Francesco RampaHead of Food Security Programme,

ECDPM

The political economy around regional food market

integration and policies in Africa

• Why ECDPM (think&…doing it)• Big picture: policy/political bottlenecks to

RI• A PEA angle (from ECDPM)• Political Economy of reg food markets in

ECOWAS: rice (livestock)…& corridors• What can we do about it? Way Forward

…doing it: example of Reg PPP Platforms in COMESA

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• Africa’s food import bill is worth US$35 billion (excluding fish) every year both public & private sectors are having good % of Rents (not only exporters)

• To meet its basic food demand, Africa relies on imports from outside (87% of imports from the RoW vs. 13% from Africa)

• Africa’s basic food products EXP also directed towards external partners despite its strong internal needs (78% of exports to the RoW vs. 22% to Africa)

• …but always beware of “largely used data” e.g. according to SWAC Secretariat, RoW-food-imp shouldn't be compared to TOT-imp but to TOT-size of Food Economy e.g. in WA 178bn $ in 2010 = 36% of regional GDP vs Food imp are only 7% of Food Ec total size. + Ag exports are only 9% of total Ag GDP in the region.

Infrastr & Governance/political & Policy Bottlenecks National interests: implementation of regional

cooperation and integration takes place only when in line with key ‘national interests’ (as defined by ruling elites)

RI/RECs heavily dependent on donors (ECOWAS partial exception)

The BIG picture

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Facts & Figures

African countries are losing out on billions of dollars in potential trade every year because of the region’s fragmented market. (World Bank. 2012. De-Fragmenting Africa: Deepening Regional Integration in Goods and Services.)

% Africa’s intra-regional goods trade in total goods exports is just 12 per cent, compared with 25 per cent in the Association of Southeast Asian Nations and 65 per cent in the European Union. (World Economic Forum. 2013)

A truck driver on the Koutiala–Dakar corridor between Mali and Senegal has to pass through almost 100 checkpoints and border posts and is required to pay about US$437 in bribes along the route. (World Economic Forum. 2013. The Africa Competitiveness Report. Based on data from the West Africa Trade Hub, USAID)

artificial borders & urban consumers VS rural producers

• Challenge is to get food from rural areas to consumers in growing urban centers

• Nearest city is often across a border

• Provides incentive to invest in higher productivity

Source: Haggblade et al (2008).

History matters

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Trade Policy Barriers for expanding trade in Africa

huge potential for an ambitious trade facilitation agenda:

– Free Circulation of goods still not achieved within Custom Unions (intra-trade still affected by MFN tariffs, double taxation…)

– Numerous fees and bribes – Administrative burden– Inefficiency of checkpoints (delays)

ECOWAS CEMAC COMESA SACU0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%18.0%

Average Import Tariffs on Agri-food imports

Applied to non SSA countries Applied to SSA countries

• Despite RI [tariffs within RECs going down], intra-Africa trade still affected by significant tariffs [still significant between RECs], espec in Agric…need to address between blocks trade barriers

• External pressure to liberalize markets with third countries (EPA with the EU..)

• Still instability / uncertainty regarding some trade policies

…. Political economy & lack of competition along whole value chain

Trade barriers limit access to seeds and fertilisers

Transport cartels, road blocks result in high costs

Trade policies are opaque and unpredictable

Quality standards and SPS rules can block trade

Distribution services are not linking poor producers to poor consumers

Farmers on average receive less than 20% of consumer price

Source: World Bank (2012).

Food trade as risky business, especially for women

Source: World Bank (2012).

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PEA... 5 lenses

Foundational & structural factors

Institutions - formal & informal rules of the game

Actors and agency - power and interests

Sectoral characteristics

External factors - financial and other12

to examine the interaction of political & economic processes & incentives...

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POLITICAL ECONOMY OF REGIONAL INTEGRATION IN AFRICAWhat drives and constrains regional organisations?

e.g. Foundational & Structural factors... “continue to shape the environment in which African regional organisations set and implement their agendas.”- ECOWAS - franco-anglo colonial and linguistic heritage - IGAD - common physical challenges vs long-run conflicts- COMESA - 8/19 landlocked; 4/19 islands, dispersed- EAC - landlocked Ug, Rw, Burundi but ‘coalition of the willing’

PEA of reg food markets in ECOWAS: rice, livestock…corridors:15 countries (among poorest), fragmented, fragility(terrorism), UEMOA/ECOWAS, variable geometry, PS mistrust, Nigeria…

P&Security: strong incentive for reg.cooperation effective ; Food Sec not enough (despite 2008) very slow progress after 10y of ECOWAP/RAIP

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• ECOWAS Commission: adhoc path, looking for windows of opportunities to play informal broker/foster compliance, alliance with ‘willing’ & ‘soft mechanisms’ of persuasion… informal coalitions/different. gears may be > appropriate

• EAC (smaller, more cohesive, less fragile, legislates, etc.) follows > formal, transparent, institutionalised rules respected by “all” highest intra-reg exports EAC 19,5%, lowest ECOWAS 8,5%

