The African Union Assembly decided in 2012 during its 18th Ordinary Session to boost intra-African trade and to fast track the Continental Free Trade Area (CFTA). This CFTA is expected to boost intra-African trade expansion, stimulate sustained economic growth and foster inclusive development.

The CFTA is more than a free trade agreement. It is perceived as a platform that would facilitate a process of inclusive structural transformation of African countries, contributing to meeting Africa’s 2063 Vision. In this process, the CFTA would also help Africa to make progress in implementing the 2030 Agenda and Sustainable Development Goals.

The present study aims to enhance knowledge among policy-makers, experts and private sector on requisite policies and measures for fostering the development and strengthening of regional supply and value chains in agricultural commodities and processed food products. This would contribute to the development of intra-African trade in agricultural and food products including through the setting up and strengthening of regional agro-food supply chains.

Objectives and Methodology of the Report

The report aims at presenting key modalities for fostering or adding value in regional supply chains in agricultural commodities and processed food products, in relation to helping to establish the CFTA and boosting intra-African trade. The target audience is African policy-makers, experts of the African Union Commission, the regional economic communities and AU member States.

It is intended to propose guidelines on establishing regional value chains in agricultural commodities and processed food products.

The focus of this report is as follows:

• To provide a literature review on the many methodologies on value chain analysis and development, particularly in the sector of agri-food products and in the African region, recapping the definitions of the concepts used in the value chain paradigm (Chapter 1)

• To give an overview of the regional agriculture value chains of specific commodities existing at the regional level, including mapping, presentation of actors and focus on special issues such as trade barriers (Chapter 2)

• To suggest methods for prioritization of regional agricultural value chains to be further developed, and to test this approach with the analysis of two priority commodities, the potential development of regional value chains in these sectors, with a view on value addition (Chapter 3)

• To draw conclusions and policy recommendations for fostering and establishing regional value chains in agricultural commodities and processed food products in Africa (Conclusion chapter).

The report is based on analysis of existing documentation (including books, reports, best practices, etc.) and consultation of trade databases.

The study was made out of secondary data review. No “fresh” data – e.g. through interviews of stakeholders – was collected for this assignment. Furthermore, the fixed length of the report (forty pages plus annexes) contained the scope.

The study cannot be considered as an exhaustive value chain analysis of determined agricultural sectors in Africa. It is aimed at examining the concept of regional value chains, applied to agricultural commodities in Africa, for policy-makers willing to quickly grasp the issues at stake and to understand the main features of value chain prioritization.

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Recommendations for fostering and establishing regional value chains in agricultural commodities and processed food for Africa

This study was intended to provide an overview of existing value chains in agricultural commodities in Africa and to select promising ones, with a particular focus on the incremental creation of value linked to the upcoming implementation of the CFTA. As nine commodities (selected by the AU in 2006 in Abuja) plus two (prioritized through a new methodology) have been scrutinized, it is logical that the conclusion of the study provides a digest of potential policy recommendations and guidelines in order to move forward with the “scaling up” and “moving up” exercises in value chains.

This compendium of general recommendations is targeted at policy-makers willing to address the challenges to agricultural development in Africa and is mostly focused on the regional and continental levels.

1. Interventions at the “macro” level

A VA optimization strategy in agricultural commodities and agri-food products would require interventions on a large bunch of categories and sub-categories of the VCs.

A first group of recommendations would concern productive capacities: while productivity and yield-enhancing techniques should be promoted, the protection of environment should not be ignored. The issues of degraded land, land property issues, water management and quality of fertilizers should be at the core of discussion on boosting productivity. A steady supply of inputs, in qualitative and quantitative terms, should be secured.

