Free Trade Area: Grain sector stakeholders especially farmers, have been urged to improve productivity and enhance grain standards to take advantage of the huge market opportunities presented by the Africa Continental Free Trade Area (CFTA) agreement.
A total of 44 countries signed the CFTA deal in Kigali on March 21, while 30 signed the Protocol on Free Movement of Persons, and 47 supported the creation of Africa’s one market by signing the Kigali Declaration.
Joshua Rugema, the country director of East Africa Exchange, a regional commodity exchange based in Kigali, said they are excited about the continental free trade area “mainly because it provides regional and domestic markets unhindered access to African producers and exporters”.
“This access will in turn boost productivity and overall competitiveness of the sector,” he said. One of the seven flagship initiatives under the African Union’s Agenda 2063 is the Africa commodity strategy, which will allow Africans to add value and extract higher prices for their commodities, he added.
The East African Green Council (EAGC) executive director, Gerald Makau Masila said the historical agreement presents immense opportunities for foodstuff trade across the continent. He said: “Grains and cereals are among the main commodities that can yield higher incomes while also ensuring food security across the continent.”
Masila challenged African agro-businesses to step up their game to benefit from the larger market of over 1.2 billion people and a combined Gross Domestic Product of more than $3.4 trillion, as well as push for the quick implementation of the CFTA.
“As for grain trade, there is an urgent need for investment in enabling infrastructure, including warehouses and the whole value chain. It is important to embrace modern grain storage, transportation, and processing to ensure maximum gain by stakeholders especially farmers,” he said in an interview with The New Times on Friday.
Masila said Africa has a “big advantage” as the only continent with huge chunks of arable land, which must now be fully-exploited to increase crop productivity to help countries meet their food needs and export demand. “With the agreement, we expect the sector to become more attractive for investments, which will benefit farmers and consumers and spur economic growth across the continent,” he said. He urged governments and policy-makers to promote large-scale farming and ease access to quality inputs to ensure high and sustainable production.
What farmers say
Tharcisse Twahirwa, the president of Kotuka Cooperative in Nyagatare District, said farmers were presently producing under capacity to avoid losses that come with lack of markets. “We are optimistic that the free trade area will help solve this challenge and expand our market to the continental level,” said the head of maize cooperative, which brings together over 2,100 farmers.
He said low market access has limited them to producing only 4,000 tonnes of maize per year. “However, we can triple production capacity when we get a more promising unlimited market particularly under the free trade zone on the continent. With more production and sustainable market access, banks will also have confidence in the sector and fund farmers,” he added.
However, called on the government and other stakeholders to provide facilities for post-harvesting management and modern processing facilities to guarantee the quality and boost competitiveness.
Current grain trade barriers
According to the EAGC official, cross-border trade in grains and cereals continues to face a number of tariff and non-tariff barriers that limit trade. About 6.1 per cent African businesses currently face higher import duties when they export within Africa than when they export outside the continent, according to available data. For the CFTA deal to come into force, it has to be ratified by at least 22 nations. It commits members to remove tariffs on 90 per cent of goods.
The agreement is expected to boost the level of intra-Africa trade from the current 14 per cent to over 52 per cent by 2022.
Masila said these challenges should be addressed urgently by putting in place new policies and regulations to create an enabling environment for grain trade. He also said issues like foreign exchange should be addressed, arguing that it does not make sense to trade using US dollars instead of a common continent unit of exchange.