Task Force for Rural Africa Sets Out Four Strategic Areas and Six Initiatives

Summary
The Task Force Rural Africa (TFRA) advances a series of specific recommendations and initiatives aimed at ensuring African agro-food sector development contributes fully to addressing the employment and income earning opportunities challenge faced in Africa. A critical challenge is seen as promoting an appropriate trajectory for ‘the development of the African food industry and food markets’. However this will need to address the tension between the EU’s quest for new food product markets and African aspirations for the structural development of national agro-food sectors. In some sectors this will require a critical review of current patterns of trade and investment relations (e.g. in the dairy sector). TFRA recommendation on structured policy dialogues could prove valuable in this regard. A key issue to be addressed will be the interpretation and application of existing EU-Africa trade agreement commitments, which go beyond WTO rules and undermine national trade policy sovereignty and the effectiveness of chosen policy measures. It will also need to effectively operationalize the EU’s new unfair trading practices directive as this impacts Africa-EU trade flows and support measures to strengthen the functioning of local agro-food sector supply chains.

The report of the Task Force Rural Africa takes as its starting point Africa’s expanding workforce which will grow by 800 million people over the next 30 years. The jobs and income earning opportunities this will require is seen as one of ‘the biggest political and economic challenges of our time’. This population growth is also seen as presenting new opportunities, if the necessary investments can be made, particularly in nutrition, education and health. It is in this context that the report’s strategies and policy recommendations are advanced. The report notes how not-withstanding the rapid urbanization which is underway, ‘the majority of the African population will remain rural until 2040’.

The profound economic, environmental, political and governance diversity in Africa is highlighted, with this suggesting the need for a nuanced country/region specific approach will be needed.

In situating EU-Africa relations it highlights how ‘the EU remains Africa’s main trading partner, its largest source of Foreign Direct Investment (FDI) and development assistance and, as a close neighbour, a key ally on security’.

The report identifies four strategic areas for action and proposes six short term initiatives ‘consistent with the four longer term areas of action, which Africa and the EU should swiftly implement to launch their enhanced collaboration for the agri-food sector and rural economy’.

The four strategic areas cover:

the adoption of ‘a territorial approach for income and job creation’;
a commitment to ‘sustainable land and natural resources management and climate change’;
a commitment to ‘sustainable transformation of African agriculture’;
the ‘development of the African food industry and food markets’.

The six initiatives involve:

extending ‘support rural governance and an innovative local action programme, based on a territorial approach’ through mobilising ‘local initiatives through a Local Action Programme’ and creating a network for territorial development in Africa which is linked to a similar local action network programme in Europe;
mainstreaming environmental sustainability and promoting climate action, through fast tracking ‘the co-financing of food-related plans within the African climate action frameworks, including through international climate finance mechanisms’ and consolidating secure access to land;
creating a ‘knowledge, innovation and networking initiative for transformation of agriculture and rural areas’, through creating ‘knowledge platforms to feed national and regional policy dialogue’ and implementing ‘Innovation Hubs to support agripreneurs and go digital in extension services, learning and vocational training’;
improving ‘access to private finance and to EU cooperation instruments for small and medium size agriculture and food business’ through scaling up ‘technical assistance to support the agri-food sector to prepare bankable investments’ and creating an AU-EU Agribusiness Platform;
Scaling up ‘sustainable value chain development, regional integration and intra-regional trade’ through the use, promotion and dissemination of ‘tools and methods to assess value chains in economic, environmental and social terms’ and scaling up ‘support to regional integration and harmonisation of food safety and sanitary regulation through a knowledge-sharing platform’;
bringing ‘together European and African expertise for agriculture and rural development’ through facilitating ‘twinning programmes for the linkage of experts from associations, businesses and public entities with peers’ and ‘establishing exchange between farmers and peers from society, business and governments’.

