Daily Trust (Abuja)

26 October 2012

Africa to Generate U.S.$20 Billion Annually Through Free Trade - World Bank

Photo: IRIN
A fresh produce market in Mbare, Harare.

African government can generate about $20 million annually and avoid food shortage if they restrict trade barriers within the region, the World Bank has said.

The Bank said that food trade barriers increase the cost to the consumer and the farmer.

It said that farmers on holdings in Africa who sell surplus harvest typically receive less than 20 percent of the consumer price of their produce, with the rest being eaten up by various transaction costs and post harvest losses.

"This clearly limits the incentive to produce for the market," the Bank said.

A latest World Bank report said Africa could avoid food shortages if it reduces the tangled web of rules, fees and high costs strangling regional food trade and by putting large swathes of uncultivated land to productive use.

Just 5 percent of Africa's cereal imports are now provided by African farmers, according to the report released on the eve of an African Union summit on agriculture and trade in Ethiopia.

"Too often borders get in the way of getting food to homes and communities which are struggling with too little to eat," the World Bank vice president for Africa Makhtar Diop said.

The Bank estimated that 19 million people are in danger of hunger and malnutrition in West Africa's Sahel region. Yet, removing cross-border restrictions could help avoid food crises if farmers were allowed to trade more easily with each other and get food to communities facing shortages.

The World Bank said high transport costs were an impediment to more food trade across Africa, especially for small farmers. While poor roads and lack of infrastructure are a problem in Africa, transport cartels are also common with little incentive for investment in modern trucks.

Countries in West Africa could halve their transport costs within 10 years if governments undertook policy reforms that spurred more competition, the World Bank said. Roadblocks and bribes at border posts also add to the cost of getting food to markets.

The World Bank report said yields for many crops in Africa are a fraction of what farmers are achieving elsewhere in the world. It said that more food trade in Africa could help raise yields, spread new technology and create jobs.

The Bank said rules and regulations are preventing African farmers from using higher yielding seeds and better fertilizers. In some countries it can take two to three years for new seed varieties to be released, even if they are being used elsewhere in Africa.

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InFocus

Regional Trade Key to Food Security

A fresh produce market in Mbare, Harare.

Governments should reduce the barriers that prevent farmers from trading across the continent, the World Bank says. Read more »