Sub-Saharan Africa’s share in world agricultural trade remains low. Exports of high-value added agricultural or agro-based goods are still modest, but global demand for these products is highly dynamic and will continue to increase. Growth based on the development of agro-based industries in Kenya, SSA, is possible.While creating competitive advantages in the agricultural sector presents special challenges for the continent, policy lessons from successful experiences in Asia and Latin America could be utilized to promote sustainable development and resource-based growth.
A large number of African countries are highly dependent on agriculture. While on average the agricultural sector accounts for one-fourth of GDP, in some Least Developed Countries (LDCs) this share reaches or surpasses 50 per cent. Over 30 per cent of the African population depends on agriculture for their livelihood, but in some of the poorest countries this share reaches 90 per cent. Overall, agricultural exports from African countries (including raw materials and processed foods) represent half of total merchandise exports, and exceed 80 per cent in some cases.
Agricultural growth can play a central role in the process of overall economic growth and in poverty reduction. For some developing countries, the rise in imports of agricultural products by developed countries has constituted an opportunity to upgrade and diversify their agriculture and agro-industry, which in turn has stimulated growth. For the most part, however, Africa has not been able to benefit from these trends. Part of the reason lies in the positioning of Africa in world agricultural markets. In a nutshell, Africa has mostly specialized in commodities where it faced stiff competition from other developing countries and low world prices rather than in high value-added agricultural products.
Africa’s agricultural exports are concentrated in a few commodities (coffee, tea, cocoa, sugar, cotton, bananas). The largest importer of such products from Africa is by far the EU, now followed by China and the US. For almost half of the countries in Sub-Saharan Africa, agricultural commodities are the main exports. For many of them, reliance on one single agricultural commodity export reaches between 50 and 75 per cent of total commodity exports.
With the exception of cotton, over the last two decades African producers have steadily been losing market share to Asian and Latin American competitors. This holds even for cocoa, although Africa remains the dominant supplier. Stagnant yields and inability to improve significantly quality and price through greater value-addition and differentiation stand in stark contrast with trends in competing countries.
Fresh agricultural produce are typically equated with low tech, low R&D because of the limited amount of processing in their production. However, many of them are now intensive in knowledge and services and can have more value-added than some processed industrial goods. Significant trade in fresh fruits and vegetables, for instance, is a relatively new phenomenon, linked to innovations in post-harvest systems and animal traceability, in logistics and in marketing.