In specific regard to the ‘development of the African food industry and food markets’ the task Force report identifies 5 areas of concern including:

poor food industry competitiveness: due to inadequate infrastructure; limited investment capital; high costs of inputs; inadequate organization along the supply chain; lack of stakeholder involvement in policy making given inadequate structures for public/private dialogue;
a lack of affordable investment for farming and agro-food sector activities: given the lower rates of return in the sector and the higher risks;
shortcomings in the functioning of value chains which leave smallholders poorly placed;
fragmented markets: which limits the development of intra-regional trade;
shortcomings in food safety and quality requirements: with many SPS systems ‘still not sufficiently developed, especially for animal and other high risk products’, with this impacting on the consumer preferences which in growing urban areas can favour imported safe, quality products.

Against this background the Task Force report advances a number of recommendations, notably:

‘Increase the competitiveness of African agri-food value chains by implementing predictable and coherent policies, political commitment, monitoring joint action and policy coherence, promoting African-EU policy dialogue, and knowledge generation’;
Reinforce ‘the alignment between the External Investment Plan (EIP)/blending instruments and traditional development instruments concerning economic infrastructure, technical assistance and budget support to sector policies’;
‘Allocate sufficient resources for investment on Sustainable Agriculture, Rural Entrepreneurs and Agribusiness under the EIP (particularly for agricultural SMEs and rural entrepreneurs) and ensure a good coordination of the three EIP pillars’;
‘Prioritise the national level to ensure that this nexus between financial instruments, capacity building and public policy is effective for investment, encouraging a deeper collaboration between the international finance institutions and national development agencies, at both central and national levels’;
‘Enable regional and national African Development Finance Institutions (DFI) to pass the 7-pillar assessment required to manage EU funds under the EIP, and enhance cooperation between European and African DFIs’;
‘Scale up technical assistance to support smallholder farmers and food SMEs to prepare bankable investment proposals targeting EIP funds and establish solid monitoring systems to demonstrate development impact, and ensure best practice is identified and shared for upscaling’;
‘Strengthen and scale up existing value chain initiatives, including from national to regional level where relevant. Establish an African-EU knowledge sharing platform on value chains. Establish a Value Chain Fund to address bottlenecks. Support the implementation of the AU continental strategy on geographical indications’;
‘Enhance and support African initiatives for regional and continental cooperation and trade integration. For the EU to support implementation of Regional Agricultural Investment Plans and enhanced institutional governance, including regional inclusive multi-stakeholder platforms to guide priority food value chain development’;
‘Use the AU-EU Agriculture Ministers Conferences and their follow up to discuss agricultural policy development, SPS matters and practical measures to increase regional and international trade’;
‘Set up multi-stakeholder dialogue to scale up existing guidelines on responsible business conduct and investment; and to tack-le issues relating to food imports and foreign direct investment going into African countries. Involve African stakeholders in PCD assessments and make use of joint platforms where PCD issues can be raised’.

The Task Force wants to see the new ‘Africa-Europe Alliance for Sustainable Investment and Jobs’ adopt the recommendations of the report in regard to the 6 short term initiatives, as an action plan to be funded within the framework of the Alliance. These short term initiatives are seen as offering ‘early wins in terms of development outcomes’, with these needing to be followed by ‘longer term investments’ in ‘agricultural intensification, agro-industry, infrastructure, intra-regional trade’.

The Task Force calls for ‘a high level political commitment to the spirit and content of the main recommendations of the report’ and the ‘development of an implementation plan by the AU Commission and EU Commission’. It is proposed that oversight of implementation of the strategy should be undertaken by a regular AU EU Agriculture Ministerial Conference, with this providing a forum for overseeing the implementation of the proposed ‘Action Plan for the agri-food and rural agenda within the new Africa-Europe Alliance for Sustainable Investment and Jobs’.

Comment and Analysis

Europe is a particularly important trade and investment partner for Africa in the agro-food sector. This makes the structural effects of EU trade and investment flows particularly important. Given the focus on expanding jobs and income earning opportunities, the critical issue going forward will be the extent to which EU trade and investment flows support or undermine the structural development of individual African agro-food sectors.

