- China aims to boost trade with Africa to help reduce deficits
- African farmers are pushing for access to China
- Even in commercial transactions, prolonged approvals hinder exports
THIKA, Kenya, June 28 (Reuters) – Watching workers push avocados from the tops of trees in an orchard owned by Kenyan agricultural firm Kakuzi, managing director Chris Flowers enjoys the idea that some may soon become the jewel of emerging consumer markets: China.
Taking advantage of Beijing’s deeper focus on trade with African countries to help reduce gaping deficits, Kenya struck an export deal with China for fresh avocados in January after years of lobbying for market access.
Six months later, no shipments remained, the Kenyan Avocado Society, the East African Phytosanitary Inspectorate and Kakuzi (KUKZ.NR) told Reuters.
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While 10 avocado exporters have passed Kenyan inspections, China now wants to do its own audits, and based on the previous experience of some other African fruit growers, it could take a decade to get the green light.
“You can actually have a market, but if you can’t meet the standards, you can’t take advantage,” said Stephen Caringe, head of trade at the United Nations Economic Commission for Africa.
Reuters spoke to nine officials and companies across Africa who said the Chinese bureaucracy and reluctance to reach broad trade agreements were undermining Beijing’s plan to increase imports from Africa.
However, increasing agricultural exports is one of the few opportunities many African countries need to rebalance their trade relations with China and earn the hard currency they need to service mountains of debt, much of which they owe to Beijing. .
Take Kenya. Its annual trade deficit with China is about $ 6.5 billion and has about $ 8 billion in Chinese debt. It needs nearly $ 631 million to service that debt this year alone, but that’s nearly three times its exports to China in 2021.
Many African countries now say they simply cannot afford more Chinese loans and need to increase exports to China. In recognition of the need to address imbalances, or at least halt their deterioration, China announced a change in strategy in November.
At a China-Africa summit commonly used by Beijing to reveal impressive loans, President Xi Jinping announced a series of initiatives to increase China’s imports from Africa to $ 300 billion over the next three years and $ 300 billion a year by 2035. .
In theory, agriculture is one of the most promising roads, experts say. China is the world’s largest importer of food, while Africa’s agricultural sector is both a leading employer and a contributor to economic activity.
Moreover, 60% of the world’s uncultivated arable land is in Africa, which means that it has huge growth potential.
“This is a winning choice for China and Africa,” said Mei Xinyu of the Chinese Academy of International Trade and Economic Cooperation, a think tank at China’s Ministry of Commerce.
TRADE IMBALANCE
For decades, China has allocated billions of dollars to Africa to build railways, power plants and highways, while deepening its ties with the continent while extracting minerals and oil.
This has helped Sino-African trade increase 24-fold over the past two decades, with two-way trade reaching a record $ 254 billion last year despite the turmoil of the global pandemic.
But for $ 148 billion worth of Chinese goods shipped to Africa in 2021, China imported just $ 106 billion, and five resource-rich countries – Angola, the Congolese Republic, the Democratic Republic of the Congo, South Africa and Zambia – accounted for $ 75 billion. .
Nigeria, the most populous nation in Africa, is the largest importer of Chinese goods, growing by $ 23 billion in 2021, but these imports exceeded Nigeria’s exports to China eight times.
The difference is greater in Uganda, where about 80% of its exports are agricultural products such as coffee, tea and cotton. Last year, it shipped $ 44 million worth of goods to China, but its imports exceeded $ 1 billion.
Data from Chinese customs show that more than three-quarters of African countries have trade deficits with Beijing.
Wu Peng, director general of the African Foreign Ministry’s African Affairs Department, said such imbalances were unintentional.
“China has always focused on promoting the balanced development of trade between China and Africa,” he told Reuters.
African leaders have been pushing for trade for years, said Hannah Ryder, founder of Development Reimagined, an African-based development consulting firm based in Beijing.
Meanwhile, the pandemic has sharpened their focus on debt. About 60% of low-income countries – mostly in Africa – are either in debt debt or at high risk, with the debt service burden being the 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.”
GREEN COATS
In terms of food and agriculture, China’s imports were worth $ 13 billion two decades ago. By 2020, they had jumped to $ 161 billion, but Africa accounted for only 2.6%.
China’s head of African affairs, Wu, said using this growth would ensure balanced trade, increase employment opportunities in Africa and help the continent industrialize.
“(China) has actively responded to the important concerns of African countries about trade cooperation between China and Africa,” he said.
President Xi’s plan calls for centralized release zones or “green alleys” to speed up inspections of African agricultural goods, more zero-tariff access and $ 10 billion in trade finance for Chinese companies importing from the continent.
On paper, China’s growing food needs represent a huge opportunity for Africa to use agricultural exports to raise foreign exchange, said Lauren Johnston, a visiting senior lecturer at the Institute of International Trade at the University of Adelaide.
“The debt situation has brought it to the fore,” she said. “First of all, it’s just a super logical investment.”
But some countries are struggling to seize opportunities, such as Kenya. It is the largest producer of avocados in Africa and exported $ 154 million last year, mainly to Europe.
Eric Verr of the Plant Health Inspectorate in Kenya (Kephis) said they jumped through the hoops to get permission from 10 avocado companies this year for Chinese exports.
“For the Chinese, we have to inspect the orchard, we have to inspect the warehouse and we have to inspect the fumigation facilities,” he said.
He said Kakuzi, Kenya’s largest avocado grower, has spent a month showing he can track his seed production to how trees are managed and how avocados are harvested, processed and packaged. In contrast, the European Union requires verification only at the starting point, Were said.
Last month, the inspectorate announced that Chinese authorities had decided to conduct their own audits – which has not always been a positive experience in Uganda’s neighborhood.
“When they come, they often find that we are not doing well,” Emanuel Mutahunga, Uganda’s foreign trade commissioner, told Reuters.
RED LINES
Coffee farmers in Tanzania are also struggling to make their mark, while it took nine years in Namibia to sign a beef export deal to satisfy Chinese regulators, leading to the first deliveries in 2019.
Wu said China’s planned initiatives would help African farmers improve their quarantine and food safety capacity, although May and Johnston said it was unlikely to loosen phytosanitary regulations on imports from Africa.
“There is no bigger red line than China and food security,” Johnston said.
China is also missing out on other ways to speed up access, say experts such as Vandile Sihlobo, chief economist at the South African Chamber of Agriculture.
He said Beijing could negotiate broad trade agreements with African countries and regional blocs, as the EU does.
Instead, China continues to make bilateral deals, and even then only for individual products.
“The main message here is for China to be a little more open to food exports from Africa,” he said. “Much of this will have to come down to individual countries negotiating better deals.”
The citrus industry in South Africa was among the continent’s first pioneers in China, signing its first protocol with Beijing in 2004. In 2021, it exported 162,000 pallets of fruit, but success did not come overnight.
“It was an amazing market for SA citrus fruits,” said Justin Chadwick, CEO of the Association of Citrus Producers in South Africa.
Yet the UK and the European Union, which have strict food safety standards, are still the most popular destination for South African citrus fruits, which accounted for 44% of exports last year.
“When you want to go to China, you have to get a separate protocol for each agricultural product. On average, it takes about 10 years for the protocol to be concluded for each product,” Chadwick said. “Unfortunately, China is making this product one by one.”
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Duncan Miriri reports from Tika, Kenya, and Joe Bavier reports from Johannesburg; Additional reports by Elias Biryabarema in Kampala, Ellen Zhang in Beijing, Nuzulack Dausen in Dar es Salaam and Nyasha Nyaungwa in Windhoek; Edited by David Clark
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