Trade is an important avenue through which countries transform their economies and raise standards of living. For African countries, trade in agricultural products offers great potential to boost incomes for farmers, processors, and other agricultural value chain actors.
Increasing the ability of African countries to participate in regional and continental trade helps to improve the well-being of consumers, raise incomes of farmers, build resilience of food markets, and boost economic growth and reduce poverty.
Rapid population and income growth are expanding the demand for food and agricultural products in the African continent, opening substantial opportunities for trade and employment not only in agricultural production but also across agri-food systems.
Given the amounts spent on imported food, the demographic changes taking place, the huge opportunities offered by urban markets across the continent, not to mention the immense productive potential for agriculture in Africa, it is evident that there are both significant opportunities and a pressing need for greater intra-African and intra-regional agricultural trade.
The African Continental Free Trade Area (AfCFTA) agreement, which came into effect on the 1st of January 2021, will create the world’s largest single, integrated market for goods and services, and a customs union that will enable free movement of capital and business travelers in Africa.
It aims to connect 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion. The agreement is expected to reduce tariffs on most goods among member countries, liberalize trade of key services, and address non-tariff obstacles to intra-regional trade, including sanitary and phytosanitary (SPS) standards and technical barriers to trade, catalyze the introduction of new technology to boost productivity and ease movement of capital (World Bank).
Urbanization and urban lifestyles are also accompanied by shifts in dietary patterns. More fruits and vegetables and more processed foods are being consumed. Demand for convenience is another overarching trend across income groups and is reflected in the strong demand for processed and prepared foods and in the expansion of street food.
A major evolution of the continent’s agricultural transformation is the rapid development of processing, packaging, distribution, and retail. These transformations open up new opportunities for value addition and employment creation, and increasingly in the off-farm segments of the value chain.