However this would be possible only if sector actors are strong, aware and capacitated. Therefore – and particularly in the context of enhanced integration with the establishment of the CFTA – the creation and strengthening of specialized structures should be developed. It is crucial to create multi stakeholders structures in sectors where none exist (like some roots and tubers), to strengthen farmers’ organisations and trade associations, but also to involve actors at the policy-making level. This can be done by fostering or setting up the national agriculture committees in national and regional Parliaments, and by organizing “value chains sessions” at important continental events a such as meetings of the AU or UNECA. As policy-makers are responsible for the implementation of cross-sector or sector-specific programmes, such as the AIDA, the programmes for infrastructure development or the Maputo commitments, it is crucial that they are aware of issues and evolutions, and that they are connected to professional groups. The lobbies in agriculture are often under-capacitated and in need of skills development; capacity-building activities exist but should be fostered, maybe at RECs level first, and extended then at the continental level. Exchange of best practices could be sought with other continents – Asia, and Latin America.

Capacitating professional associations will allow them to better understand policy-making decision processes, impact of the CFTA and will enhance their role in agricultural policy negotiations. Capacitating policy-makers will facilitate the comprehension of sector-specific problems and the resolution of blockages and protests at the national and regional levels.

2. Interventions impacting competitiveness

Competitiveness is the largest group of recommendations when the scope is on value chains. For instance, when asked about the most effective ways in helping developing countries to better participate in GVCs, business leaders talk about infrastructure development, which is an important sub-category of the competitiveness aspect of value chains. Trade facilitation, barriers to investment and access to information are other decisive issues in the competitiveness pool.

The costs of production could be monitored by the concerned institutions strengthened at the national, regional and continental level. By securing a steady access to inputs and encouraging the development of local inputs (by establishing a fertilizer factory, for instance), governments or professional groups will help mastering the costs. To control the costs, free movements of goods and workers is crucial. This is where the involvement at the political level is key, and governments and RECs need now to operationalize the existing policies or protocols on free movement of people and labour migration.

Skilled labour migration is relevant if skills are largely recognized. Thus agreements on mutual recognition of qualifications and competences, oriented towards agriculture, are needed.

3. Access to facilities and information

Infrastructures are one of the major blocking points in developing trade, whether regionally, continentally or internationally. Many actions plans and implementation strategies for Africa have been prepared and agreed on the issue. A Programme for Infrastructure Development in Africa (PIDA) exists. Its implementation should be prioritized and operationalized. Road infrastructure, energy and water supply are common constraints to producers and processors; tackling these issues at national, regional and continental level will incrementally help the addition of value in agricultural VCs.

Information is power. Almost all the actors of the agricultural VC in Africa lack adequate access to information – either farmers, with prices or weather information; the processors, with export information; the professional associations; or the policy-makers. It should be a priority to develop or strengthen and generalize information systems. Some Market Information Systems exist but should be given attention and adequate resources (funding, staff, etc.). Alternative systems (by mobile phone, radio, etc.) should be expanded. Considering these issues at the regional or continental levels could allow economies of scale and enhanced coherence.

Macro-information on value chains is also key. Often countries and RECs depend on donors to obtain information about the value chains to be prioritized, the good practices implemented and the ones to be avoided. An endogenous capacity on VC should be created and disseminated. Channels already exist, with networks and associations. They should be identified and fortified.

Access to information is also about access to research findings. Currently, funding on research is scarce and should be increased to 2% of agricultural GDP. Regional centres of excellence of agricultural research could be strengthened when existing, and created where there is none.

4. Investment and funding

Accessing to funding and investment is currently challenging, especially for smallholders. Investment should be boosted, but safeguards should be given to investors. Current initiatives on risk information and management are promising, but more needs to be done, for instance by encouraging investments through established frameworks for the strengthening of regional and continental complementarities.

Tax and investment incentives should be created, but foreign and national investors should be assured that no non-technical barriers, such as corruption, will interfere with their investment. Tax incentives and progress towards the transparency of the regulatory environment could be promoted. In fostering largescale investments, the promotion of public-private partnerships schemes is pertinent.