This will require a serious review of current EU trade and investment flows at a sector by sector level to determine to what extent current patterns of trade and investment support the necessary structural development of the concerned sectors. This needs to be seen as central to the effective operationalisation of the EU’s Policy Coherence for Development (PCD) commitments, which as the Task Force report argues ‘should be an integral part of a future partnership under the Africa-Europe Alliance’. Indeed the Task Force report goes further, arguing coherence concerns are such that ‘a formal AU-EU dialogue framework on agriculture and trade of agricultural products open to representatives of the private sector and farmers’ organisations’ should be established.

However as the Task Force report points out Africa’s evolving patterns of agro-food sector trade are such that ‘just focusing on trade policy dealing with EU trade flows is not sufficient as these EU trade flows could be easily replaced with ex-ports from other global competitors’. Nevertheless it needs to be recognised EU trade agreements with African countries are structured in ways which involve African governments going beyond their WTO commitments in their import trade with the EU.

For example tariff standstill commitments in EU trade agreements with African countries mean that although African governments can use the ‘water’ in their WTO bound tariffs to raise tariffs on imports as part of sector development programmes, where patterns of imports are posing challenges, such tariff increases cannot be applied to imports from the EU. A case in point is South Africa’s decision, implemented in October 2013, to increase MFN tariffs on selected poultry meat imports. However these tariff increases could not be applied to imports from EU member states. This left EU exporters with additional tariff advantages over their international competitors and fuelled a further expansion of EU poultry meat exports to South Africa. Between 2013 and 2016 South African poultry meat imports from the EU increase 70% from 158,548 tonnes in 2013 to 270,176 tonnes in 2016.

As a consequence of the provisions of the EU-South Africa trade agreement the use of the ‘water’ in South Africa’s WTO bound tariff schedule not only proved ineffective in affording local poultry producers protection from imports of low priced poultry parts, but also saw the South African government drawn deeper into a trade dispute with the USA. This eventually required the granting of additional market access concessions to US poultry exporters in order to avert South Africa’s expulsion from the USA’s AGOA initiative.

Similar preferential treatment for EU exporters with regard to the application of non-tariff trade policy measures is also included in all EU trade agreements with African countries. These commitments could take on particular significance were the EU to seek the full enforcement of these trade agreement commitments in the coming period when a potential no-deal Brexit could profoundly disrupt existing EU27/UK trade flows in animal products, leading to high levels of trade diversion in products which are sensitive in an African rural development context (e.g. in the poultry, dairy and sugar sectors).

In this context policy dialogue with the EU takes on particular significance, since the interpretation and application of existing EU trade agreement commitments could severely undermine national trade policy space and undermine efforts to use trade policy tools as an integral part of agro-food sector development strategies. This is an issue which African governments will need to get to grips with as they seek to carry forward the work of the Task Force on Rural Africa.

A critical challenge will be reconciling the EU’s growing thirst for overseas markets for its agro-food industry with Africa’s aspirations for the structural development of national agro-food sector. To date this issue has largely been side-stepped.

An additional issue which will need to be addressed is how to make markets work better for smaller scale farmers. This will require closer EU-African collaboration on the policy measures required to strengthen the functioning of agro-food sector supply chains to the benefit of agricultural producers. This issue will need to be addressed domestically in African countries with some very successful examples in Namibia on how to improve access for local producers to local markets (see epamonitoring.net article ‘Namibia’s Retail Sector Charter and the Strengthening of Local Supply Chains’, 24^th March 2017)

This issue will also need to be addressed at the level of the functioning of Africa-EU agro-food sector supply chains, with particular importance needing to be attached to operationalising the EU’s new Unfair Trading Practices (UTP) directive (see epamonitoring.net article, ‘Impact of Yellow Vest Protests on Cameroonian Pineapple Exports Highlights Importance of Tackling UTPs along ACP-EU Supply Chains in Context of Potential ‘No-Deal Brexit’, 13^th May 2019). Early action in this area could potentially lead to significance income gains for the worst affected small scale African exporters (see epamonitoring.net article, ‘Calls for Stricter EU Measures Against UTP’, 1^st November 2018)

Sources:
(1) EC, ‘An Africa-Europe Agenda for Rural transformation’, Report by the Task Force Rural Africa, March 2019
https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/report-tfra_mar2019_en.pdf