- China aims to increase trade with Africa to help reduce deficits
- African agricultural producers press for access to China
- Even with trade deals, long-term approvals hinder exports
THIKA, Kenya, June 28 (Reuters) – Watching Kenyan agricultural firm Kakuzi poke avocados from the tops of trees in an orchard owned by general manager Chris Flowers, some are enchanted by the thought that it may soon make its way to the crown of emerging consumer markets: China.
Leveraging Beijing’s deeper focus on trade with African countries to help reduce deficits, Kenya signed an export deal with China for fresh avocados in January after years of lobbying for market access.
Six months later, no shipments remained, with Kenya’s avocado community, the East African country’s phytosanitary inspectorate and Kakuzi (KUKZ.NR) He told Reuters.
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While 10 avocado exporters have passed Kenyan inspections, China now wants to conduct its own inspections, and it may take a decade to greenlight based on the past experience of some other African fruit producers.
“You can actually have a market, but if you can’t meet the standards, you can’t gain an advantage,” said Stephen Karingi, head of trade for the United Nations Economic Commission for Africa.
Reuters spoke to nine officials and businesses in Africa and said the Chinese bureaucracy and unwillingness to strike broad trade deals undermined Beijing’s plan to increase African imports.
However, increasing agricultural exports is one of the few options many African countries have to rebalance their trade relations with China and earn the foreign exchange they need to pay off the mountains of debts many owe Beijing.
Get Kenya. It has an annual trade deficit with China of about $6.5 billion and Chinese debt of roughly $8 billion. It needs about $631 million this year just to pay off that debt, but that’s almost three times its exports to China in 2021.
Many African countries say they can no longer get Chinese loans and must increase exports to China. Recognizing the need to address imbalances or at least prevent them from getting worse, China announced a change in strategy in November.
At the China-Africa summit, a China-Africa summit typically used by Beijing to reveal glamorous loans, President Xi Jinping has set out to increase China’s imports from Africa to $300 billion over the next three years and $300 billion a year by 2035. announced a number of initiatives.
Experts say that in theory agriculture is one of the most promising avenues. While China is the world’s largest food importer, the agricultural sector in Africa is both a leading employer and a contributor to economic activity.
Moreover, 60% of the world’s uncultivated arable land is in Africa, meaning it has great growth potential.
“It’s a win-win option for China and Africa,” said Mei Xinyu of the China Academy of International Trade and Economic Cooperation, a think tank affiliated with China’s Ministry of Commerce.
For decades, China has lent Africa billions of dollars to build railroads, power plants and highways, while mining and oiling and deepening ties with the continent.
This has helped the China-Africa trade bubble 24 times over the past two decades, and despite the turmoil of the global pandemic, two-way trade hit a record $254 billion last year.
But for the $148 billion of Chinese goods shipped to Africa in 2021, China imported just $106 billion, with five resource-rich countries – Angola, the Republic of the Congo, the Democratic Republic of the Congo South Africa and Zambia – making up $75 billion of that.
Nigeria, Africa’s most populous country, is the largest importer of Chinese goods, worth $23 billion in 2021, but these imports dwarf Nigeria’s exports to China by eight times.
The difference is more pronounced in Uganda, where around 80% of its exports are agricultural products such as coffee, tea and cotton. It shipped $44 million worth of goods to China last year, but its imports exceeded $1 billion.
Chinese customs data shows that more than three-quarters of African countries have a trade deficit with Beijing.
Wu Peng, Director-General of China’s Department of African Affairs at the Ministry of Foreign Affairs, said such imbalances were unintentional.
“China has always focused on promoting the balanced development of China-Africa trade,” he told Reuters.
Hannah Ryder, founder of Development Reimagined, an African-owned development consulting firm headquartered in Beijing, said African leaders have been pressing for years to take action on trade.
Meanwhile, the pandemic has sharpened their focus on debt. About 60% of low-income countries—mostly in Africa—are either in debt distress or at high risk, and their debt service burdens are at their highest in 20 years.
“African countries were under pressure not to take out more loans,” Ryder said. “Trade is where (the Chinese) think they can do something.”
When it comes to food and agriculture, China’s imports were worth $13 billion two decades ago. They had jumped to $161 billion by 2020, but Africa only accounted for 2.6% of that.
Wu, head of China’s African Affairs, said the growth would ensure balanced trade, increase job opportunities in Africa and help industrialize the continent.
“(China) has actively responded to the important concerns of African countries on China-Africa trade cooperation,” he said.
President Xi’s plan calls for centralized customs zones, or “Green Routes,” for speeding up inspections of agricultural products from Africa, greater access to zero tariffs, and $10 billion in trade finance for Chinese firms importing from the continent.
Lauren Johnston, a senior lecturer at the University of Adelaide’s Institute of International Trade, said on paper, China’s growing food needs present a huge opportunity for Africa to leverage agricultural exports to boost foreign exchange.
“The debt situation brought that to the fore,” he said. “It’s just a super sensible investment in the first place.”
But some countries, such as Kenya, are struggling to take advantage of the opportunities. It is Africa’s largest avocado producer and exported 154 million dollars last year, primarily to Europe.
Eric Were of the Kenya Phytosanitary Inspectorate Service (Kephis) said they went through all the hoops to clear 10 avocado companies for Chinese exports this year.
“For the Chinese, we need to inspect the orchard, we need to inspect the pack house, and we need to inspect the fumigation facilities,” he said.
He said Kakuzi, Kenya’s largest avocado grower, has spent a month demonstrating that he can track his crops from seeds, how trees are managed, and how avocados are harvested, processed and packaged. In contrast, he said the European Union only requires inspection at the point of departure.
Last month, the inspectorate announced that the Chinese authorities had decided to conduct their own inspection – which has not always been a positive experience in Uganda.
“When they come, they often see that we are not in good standing,” Uganda’s Foreign Trade Commissioner Emmanuel Mutahunga told Reuters.
Tanzanian coffee farmers have also struggled to make their mark in Namibia, leading to first shipments in 2019, nine years after a beef export deal was signed to satisfy Chinese regulators.
Wu said China’s planned initiatives will help African farmers build their quarantine and food safety capacities, but Mei and Johnston said any relaxation in phytosanitary regulations for African imports is unlikely.
“There is no bigger red line than China and food security,” Johnston said.
Experts like Wandile Sihlobo, chief economist at the South African Chamber of Agriculture and Commerce, say China is missing other ways to speed up access.
He said Beijing could negotiate broad trade deals with African countries and regional blocs, as the EU does.
Instead, China continues to make bilateral agreements, and even then only on individual products.
The key message here is that China is a little more open to African food exports,” he said. “Many of them will have to land individually in countries negotiating better deals.”
South Africa’s citrus industry was among the continent’s first pioneers in China and signed its first protocol with Beijing in 2004. It exported 162,000 pallets of fruit in 2021, but success didn’t come overnight.
“SA has been an incredible market for citrus,” said Justin Chadwick, president of the South African Citrus Growers Association.
Still, the UK and the European Union, with their stringent food safety standards, rank by far for South African citrus, which accounted for 44% of exports last year.
Chadwick said, “When you want to go to China, you need to get a separate protocol for each agricultural product. It takes an average of 10 years for each product to conclude the protocol.” “Unfortunately, China makes this product one by one.”
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Duncan Miriri reported from Thika, Kenya and Joe Bavier from Johannesburg; Additional reporting by Elias Biryabarema in Kampala, Ellen Zhang in Beijing, Nuzulack Dausen in Dar es Salaam and Nyasha Nyaungwa in Windhoek; Editing by David Clarke
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