In an unexpected twist of global trade, many African countries find themselves in a peculiar situation: they import goods that they also export. Picture this: a farmer in Kenya grows coffee beans that are shipped off to Europe, only for Kenya to import processed coffee from the same region.
It’s a strange dance of global trade, where local raw materials leave the continent only to return as finished products. This odd scenario sheds light on the challenges African nations face.
It’s not just about the goods themselves, but about the underlying issues of local processing and manufacturing capabilities. With underdeveloped infrastructure and complex global trade policies, many African countries struggle to add value to their own raw materials.
Instead, they watch as their agricultural products, raw materials, and even some manufactured goods take long trips around the world before coming back home, often at a higher cost.
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This paradox of trade isn’t just an economic quirk—it impacts the lives of farmers, workers, consumers, and the growth of nations across the continent. Addressing these challenges could open doors to economic growth and greater self-sufficiency, making this more than just a tale of trade but a story of potential transformation for Africa.
The agricultural conundrum
Africa’s agricultural potential is immense, yet many African nations import significant quantities of food products. Despite producing vast amounts of cereals, fats, oils, and sugar, these commodities remain major imports for many countries on the continent.
Take Nigeria, for instance. As a leading producer of cassava globally, Nigeria’s cassava production soared from 9.6 million metric tonnes in 1973 to 60.8 million metric tonnes in 2022, reflecting an average annual growth rate of 4.20 percent, according to the Food and Agriculture Organisation (FAO). The Democratic Republic of Congo follows closely, with a production volume of around 47.8 million metric tonnes.
Cassava serves as a staple food in many tropical countries and is used in producing ethanol, alcohol, medicines, animal feed, chemicals, and more. Surprisingly, despite being the world’s largest cassava producer, Nigeria imports over $580 million worth of cassava by-products annually, including starch, ethanol, and high-quality cassava flour.
This paradoxical situation arises from Nigeria’s insufficient local processing capacity, inconsistent supplies of high-quality cassava roots, and significant infrastructural challenges. These hurdles compel Nigeria to rely heavily on imports to meet its cassava by-product demands, as highlighted by a BusinessDay research report.
Q: “With underdeveloped infrastructure and complex global trade policies, many African countries struggle to add value to their own raw materials.”
The dairy industry in Uganda has been expanding over the years, with the volume of milk produced increasing from 2.51 billion litres in 2018 to 2.81 billion litres in 2021. The latest figures estimate annual milk production at almost 4 billion litres as of 2023, with the government targeting 20 billion litres.
According to Researchtec Global, this growth is driven by improvements in dairy farming practices and the promotion of high-yield dairy breeds.
Despite this substantial production, Uganda still imports processed milk from countries like New Zealand. This importation underscores the challenges Uganda faces in processing and adding value to its raw milk locally.
Issues such as limited processing capacity and infrastructure contribute to this paradox, where a country rich in raw agricultural products relies on imports to meet its processed goods needs.
This situation results in African nations exporting raw agricultural products while importing finished goods, sometimes from other African nations with better processing facilities.
Raw materials: Exporting and importing the same
Data from the World Trade Organisation (WTO) shows that in 2021, Sub-Saharan Africa exported raw materials worth approximately $133.5 billion, accounting for about 43.05 percent of the region’s total exports.
Despite this substantial export value, the region remains significantly dependent on imported, refined, and manufactured goods. This dependency highlights the limited local processing and industrial capabilities within Sub-Saharan Africa.
Africa is rich in minerals and raw materials, including oil, precious metals, and stones. Countries like Nigeria and Angola are prime examples, as they export crude oil but import refined petroleum products.
In Nigeria, this situation is exacerbated by political interests and a poor maintenance culture. According to the International Trade Administration (ITA), only 20 percent of refined products are sourced locally. The refining of crude oil and the distribution of refined oil fall well below domestic demand due to limited local refining capacity and infrastructure deficiencies. This creates a dependency on countries with advanced processing industries, such as the United States and China.
The iron and steel industry presents a similar scenario. South Africa exports iron ore but imports steel from countries like China and India, where advanced processing facilities are prevalent. This reliance on foreign refining industries increases costs and exposes African countries to global market fluctuations.
Read also: Global trade jumps five-fold in 28 years – WTO
Manufactured goods and technology dependence
African countries heavily rely on imports for manufactured goods and technology. Machinery, electronics, vehicles, and medical equipment predominantly come from industrialised nations.
China, for instance, is a major exporter of manufactured goods to Africa, leveraging its competitive production capabilities and lower costs. Data from Statista shows that as of 2021, exports from China to Africa reached roughly 145 billion U.S. dollars, up from 113 billion U.S. dollars in 2020.
Chinese trade with African countries has surged over the last two decades. In 2000, Africa imported goods from China worth 5 billion U.S. dollars. This figure peaked in 2015 at 155 billion U.S. dollars.
This growing dependency highlights the significant influence China has in providing essential manufactured goods to African markets, further emphasising the continent’s reliance on external sources for critical supplies.
This dependency extends to high-tech products and industrial goods, which African countries import from the United States, Germany, and Japan. This reliance stems from the relatively underdeveloped industrial base in many African nations, limiting their ability to produce these goods domestically.
Trade policies and economic dynamics
The trade dynamics between African countries and the rest of the world are influenced by economic policies and agreements. The African Continental Free Trade Area (AfCFTA) aims to reduce trade barriers and increase intra-African trade.
However, significant obstacles remain, including tariff and non-tariff barriers and the lack of harmonised regulations.
Furthermore, the trade policies of exporting countries, such as agricultural subsidies in the European Union and the United States, distort market prices. These subsidies make imports cheaper than locally produced goods, creating an uneven playing field where African producers struggle to compete (Development Reimagined).
The road to self-sufficiency
Infrastructure development: Enhancing infrastructure, particularly in transportation and processing, can reduce dependency on imports and boost local production capabilities. Investments in storage, roads, and processing plants are critical.
Policy reforms: Implementing supportive policies that protect local industries while promoting fair trade can help balance the scales. This includes reducing tariffs on intra-African trade and establishing non-tariff barriers to protect nascent industries.
Capacity building: Investing in technology and skills development can enhance the ability of African countries to process and manufacture goods locally. Partnerships with developed nations and international organisations can be instrumental.
Promoting Intra-African Trade: Leveraging the AfCFTA to increase trade among African nations can reduce reliance on imports from outside the continent. This requires harmonising standards, reducing tariffs, and improving trade logistics.
Agricultural Innovation: Adopting modern agricultural practices and technologies can increase productivity and reduce the need for food imports. This includes investment in research and development as well as extension services to educate farmers on best practices.
While African countries currently import many products that are also major exports, there is significant potential to shift this dynamic through strategic investments and policy reforms.
By enhancing local production capabilities and promoting intra-African trade, the continent can reduce its dependency on external imports and foster sustainable economic growth.
Oluwatobi Ojabello, senior economic analyst at BusinessDay, holds a BSc and an MSc in Economics as well as a PhD (in view) in Economics (Covenant, Ota).
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