International Trade Centre’s ‘One Trade Africa’ is helping African MSMEs leverage market opportunities
The COVID-19 pandemic is disrupting Africa’s development trajectory. It is exacting a substantial socio-economic toll and putting the survival of half of the continent’s micro, small and medium-sized enterprises (MSMEs) at risk. Four in five African businesses are witnessing a dramatic reduction in sales.
As African countries restart their economies and phase out COVID-19 restrictions, the ripple effects of the Ukraine crisis increase daily. The effects are particularly acute in terms of food security, given the continent’s reliance on food imports from the region of conflict.
In addition, the rising cost of fertilizers and the impact of climate change are exacerbating food shortages.
These shocks have slowed progress towards achieving SDG2, which is zero hunger by 2030.
A 2021 joint publication by FAO, the United Nations Economic Commission for Africa (UNECA), and the African Union titled Africa: Regional Overview of Food Security and Nutrition indicated that over one-fifth of the continent’s population faced hunger in 2020. That is about 281.6 million people–46.3 million more than the figure for 2019.
Due to current harsh economic realities in countries, the International Monetary Fund is encouraging governments worldwide to subsidize the cost of food and energy for their poor. Such a social intervention presents a huge fiscal challenge for many African countries.
What then is the solution?
An effective solution is to boost intra-African trade, which has the potential to pave the way to food security.
Africa has enough food to ensure its citizens do not face hunger; however, the challenge is how to ensure that trade contributes significantly to food security.
According to the UNECA, the AfCFTA is expected to boost intra-African trade in goods and services by up to 25 per cent by 2040, in part through increased activities of MSMEs, help from business-support organisations and sturdy policy frameworks.
To ensure food availability and tackle price volatility, a need exists to connect agricultural markets, maintain producer incentives in surplus zones and boost cross-border trade.
African countries must welcome the opportunity to strengthen intra-regional trade and firm up measures for a seamless exchange of goods and services and for food sufficiency. To help achieve these goals, the International Trade Centre (ITC) launched the One Trade Africa (OTA) in 2020.
One Trade Africa
The OTA is a five-year programme designed to help African MSMEs leverage market opportunities generated by the African Continental Free Trade Area (AfCFTA).
UNECA, the AfCFTA is expected to boost intra-African trade in goods and services by up to 25 per cent by 2040, in part through increased activities of MSMEs, help from business-support organisations and sturdy policy frameworks.
The trade pact eliminates at least 90 per cent of tariff lines on goods produced within Africa over the next 5 to 15 years. That will be a boon for businesses, including those engaged in intra-African agricultural trade.
Currently, the average tariff on agricultural products traded between African countries is 17.1 per cent, whereas exports to Organisation for Economic Co-operation and Development (OECD) countries are at 15 per cent.
With the AfCFTA, intra-African exports in agriculture and food products are projected to increase between 20 and 35 per cent by 2040.
At its core, the OTA promotes policies that facilitate trade and boost the competitiveness of MSMEs through enhanced digitization. And a focus on the cross-cutting dimensions of green and sustainable trade as well as gender and youth is the right approach. We must help women and youth take advantage of available regional and global trade opportunities.
The OTA is supporting MSMEs in many ways. For example, in partnership with the Africa Export and Import Bank (Afreximbank), a “How to Export” training programme is being implemented. The programme was piloted in Côte d’Ivoire, Nigeria and Rwanda, and has since benefited more than 5,000 MSME operators in at least 30 countries. Beneficiaries have access to an OTA online resource centre on the AfCFTA.
To expand its reach to all 55 countries in Africa, the online training, initially conducted in English and French, is being expanded to include Arabic and Portuguese.
In addition, the OTA partnered with the UNECA to design many national and regional AfCFTA strategies, while the design of an AfCFTA Youth in Business Platform is in the pipeline.
By facilitating about 100 business connections–and counting–the OTA is bringing entrepreneurs to engage and discuss business partnerships, opportunities and best practices. At the 2021 Intra-African Trade Fair in Durban, South Africa, for example, the OTA sponsored the participation of entrepreneurs from Sierra Leone, Senegal, and Guinea.
In the future, the OTA will laser-focus on helping the African private sector thrive in a post-COVID-19 world. That is a recognition of the unique role of African businesses in powering economies.
And we must remember that a fully and effectively implemented AfCFTA is a safe investment in Africa’s future.
Ms. Diallo is ITC Senior Coordinator for AfCFTA, LDCs.