Africa’s dream of feeding China hits a hard reality

  • China aims to boost trade with Africa to help reduce deficit
  • African agricultural producers push for access to China
  • Even with trade deals, lengthy approvals hamper exports

THICA, Kenya (Reuters) – Watched as workers harvest avocados from the treetops in an orchard owned by Kenyan agriculture company Kakuzi, managing director Chris Flowers salutes the idea that some may soon go to the jewel in the crown of emerging consumer markets: China.

Capitalizing on Beijing’s deeper focus on trade with African countries to help reduce a massive deficit, Kenya struck an export deal with China for fresh avocados in January after years of lobbying for market access.

Six months later, no shipments had left, the Kenya Avocado Society, the East African country’s Plant Health Inspectorate and Kakuzi Corporation (KUKZ.NR) told Reuters.

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While 10 avocado exporters have passed Kenyan inspections, China now wants to conduct its own audits and, based on past experience of some other African fruit producers, could take a decade to get the green light.

“You can already have a market, but if you can’t meet the standards, you can’t benefit,” said Stephen Karenji, head of trade at the United Nations 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 undermine 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 hard currency they need to service mountains of debt, most of which they owe to Beijing.

Take Kenya, for example. Its annual trade deficit with China is about $6.5 billion and it has nearly $8 billion of Chinese debt. It needs roughly $631 million to service that debt alone this year, but that’s nearly triple its exports to China in 2021.

Many African countries are now saying they simply cannot afford more Chinese loans and should increase exports to China. Recognizing the need to address the imbalances, or at least prevent them from getting worse, China announced a shift in strategy in November.

At a summit between China and Africa usually used by Beijing to unveil eye-catching loans, President Xi Jinping announced a raft of initiatives to increase China’s imports from Africa to $300 billion over the next three years and $300 billion annually by 2035.

In theory, experts say, agriculture is one of the most promising avenues. China is the world’s largest food importer while the agricultural sector in Africa is the main employer and contributor to economic activity.

Moreover, 60% of the uncultivated arable land is located in Africa, which means that there is huge potential for growth.

“It is a win-win option for China and Africa,” said Mei Xinyu of the China Academy of International Trade and Economic Cooperation, a think-tank under the Chinese Ministry of Commerce.

Trade Obstacles

For decades, China has loaned billions of dollars to Africa to build railways, power plants and highways while strengthening ties with the continent while extracting minerals and oil.

This has helped China-Africa trade swell 24 times over the past two decades, and bilateral trade hit a record $254 billion last year despite the turmoil caused by the global pandemic.

But for $148 billion in Chinese goods shipped to Africa in 2021, China imported just $106 billion, and five resource-rich countries — Angola, the Republic of Congo, the Democratic Republic of the Congo, South Africa and Zambia — accounted for $75 billion of that.

Nigeria, Africa’s most populous country, is the largest importer of Chinese goods, exceeding $23 billion in 2021, but those imports dwarfed Nigeria’s exports to China by eight times.

The disparity is more pronounced in Uganda, where about 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 exceeded $1 billion.

Chinese customs data shows that more than three-quarters of African countries have a trade deficit with Beijing.

Such imbalances were unintentional, said Wu Peng, director-general of the African Affairs Department of the Chinese Foreign Ministry.

“China has always focused on promoting the balanced development of trade between China and Africa,” he told Reuters.

For years, African leaders have been pushing for action on trade, said Hannah Ryder, founder of Development Reimagined, an Africa-owned development advisory 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 distress or at high risk, with debt-service burdens at their highest level in 20 years.

“African countries were under pressure not to accept more lending,” Ryder said. “Commerce is where (the Chinese) think they can do something.”

green lanes

When it comes to food and agriculture, China’s imports were worth $13 billion two decades ago. By 2020, it had jumped to $161 billion, but Africa made up only 2.6% of that amount.

Capitalizing on this growth will ensure balanced trade, increase African jobs, and help the continent industrialize, China’s Africa Affairs Chief Wu said.

“(China) has effectively responded to the important concerns of African countries about China-Africa trade cooperation,” he said.

President Xi’s plan calls for the creation of centralized disinfection zones, or “green corridors,” to speed up inspections of agricultural goods from Africa, more tariff-free access, and $10 billion worth of trade financing for Chinese companies importing from the continent.

Lauren Johnston, visiting lecturer at the University of Adelaide’s Institute of International Trade, said China’s growing food needs represented, in theory, a great opportunity for Africa to tap agricultural exports to increase foreign exchange.

“Putting debt put it first,” she said. “In the first place, it’s just a very logical investment.”

But some countries are struggling to take advantage of the opportunities, such as Kenya. It is the largest avocado producer in Africa and exported $154 million worth last year, mainly to Europe.

Eric Weir at the Kenya Plant Health Inspectorate (Kephis) said they jumped through hoops to get 10 avocado companies to clear Chinese exports this year.

“For the Chinese, we need to check out the orchard, we need to check out the packing warehouse and we need to check out the fumigation facilities,” he said.

He said Kakuzi, Kenya’s largest avocado grower, spent a month demonstrating his ability to track his seed production, how to manage trees, and how avocados are harvested, processed and packaged. By contrast, the EU only requires inspections at the exit point, Ware said.

Last month, the inspection body announced that Chinese authorities had decided to conduct their own audits – which has not always been a positive experience nearby in Uganda.

“When they come they often find that we are not doing well,” Ugandan External Trade Commissioner Emmanuel Mutahunga told Reuters.

Red lines

Tanzanian coffee farmers have struggled to make their mark too while in Namibia, it took nine years to sign a beef export deal to satisfy Chinese regulators, leading to the first shipments in 2019.

Wu said the planned Chinese initiatives would help African farmers improve their quarantine and food safety capabilities, although Mi and Johnston said any loosening of phytosanitary regulations for African imports was unlikely.

“There is no greater 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 Wandile Sihlobo, chief economist at the South African Chamber of Agribusiness.

He said Beijing could negotiate broad trade deals with African countries and regional blocs, as the European Union does.

Instead, China continues to make bilateral deals, and even then only on individual products.

“The main message here is for China to be a little more open to food exports to Africa,” he said. “A lot of that has to come down to individual countries negotiating better deals.”

South Africa’s citrus industry was among the continent’s early pioneers in China, signing its first protocol with Beijing in 2004. It exported 162,000 slabs of fruit in 2021, but success did not come overnight.

“It’s been a fantastic market for South African citrus,” said Justin Chadwick, CEO of the South African Citrus Growers Association.

However, Britain and the European Union, which have strict food safety standards, remain by far the number one citrus destination in South Africa, accounting for 44% of last year’s exports.

“When you want to go to China, you have to have a separate protocol for each agricultural product,” Chadwick said. “It averages about 10 years until the protocol for each product is finalised.” “Unfortunately, China makes this one product at a time.”

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Duncan Meriri reported from Thika, Kenya, and Joe Bavier from Johannesburg; Additional reporting by Elias Priyaparima in Kampala, Elaine Zhang in Beijing, Nozulak Dawson in Dar es Salaam, Nyasha Nyongwa in Windhoek; Editing by David Clark

Our Standards: Thomson Reuters Trust Principles.

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