“main challenge for donors: align much closer to the real political economy dynamics prevailing in a given sector or policy area (linked to power relations, incentives and interests) rather than towards formal players and processes”

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Regional dependency on imports: Rice, political staple food (ECOWAP/Offensive Riz)

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1961

1970

1980

1990

2000

2005

2008

2012

0 2000000 4000000 6000000 8000000 10000000 12000000 14000000 16000000

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• Rice [no RVC]: corridors facilitate imports from outside WA Livestock [RVC !]: significant % of intra-regional livestock trade makes use of existing transit corridors in the region

• Scattered informal trade info & location of rice production basins and urban markets imply some intra-regional rice trade passes through corridors (e.g. potential Bamako-Abidjan; Bamako-Ouagadougou), but also suggests most existing intra-regional trade (in particular in Central Basin) is informal trade along transb.production basins (re-exports)

• Importers & vote-seekers won [10% CET] : incentives to invest in local prod…Dreyfus etc agree (GA) but no Quality/Contract-enf...so Policies work with crossborder trader associations/aggregators …Inclusive Reg VC PPP Platform/MIS

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PEA means being realistic…but difficult choices. Work with Nigeria: 50% CONS-25% IMP/35%...(avg. prod. 2010-2012) + C.d’Iv./Mali/Guinea…and all rest buyers?

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Nigeria37%

Mali15%

Guinea13%

Côte d'Ivoire9%

Sierra Leone8%

Senegal4%

Ghana4%

Others9%

- Build “RI Vision” … especially on RVC and linking ECOWAP-trade-corridors...Nigeria!

- Stable Trade Policy: CET impl.differently: tariffs on imported rice not uniform in ECOWAS opportunities for transhipment and smuggling within the region

- Pre-requisite: CB for enforceability (Min of Finance…)- Massive need for more info: impact on informal

economy (40% rural household: non-farm informal post-harvest segments of food VC: processing/distribution…) + PEA + informal trade data

- PS in the lead (which PS?): actors mapping!- Corridors are important (e.g. cities need rice) but link

them via Feeder to Border MKTs

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• “Plan for sailboats, not trains” (Kleinfeld, 2015)• A Knowledge Agenda (data/PEA/informal) BUT goDEEP/VC• Bottleneck based & multistakeh: from top-down to bottom-

up RI; instead of CFTA and wholesale RFTAs, pragmatic (PPP) initiatives to remove trade barriers for a small set of priority food commodities, where real political commitment and commercial interests can effectively change policies and practices ? [differentiated gears]

• HORIZ & VERTICAL coherence !• Transparent rules / Trust building within VC/accountability

for all (monitor pro-poorness/inclusiveness of VCs)• Champions&strategic Comms – help champion

countries/individuals, coalitions - at the political and technical levels, - in regional and national organisations, P-P sectors

Way Forward ?

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• Mushrooming DP initiatives

• ECOWAP DP Coordination practices : vertical and horizontal coherence?

• protectionism can work to attract investors in Agric, if done at regional level ? EPA EAC exclusion list include dairy products

• Trading commodities with EU vs Inclusive investment in East Africa ? Nexus (Nairobi)?

• e.g. Flowers vs Milk or Potato

DP Coordination

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• At the policy level most RECs have or are developing CAADP Reg. Inv. Plans to address specific cross-border trade issues

• COMESA Regional Investment Programme in Agriculture – Priority Area 2 (RIPA-II)• Platforms for public-private dialogue aimed at

participatory regional value chain development• Competition U-K-R on dairy / quality / processing• (see also Rice in EAC !)

DOING IT…RIPA-II

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1. Working in the kitchen represents a significant investment (getting to impact? Exit strategy?) – but can yield returns (learning, partners, funding)

2. Partnership building is crucial (MoUs?), but choose partners wisely, and get to know them well! (CAADP Unit vs EAFF)

3. Promoting ‘business unusual’ is hard! (interests in status quo, wariness about new structures)

4. Enhancing inclusivity is possible, but we face limits (private sector buy in?)

12 lessons from the kitchen

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5. Donors don’t always put their money where their mouths are – need for PEA of donors?

6. Doing is great, but don’t forget to think (plan!!!, reflect, share)!

7. Being there could be useful but probably only where aims are concrete

8. Interest in funding is one of real motivators and we can use this, but it can also create jealousies

12 lesson from the kitchen (cont.)

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9. Political commitments (especially at high level - COMESA Summit (PPPs) & Malabo Declaration (Tripling)) can help move things along

10.Effective independent partnership brokers are hard to find, including in Africa

11.Kitchen work only possible because of large network12.Thinking and working politically is crucial (work with

established structures, vested interests, etc.)

12 lesson from the kitchen (cont.)

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Your views !PUBs:

GREAT, WAx2, Maize2feed,PEA&Caadp

www.ecdpm.org/foodsecurity

fr@ecdpm.org@F_Rampa

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