BusinessDay

AfCFTA can make Nigeria Africa’s food basket

On January 1, 2021, the African Continental Free Trade Agreement (AfCFTA), the world’s largest free trade area, officially came into promulgation. After more than forty-three years of initial dealmaking, African nations reached an agreement to bring the Lagos Plan of Action to effect, which sought to create an African Common Market, promoting collective self-reliance.

Now, just two years after they agreed on the AfCFTA, salient questions have emerged from the all-encompassing nature of the concord. Can the AfCFTA make Nigeria Africa’s food basket?

Indeed, to what extent can Nigeria leverage this most auspicious agreement to serve the African agricultural complex? This essay examines how the AfCFTA can return Nigeria to a place serving as Africa’s food basket.

The nature of food imports in Africa

The African Continent consists of 54 countries and over 1.4 billion people, so the African populace’s dietary needs must be significant. Let’s examine the reality of the outsized nature of the African food industry by factoring in the import needs of the continent on certain major foods.

Take Wheat, for instance. While the African population increased by 32% between the 2007-2008 and the 2018-2019 planting seasons, African continental wheat imports increased by 68% over the same period, surging from 27.3 million tonnes of wheat imports to 47 million tonnes.

On rice imports, the continent imported around 16.6 million metric tons of rice in the 2020-2021 trade year, with most of the rice going to sub-Saharan Africa. North Africa stood more self-sufficient in rice production, having imported only one million metric tons of rice out of the cumulative African rice imports of 16.6 million metric tons.

Food imports are relatively large across all major food sectors in Africa. African import statistics on palm oil, poultry meat and proteins, vegetable oils, ethanol, condiments and sauces, and many other nutritional sources underscore Africa’s ever-growing appetite, mainly as the continent’s population increases at an exponential rate.

Indeed, sub-Saharan Africa has been singled out as having a “spiraling” food import bill. This was after the region spent $43 billion on food imports in 2019 alone.

That’s enough financial firepower that could have bolstered critical infrastructure in the region and attracted value in other tangential areas crucial to the needs of the people in the region. This may be why some observers of the African economy have concluded that Africa has a major challenge with feeding itself.

Nigeria’s opportunity to be Africa’s food basket

Egypt, Algeria, South Africa, Morocco, and Nigeria all account for 50% of Africa’s total food imports. Egypt contributes 15% of Africa’s food imports, Algeria contributes 12%, South Africa contributes 9%, Morocco contributes 7%, and Nigeria contributes 7%.

However, the regime of the AfCFTA presents Nigeria with a remarkable opportunity to turn its status around from a major net importer of food in Africa to a major net exporter of food to other African countries well-balanced on the AfCFTA scale.

Intra-African trade currently stands at about 13-15%. This figure is measly compared to the 60% regional trade achieved by Europe, 40% regional trade in North America, and the 30% achieved in South East Asia. Nigeria can take advantage of the low intra-African food trade by boosting exports to other African countries.

However, the axis forces of inadequate trade-related infrastructure, lack of financial access, restrictive customs procedures, and excessive political uncertainty will all have to be defeated before Nigeria can take her pride as Africa’s food basket. This is a more workable reality considering that the Lagos Plan of Action was held in Nigeria.

Recommendations on how Nigeria can become Africa’s food basket

The challenges impugning Nigeria’s efforts to be Africa’s food source include inadequate trade-related infrastructure, restrictive customs procedures, policy uncertainties, and poor financial flows, amongst many others.

To become Africa’s food basket, Nigeria will have to fix the following trade lacuna:

1. Providing adequate trade-related infrastructure:

The World Bank confirms that large-scale transport infrastructure between countries can reduce transport costs and supercharge internal and external trade-related infrastructure.

Nigeria will have to invest more heavily in its trade-related infrastructure to become Africa’s food basket. This includes fixing its dilapidated ports, harbors, rail and road infrastructure.

2. Creating open customs procedures:

Nigeria closed four of its land borders in August 2019, only to reopen them to intra-African trade in December 2020. The Nigerian government stated that the move was to reduce smuggling, dampen the illegal inflow of small arms and drugs and protect local manufacturers. However, to export more food to other African countries, Nigeria will have to exercise a more flexible border policy with its neighbours.

Indeed, it remains a counter-intuitive logic to expect to serve as the food basket of the African continent if Nigeria’s borders are closed and unpredictable. In this case, technological necessities around the Nigerian border will have to be improved so that a smooth interchange of trade around the border can ensue.

Read also: Lagos launches technical working group on AFCFTA

3. Providing policy certainty

Nigeria has a penchant for invoking trade wrath on its neighbors when it feels like it. In August 2019, the country closed its land borders rather unexpectedly, preventing trade access between many west-African businesses and their Nigerian customers, and vice-versa. The Olusegun Obasanjo presidency of 2003 also imposed an import ban on Ghanaian textiles, starch, and plastics. The reason was that Nigeria could promote local industrialization and substitute imported goods.

Nigeria’s trade policy with its neighbours will have to be straightened out more smoothly to become a food source for the African continent. Erratic policy shifts that take neighbours and trading partners unawares will have to be eschewed for a more progressive trade stance.

In conclusion

The AfCFTA presents Nigeria with a promising opportunity to reduce its hefty food import bill and trade more efficiently with its neighbors. The government can and should ultimately maximize this opportunity to make Nigeria the continent’s food basket.

However, Nigeria must seize this chance and make the requisite trade-related adjustments as early as possible to take advantage of the AfCFTA, become Africa’s food basket, and limit its reliance on oil exports.