Africa’s dream of feeding China collides with harsh reality
- China aims to boost trade with Africa to help reduce deficits
- African agricultural producers push for access to China
- Even with trade deals, extended approvals are hampering exports
THIKA, Kenya, June 28 (Reuters) – Watching workers prick avocados from the treetops at an orchard owned by Kenyan agricultural company Kakuzi, chief executive Chris Flowers rejoices that some may soon be heading to the jewel in the crown of emerging consumer markets: China.
Taking advantage of Beijing’s emphasis 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 access. at the market.
Six months later, no cargo has left, Kenya’s avocado society, the East African country’s 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 past 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 of it,” said Stephen Karingi, head of trade at the UN Economic Commission for Africa.
Reuters spoke to nine officials and companies across Africa who said Chinese red tape and reluctance to strike broad trade deals were undermining Beijing’s plan to boost African imports.
However, increasing agricultural exports is one of the few options many African countries have to rebalance their trade relationship with China and earn the hard currency they need to pay off mountains of debt, much of which is due to Beijing.
Take Kenya. Its annual trade deficit with China is about $6.5 billion and it has about $8 billion in Chinese debt. It needs nearly $631 million to pay off that debt alone this year, but that’s almost three times its exports to China in 2021.
Many African countries are now saying they simply cannot afford more Chinese loans and must increase their exports to China. Recognizing the need to address imbalances, or at least prevent them from worsening, China announced a change in strategy in November.
At a China-Africa summit usually used by Beijing to unveil eye-popping loans, President Xi Jinping announced a series of initiatives aimed at boosting Chinese imports from Africa to $300 billion over the next three next few years and $300 billion a year by 2035.
In theory, agriculture is one of the most promising avenues, experts say. China is the world’s largest food importer, while Africa’s agricultural sector is both the largest employer and largest contributor to economic activity.
Additionally, 60% of the world’s uncultivated arable land is in Africa, meaning there is huge potential for growth.
“It’s a win-win choice for China and Africa,” said Mei Xinyu of the Chinese Academy of International Trade and Economic Cooperation, a think tank under China’s Ministry of Commerce.
For decades, China has loaned billions of dollars to Africa to build railways, power stations and highways while deepening its ties with the continent while extracting minerals and oil.
This has seen China-Africa trade grow 24-fold over the past two decades and bilateral trade hit a record $254 billion last year despite the turmoil of the global pandemic.
But for $148 billion of Chinese goods shipped to Africa in 2021, China only imported $106 billion and five resource-rich countries – Angola, Republic of Congo, Democratic Republic of Congo, South Africa and Zambia – accounted for $75 billion.
Nigeria, Africa’s most populous country, is the top importer of Chinese goods, worth $23 billion in 2021, but those imports have eclipsed Nigeria’s exports to China by eight times.
The disparity is more marked in Uganda, where around 80% of its exports are agricultural products such as coffee, tea and cotton. It sent goods worth $44 million to China last year, but its imports topped $1 billion.
Chinese customs data shows that more than three quarters of African countries have trade deficits with Beijing.
Wu Peng, director general of China’s Foreign Ministry’s African Affairs Department, said such imbalances were unintentional.
“China has always focused on promoting the balanced development of China-Africa trade,” he told Reuters.
African leaders have been pushing for action on trade for years, said Hannah Ryder, founder of Development Reimagined, an African-owned development consultancy headquartered in Beijing.
The pandemic, meanwhile, has sharpened their focus on debt. Some 60% of low-income countries – mainly in Africa – are either in debt distress or at high risk, with the debt service burden at its highest level in 20 years.
“African countries were under pressure not to take more loans,” Ryder said. “Trade is where (the Chinese) think they can do something.”
When it comes to food and agriculture, Chinese imports were worth $13 billion twenty years ago. By 2020, they had jumped to $161 billion, but Africa only accounted for 2.6%.
China’s African affairs chief Wu said the growth will ensure balanced trade, increase job opportunities in Africa and help the continent industrialize.
“(China) has actively responded to important concerns of African countries regarding China-Africa business cooperation,” he said.
President Xi’s plan includes centralized clearance zones, or ‘green lanes’, to speed up inspections of agricultural products from Africa, access to zero tariffs and $10 billion in trade finance for Chinese companies importing from the mainland.
On paper, China’s growing food needs present a huge opportunity for Africa to leverage agricultural exports to boost foreign exchange, said Lauren Johnston, visiting lecturer at the University’s Institute of International Trade. from Adelaide.
“The debt situation has brought it to the fore,” she said. “In the first place, it’s just a super logical investment.”
But some countries are struggling to seize the opportunities, such as Kenya. It is Africa’s largest avocado producer and exported $154 million worth last year, mostly to Europe.
Eric Were from the Kenya Plant Health Inspectorate Service (Kephis) said they have taken steps to get 10 avocado companies cleared this year for Chinese exports.
“For the Chinese, we have to inspect the orchard, we have to inspect the packing station, and we have to inspect the fumigation facilities,” he said.
He said Kakuzi, Kenya’s largest avocado grower, spent a month showing he could track his products from the seeds, to how the trees are managed and how the avocados are harvested, processed and packaged. In contrast, the European Union only requires inspection at the point of exit, Were said.
Last month, the inspectorate announced that the Chinese authorities had decided to carry out their own audits – which has not always been a positive side experience in Uganda.
“When they come, they often see that we are not doing well,” Emmanuel Mutahunga, Uganda’s foreign trade commissioner, told Reuters.
Tanzanian coffee farmers also struggled to make their mark while in Namibia it took nine years from the signing of a beef export deal to satisfy Chinese regulators, leading to the first shipments in 2019.
Wu said China’s planned initiatives would help African farmers improve their quarantine and food safety capacity, although Mei and Johnston said a relaxation of phytosanitary regulations for African imports was unlikely.
“There is no greater red line than China and food security,” Johnston said.
China also lacks other means of accelerating access, according to experts such as Wandile Sihlobo, chief economist at South Africa’s Chamber of Agricultural Affairs.
He said Beijing could negotiate broad trade deals with African countries and regional blocs, like the EU is doing.
Instead, China continues to strike bilateral agreements, and even then only on individual products.
“The central message here is for China to be a bit more open to food exports from Africa,” he said. “A lot of that will have to come back to individual countries negotiating better deals.”
South Africa’s citrus industry was among the continent’s first pioneers in China, signing its first protocol with Beijing in 2004. It exported 162,000 pallets of fruit in 2021, but success did not come overnight. the following day.
“It’s been an incredible market for South African citrus,” said Justin Chadwick, chief executive of the Citrus Growers Association of Southern Africa.
Yet Britain and the European Union, which have strict food safety standards, are still by far the top destination for South African citrus, accounting for 44% of exports last year.
“When you want to go to China, you have to get a separate protocol for each agricultural product. It takes on average about 10 years for each product’s protocol to be concluded,” Chadwick said. “Unfortunately, China only produces one product at a time.”
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Duncan Miriri reported from Thika, Kenya, and Joe Bavier reported 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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