies beyond natural resource extraction and agriculture. But to break into manufacturing, countries will need to strengthen their competitiveness by enacting policy reform to ensure more competitive markets for transport and trade facilitation, improving the efficiency of government agencies at the border, and addressing behind-the-border trade constraints to promote value addition, increase productivity, and undertake infrastructure investments that reduce the costs of inputs.

Bill Egbe, the President of Coca Cola in South Africa, estimated that they would only need about half of the current 163 plants in Africa if internal trade barriers were removed and transport services were improved – think of the huge efficiency gains here that could be redeployed for investment in new areas!

Given the central role of the private sector, the seminar noted the continued importance of improving the investment climate and reducing the cost of doing business—not only for large multinational and pan_African companies, but also for SMEs and the informal sector. Tony Elumelu, who recently retired as Chief Executive of the United Bank for Africa, flagged the need for more innovative approaches to monetize the assets, build the capacity, and enhance the productivity of small and informal enterprises, particularly in the agriculture sector.

Several panelists emphasized the synergy between intra_regional trade and global trade integration, particularly the critical importance of development-friendly trade agreements with global partners that provide broad and comprehensive market access. Two innovative proposals to incentivize trade cooperation were floated.

Rosa Whitaker, one of the original architects of AGOA, outlined a series of proposed US tax incentives to award investors who invest in Africa or retailers who source products from Africa. And Paul Collier, author of The Bottom Billion, made a very compelling case for a “Super AGOA” that would grant Africa preferential market access across the entire OECD. Right on!



“ Latest AGOA Trade Data currently available on AGOA.info


Click here to view a sector profile of Nigeria's bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include: (click each link to view)

  • AGOA-Beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.