Africa -China Review Africa -China Cooperation and Transformation
By Yike Fu
I was recently out shopping in Hangzhou to buy a bottle of wine as a birthday gift for a friend. Now, I’m no wine connoisseur, so admittedly I struggled to pick one. But while scanning the shelves, I spotted a bottle from South Africa. It struck me that compared to the other wines, this selection was significantly smaller. This got me thinking, why do we not see as many African agricultural products or brands, on Chinese supermarket shelves? Especially as Africa is home to such a rich variety of agricultural goods?
Over the past decade, as China’s ever-increasing consumer market has developed a growing appetite for unique tastes and flavours, I’ve seen China’s supermarket shelves become increasingly filled with a selection of products from all over the world. You can find wine from France, coffee from Brazil or olive oil from Italy.
And this demand for foreign food, in particular agriculture products, presents a wealth of new opportunities for many African economies – especially considering agriculture accounts for 23% of the continent’s total GDP and provides 60% of employment in sub-Saharan Africa. Indeed, increasing exports, as well as value-added production of agricultural goods would also provide a huge number of jobs for Africa’s growing population, which is estimated to reach 2.5 billion people by 2050. This would also increase incomes which would support people to lift themselves out of poverty. This is not unfeasible, as Africa’s agribusiness sector holds great potential, predicted to reach $1 trillion by 2030.
SO WHY ARE SO FEW AFRICAN GOODS IN CHINESE SUPERMARKETS? I DID A BIT OF DIGGING TO FIND OUT.
The first thing to note is that agricultural trade between China and Africa has significantly increased, growing at an average annual rate of 17.3% from 2000 to 2018, reaching $6.92 billion. Chinese enterprises have also begun to realize the attractiveness of Africa’s agricultural sector, with more than $415 million invested in 115 agricultural projects across Africa.
However, from a wider perspective, this remains relatively small. Chinese FDI into Africa’s agribusiness sector remains low, equating to less than 1% of total Chinese FDI stock. Further, whilst increasing, agriculture still makes up the smallest portion of African exports to China, with the present volume of China-Africa agricultural trade only accounting for 3.2% of China’s total agricultural trade. This is partially due to the fact that whilst there has been a growing number of trade frameworks signed between China and the continent, there has been no preferential framework established for agricultural trade. Essentially, this limits cooperation in agricultural exports by categorizing it as trade, rather than a sector of cooperation.
Additionally, African countries themselves face challenges in developing their agricultural sectors. Firstly, the majority of Africa’s agricultural sector is comprised of smallholder farmers, whose individual ability to break into large international markets, such as China, is limited. Secondly, the agricultural sector experiences a significant financing gap, with analysts projecting that $45 billion per year is required to increase value-added production and move up in the value-chain – yet only US$7 billion per year is invested in the sector.
CONSIDERING CHINA IS SUCH AN IMPORTANT DEVELOPMENT PARTNER IN AFRICA, WHAT HAS CHINA DONE TO SUPPORT AGRICULTURAL DEVELOPMENT?
I discovered two major ways the Chinese Government and Private sector are supporting the increase in agricultural trade.
Firstly, through E-commerce. China is famed for its booming e-commerce market, which is hugely popular with consumers of all ages and regions. African governments and businesses have sought to harness the power of e-commerce with support from Chinese partners. In 2016, Alibaba launched the Electronic World Trade Platform (eWTP) to facilitate access to international products, and both Rwanda and Ethiopia have signed agreements to have local produce, such as coffee and pepper, sold on the platform.
Rwanda’s Ambassador to China, James Chimonio, has even live-streamed five times to promote his country’s coffee – what an incredible way to advertise! And this clearly paid off – with over 3,000 bags of Rwandan coffee selling out in under a minute, and a 400% increase in Rwanda’s online coffee sales! Access into China’s growing coffee – and e-commerce – market will support the value-added development of Rwanda’s coffee industry as well as boost the 400,000 coffee farmers’ incomes thus supporting poverty reduction efforts. Other coffee-producing countries – such as Uganda, whose smallholder coffee farmers have an average household income of just USD 435 per year – should also look to tap into this.
Secondly, by using trade expos to showcase African products. Expos such as the China Import and Export Fair and China International Agricultural Trade Fair and China Africa Economic and Trade Expo (CAETE), specifically target agricultural products. The results of the expos have been substantial. The first CAETE, held in June 2019, had representatives from 53 African countries in attendance, with a
total of 84 cooperation documents signed which covered agriculture, amongst other sectors.
TWO RECOMMENDATIONS FOR BOTH AFRICAN AND CHINESE STAKEHOLDERS
Creating agricultural export outreach team by African governments is essential for identifying opportunities in the Chinese market. The outreach team could connect with Chinese counterparts to create action plans. For example, the China Council for the Promotion of International Trade (CCPIT) coordinateswith several counterpart agencies to build platforms for China-Africa trade cooperation through project pairing.
Through working with the CCPIT and its associated agencies, an outreach team could utilize trade expos to increase the number of African products showcased, as well as identify areas in China’s e-commerce market that could be tapped into – as Rwanda and Ethiopia did. Indeed, e-commerce will only continue to grow post-pandemic, so all African economies should look to enter the market now. Africa export teams would be invaluable in facilitating these processes. However, Chinese counterparts should also be active in extending cooperation through trade expos and e-commerce agreements, such as eWTP, through increasing communication with African governments and their representatives in Beijing to work specifically on developing agricultural exports.
2. Building on this, establishing an international preferential trade framework for the agricultural sector specifically is also important. Numerous Sino-Africa trade frameworks have been established over recent years; however, they only support agricultural exports indirectly and tend to focus on ‘trade’ as a whole. Creating a framework focused on agriculture specifically would shift agricultural exports from the realm of just ‘trade’ toward a comprehensive strategy of cooperation.
The opportunities for further cooperation in Africa’s agricultural sector are abundant. African countries should continue to proactively explore how they can leverage support from Chinese actors to ensure exports increase. Chinese partners, both public and private, should also actively address the challenges within current export mechanisms, as well as create new agreements, to facilitate African agricultural exports. That way, the choices of the supermarket shelves will become more bountiful.
Yike Fu, is a China-Africa Policy Analyst at Development Reimagined. Saeger Godson also contributed to this report.
developmentreimagined.com