Access to credit is often denied to agricultural producers – especially smallholders. Policy-makers and professional associations should lobby for a better access to credit, to buy inputs or to modernize their production systems. RECs and governments could be instrumental in establishing finance institutions, including cross-border ones, to fund micro-credit for producers and exporters.

5. Market access

The main immediate gain of the CFTA implementation will be the abolition of tariffs, allowing for the effective creation of a continental market. However, special attention should be given to non-tariff barriers and quantitative restrictions in food products. The creation of an Africa marketplace is feasible, given that trading interests of countries are not necessarily confined to the borders of their RECs (this was evidenced by some results of the brief value chain analysis in this report) and that tariffs will soon be part of history.

However, the eradication of tariff is a fear for many economic actors on the continent. For some of them, it is true that the establishment of the CFTA will have short-term adverse impacts. This is the reason why adjustment mechanisms should be put in place, to address the adjustment costs such as revenue shortfalls and industry decline.

But market access is not only about tariffs. It is also about trade facilitation and customs procedures, that will not be automatically abolished by the establishment of the CFTA. Important efforts should be put at the continental level to harmonize procedures and to reduce delays, by standardizing the nature of the required documents, for instance, or promoting the use of ICT in this area with online hubs about trade procedures, transportation and custom documentation. The fight against illegal practices, such as road blockages or illegal fees at customs offices, could be strengthened.

Standards and certifications are part of market access issues. Regional standards, when existing, should be disseminated, explained and understood by chain stakeholders. New ones should be developed, to promote inclusiveness in productive processes and sustainability in consumption.

6. Business environment

The improvement of the business climate environment is also quoted by business leaders as one of the priorities to develop inclusive VCs. This can be done by several actions. First, securing contractual arrangements and business models, will automatically foster investment and improve levels of trust between different economic actors. But the dialogue between stakeholders, through forums, fairs, events or other mechanisms (Chambers of Commerce, Chambers of Agriculture) should be dramatically expanded.

Awareness actions among populations, on the importance of agriculture for local development and the respective roles of the VC actors, could globally contribute to a better business environment.

It is also through joint marketing that the business climate will improve, if it results in an increase of sales. And the regional and continental levels are particularly relevant for that. Sector marketing strategies could be developed first at the regional, than at the continental level. Electronic vectors of communication (Internet campaigns) and traditional means (TV or poster announcements) could serve.

7. The role of international organizations

International organizations, particularly continental ones or trade-oriented ones like UNCTAD, can play an important role in supporting the African continent for the development of viable and sustainable agricultural VCs. Many organizations, including UNCTAD, have been a long-standing development partner of African countries, RECs and the African Union.

The study opened with criticism towards the capacity of development partners, and particularly UN agencies, to design and promote a single concept of value chain. This is a concrete action that international organizations could take: organizing rapidly a task force or a committee in order to harmonize views and methodologies on the VC concept. This does not mean abolishing differences and expertise of each organization. Every organization has its scope, its experience and its competence. But the growing interesting for VC calls for an inter-organization standing mechanism to share knowledge, concepts and experience on the concept. It could also aimed at disseminating VC knowledge, and ensuring that VC knowledge created within the UN system is turned into concrete and efficient policy interventions. If adequately designed and equipped, it will eventually avoid overlaps and join the voices calling for an enhanced efficiency of the UN development system.

International organizations could also be instrumental in fostering and mandating research on relevant topics. As the emergence of regional chains is a relatively new trend, a better understanding of their mechanisms and benefits would require more statistical research and field investigations. This would eventually feed policy interventions and RVC development.

This list of possible policy interventions is not exhaustive, and should be customized and adapted to each commodity, each segment, or each level of focus (national, regional or continental). It however provides a basis, some food for thought. As the Economic Commission for Africa recently highlighted, developing regionally integrated VCs and markets is both feasible and important, and this study is an attempt to contribute to the process.