African countries should make use of the innovative Africa Exchange Trade (ATEX) platform and boost digital trade in key commodities as part of the African Continental Free Trade Area (AfCFTA).
ATEX is a business-to-business (B2B) and business-to-government (B2G) e-commerce platform developed by UNECA and the African Export-Import Bank (Afreximbank), in collaboration with the African Union Commission and the AfCFTA Secretariat.
"The ATEX will certainly provide access to essential products at affordable prices for African countries, which seem to be the hardest hit by the global food price crisis, with serious implications for economic and political stability," said Hanan Morsy, Deputy Executive Secretary and Chief Economist of the Economic Commission for Africa (UNECA), at the presentation of the Africa Exchange Trade Platform (ATEX) on the sidelines of COP27 in Sharm el-Sheikh, Egypt.
Stimulating Raw Materials Trade
Opening the discussion session on " Finance for climate resilient trade and Africa Trade Exchange ATEX: Pathways toward a Greener Africa, " Deputy Executive Secretary Hanan Morsy stressed that the ATEX platform is an opportunity for African countries to work together to boost trade in raw materials in response to the multiple challenges of climate, fertilisers, and the food crisis.
"Africa must take advantage of the AfCFTA and the climate financing available to strengthen the resilience of the African food system and reduce vulnerability to disruptions in the global food supply," said Mrs. Morsy.
The global climate crisis has affected food security, making it imperative for African countries to improve food production through the supply of essential inputs such as fertilisers. Climate change risks in Africa include flooding, drought, and heat waves, which have reduced food production and agricultural productivity.
Morsy noted that climate change has increased and amplified the risks to food security in the most vulnerable countries. Four of the eight main risks induced by climate change have a direct impact on food security.
In addition, inflation in most African countries continues to rise, with many facing double-digit inflation rates well in excess of 20%. This is due to sustained high food and fuel prices, supply chain disruptions, and the ongoing crisis in Ukraine.
Soaring Fertiliser Prices And Shortages Will Affect The 2023 Planting Season
"One of the key implications is that global fertiliser prices have risen dramatically over the past year due to soaring input costs, supply disruptions, and export restrictions," Morsy said, warning that soaring fertiliser prices and shortages would affect the planting season in 2023 unless urgent action is taken to get fertiliser to where it is needed most in Africa and at an affordable price.
"Africa should activate its Marshall Plan, the African Continental Free Trade Area (AfCFTA)," Mrs. Morsy told participants, explaining that full implementation of the AfCFTA will boost intra-African trade by around 40% by 2045, with the agri-food sector, namely cereals and crops, milk and dairy products, sugar, and processed foods experiencing the biggest gains.
"Our presence here is a token of our support for the ATEX and particularly its emergency response phase as Africa's response to the global food crisis," she said.
Morsy stressed that ATEX can strengthen Africa's economic resilience, as pooled demand will safeguard Africa's ability to negotiate competitive prices and mitigate the effects of disruption to the food supply chain.
"There is an urgent need to reduce the cost of agricultural inputs, in particular fertilisers," noted the Deputy Executive Secretary, indicating that ATEX has enormous potential to improve intra-African trade in fertilisers. The value of Africa's total fertiliser exports will have exceeded imports by 2.6 times by 2021. In addition, four North African countries were among the continent's top five fertiliser producers.
Morocco and Egypt have a combined export of $6.23 billion worth of fertiliser in 2021, representing 70% of Africa's total.
Morsy urged African countries to strengthen the sharing of information on the demand and supply of essential products, to facilitate the participation of suppliers (private sector) of essential products, and to register and start trading via the ATEX platform.
"It goes without saying that the reorientation of fertilisers in Africa is essential to fill the void left by the Ukrainian crisis, particularly for nitrogen- and phosphate-based fertilisers," said Morsy, noting that supplying fertilisers and food products to Africa would help mitigate the debilitating effects of recurrent shocks on the continent.
Currently, 134 suppliers have joined ATEX (including 104 African companies) and 249 African buyers. The products available on ATEX are Fertilisers (NPK, Urea, Phosphates, Compound fertilizers, Agricultural Chemicals), Agricultural Products (Cashew, Coffee, Oilseeds, Wheat, Maize, Rice, and Barley), Processed Food Products (Wheat Products, Bulk Products, and Foodstuffs), and Other Industrial Products (Building Materials, Chemicals, and Petroleum Products).
OCP Group Donates Fertiliser To African Countries
World fertilizer company OCP will donate and sell at a discount 550,000 tonnes of fertilizer to African countries as part of the Africa Relief programme. In the second phase of the programme, OCP has committed 4.3 million tonnes available for the continent to almost double production capacity and hopes that ATEX will be able to help meet the logistical and financial challenges, so that the next season is not missed.
ECA and Afreximbank will work with key international players to ensure that fertilisers get to where they are needed most in Africa via ATEX.
Yusuf Daya, Director of Trade Policy and Relations on the AfCFTA at the AU, explained that the AfCFTA offers Africa an opportunity to produce and consume goods on the continent, thereby reducing its carbon footprint. Implementing the AfCFTA should therefore be a priority for all African economies. He said that by aggregating demand across the continent and with the financial support of Afreximbank, ATEX can contribute to food security and mitigate the effects of current global supply disruptions.
Daya stated that the ATEX platform has helped Africa address the Ukrainian crisis by enabling the trade of essential inputs, including food, fuel and fertiliser. He said that in the long term, the platform is expected to enable companies to access new markets on the African continent and increase intra-African trade in line with Agenda 2063 and the Sustainable Development Goals.
Maximo Torero from the FAO said that Africa was already facing chronic hunger and malnutrition as a result of the climate, water and energy crises, and that the disruption to the supply chain had exacerbated food security problems. The ATEX platform will boost the supply of essential inputs and products in Africa, reduce transaction costs and accelerate crop mobility to minimise food losses.
Mr.Torero, further explained that Africa has enormous opportunities but also many challenges; explaining that ATEX can help solve some of the challenges, but there should be accurate data on demand and supply on the continent. The FAO is open to sharing data to refine the platform to manage demand and supply, ensuring that essential commodities and fertilisers are delivered where they are needed most.
Mr.Frick from WFP indicated that the organisation supports food value chains and intra-regional trade in Africa through several initiatives, including local and regional sourcing, school feeding programmes, smallholder farmers' access to markets, as well as initiatives such as "Save Crops Operation" and FARM launched in 2022. He informed that WFP's collaboration with governments, international financial institutions, UN agencies and the private sector contributes to the objectives of the ATEX, aimed at reaching the most vulnerable communities in the context of the global food crisis.
has risen steadily between 2019 and 2022, mainly due to conflict, climate change and the Covid-19 pandemic; stressing that it is necessary to strengthen markets and local producers to eliminate food losses during production and transmission and reduce food insecurity. This may require rapid market access, which can be made possible by ATEX.
"You have to know how to take advantage of a crisis. This initiative does that by taking advantage of the crisis we are facing and how we can find solutions that will lead to a better life for Africans,’ explained Mrs Morsy.
Credit: AfriMag