To foster Africa’s food security, continent’s Export-Import Bank (Afreximbank) has staked US$6 billion in development financing to benefit and strengthen Africa’s food security prospects marred by various climatic changes and heightened by the geo-political influence, a senior official says.
The Cairo headquartered Multilateral Financial Institution, established in 1983, arguably to finance and promote intra and extra African trade plans to launch the low credit facility to all African countries and help finance food and commodities, as well as fertilizers to help strengthen food security for African countries, Egypt included following various headwinds among others, the Russian-Ukrainian War and climate change that threatened the continent-a call for stop gap measures.
The Daily News, An Egyptian daily publication, citing Afreximbank Senior Manager Gainmore Zanamwe says plans are underway to launch development financing programme-through credit facility starting with an initial US4 billion with value to be reviewed to $6bn to meet demand.
Without itemizing the loan interest terms, the report said the funding will strive to finance food and commodities, as well as fertilisers, and seek to cushion and enhance food security for affected countries. Last June Afreximbank released its ‘Africa’s 2022 Growth Prospects: Poise under Post-Pandemic and Heightening Geopolitical Pressures’ report in which it highlighted that Egypt is projected to account for 17% of Africa’s combined output expansion in 2022, up from 16% in 2021.
The two largest economies, Nigeria and South Africa, the bank stated in its report, are expected to account for 17% and 15%, respectively, of aggregate output of the region.
“Growth is projected to strengthen in North Africa — the fastest-growing sub-region — lifted by the impressive performance of Egypt, the territory’s largest economy.
“The projected recovery is also indicative of the relatively strong bounce-back in a few large African economies, with Egypt — which entered the COVID-19 crisis with sizable buffers following years of economic reforms — being one case in point.”
In a report by Africa Renewal magazine, Africa’s recovery from the climate change and COVID 19 effects hinges on the effective implementation of the 43-member-African Continental Free Trade Area (AfCFTA) after the two headwinds scattering the continent’s plans to remain food secure- having exacted 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 reported to be 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, the report argues.
The rising cost of fertilizers and the impact of climate change are exacerbating food shortages as the hocks have slowed progress towards achieving SDG2-attaining zero hunger by 2030.
The United Nations-UN food agency-FAO, the United Nations Economic Commission for Africa (UNECA), and the African Union in a joint report dubbed: ‘Africa: Regional Overview of Food Security and Nutrition’ noted that over one-fifth of the continent’s population faced hunger two years ago, representing about 281.6 million people—46.3 million more than the figure for 2019.
Due to current harsh economic realities in countries, the report adds, the Breton Woods Institution-IMF is encouraging governments worldwide to subsidize the cost of food and energy for their poor-a social intervention presenting a huge fiscal challenge for many African countries.
Arguably, the call for supporting the success of the AfCFTA-operationalised last April with an estimated market of over US$1.3 billion people comes handy as it will culminate An effective solution is to boost intra-African trade, which has the potential to pave the way to food security, the journal contends.
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. The United Nations Economic Commission for Africa-UNECA, puts it weight against AfCFTA.
It envisions the ‘home grown initiative’ will reinvigorate the continent’s intra trade African capacity 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.
UNECA encourages African countries to support the AfCFTA and help boost capacity and 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.
The OTA is a five-year programme designed to help African MSMEs leverage market opportunities generated by the African Continental Free Trade Area (AfCFTA).
According to the UNECA estimates, the AfCFTA, given support, will 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.
The AfCFTA, the continent’s conveyor belt for accelerating intra-African trade and boosting Africa’s trading position in the global market by strengthening Africa’s common voice and policy space in global trade negotiations wants to maximize on Africa’s potential to growth and value add on its products to realize real returns from exports of goods and services from the continent while buoying intra Africa trade
With support from the private sector, AfCFTA will architects say, endeavour to create a single market of 1.27 billion consumers with an aggregate GDP between US $2.1 and $3.4 trillion. It’s a fast-growing market too, as consumer numbers are expected to increase to 1.7 billion by 2030.
The AfCFTA market has a growing middle class as well, currently standing at 350 million and expected to rise to 600 million by 2030. African e-commerce is also on the rise. McKinsey & Company forecasts in an independent report for African online retail business growth to hit an all-time high US $75 billion by 2025.