African countries should use the innovative Africa Exchange Trade Platform (ATEX) and boost digital trade in critical commodities under the Africa Continental Free Trade Area (AfCFTA).
ATEX is a digital business-to-business (B2B) and business-to-government (B2G) exchange platform developed by ECA and the African Export-Import Bank (Afreximbank), in collaboration with the African Union Commission and the AfCFTA Secretariat.
“ATEX will certainly avail access to essential commodities at affordable prices to African countries that look set to be hit the hardest by the global food price crisis with severe implications on economic and political stability,” Ms. Hanan Morsy, Deputy Executive Secretary and Chief Economist of the United Nations Economic Commission for Africa (ECA) said at the presentation of the Africa Exchange Trade Platform (ATEX) on the sidelines of COP27 at Sharm El Sheikh, Egypt.
Opening the discussion session on “Finance for climate resilient trade and Africa Trade Exchange ATEX: Pathways toward a Greener Africa”, DES Morsy emphasized that the ATEX platform was an opportunity for African countries to collaborate in boosting commodity trade as a response to the multiple challenges of climate, fertilizer and food crisis.
“Africa needs to leverage the AfCFTA and available climate financing to enhance the resilience of the African food system and mitigate vulnerability to disruptions in global food supply, “said Ms. Morsy.
The global climate crisis has affected food security, imperative for African countries to enhance food production through the supply of critical inputs such as fertilizers. Climate-change-related risks in Africa have included flooding, drought and heat waves which have reduced food production and agricultural productivity.
Morsy noted that climate change has increased and amplified risks to food security for the most vulnerable countries. Four out of the eight key risks induced by climate change have direct consequences on food security.
Besides, inflation in most African countries continues to rise with many of them facing double digit inflation rates, reaching well above 20%. This comes on the back of sustained global high food and fuel costs, supply chain disruptions and the ongoing Ukraine crisis.
“One of the main implications is that the global fertilizer prices have significantly risen over the last year because of surging input costs, supply disruptions, and export restrictions,” Ms. Morsy said, warning that price spike in fertilizers and shortage would affect the planting season in 2023 unless urgent action was taken to channel the fertilize where it is needed most in Africa at an affordable price.
“Africa should activate its Marshall Plan, the African Continental Free Trade Area (AfCFTA)” Morsy told participants, explaining that the full implementation of the AfCFTA will boost intra-African trade by nearby 40% in 2045.with the agrifood sector namely cereals and crops, milk and dairy product, sugar, and processed food experiencing the most gain.
“Our presence here is a testimony of our support to ATEX and most particularly its emergency response phase as an African-driven response to the global food crisis,” she said.
Morsy highlighted that ATEX can strengthen Africa’ economic resilience as pooled demand will ensure Africa’s ability to negotiate competitive prices and attenuate the impact of the disruption in the food supply chain.
“There is a dire need to reduce the cost of agricultural inputs, especially fertilizer, ” the DES noted, indicating that ATEX offered a huge potential to enhance intra-Africa trade in fertilizers. The value of Africa’s total fertilizer exports has outpaced imports by 2.6 times in 2021. Besides, four northern Africa countries were among the top five fertilizer producers on the continent.
Morocco and Egypt cumulatively exported USD 6.23 billion in fertilizer in 2021 which is 70% of Africa’s total.
Morsy urged African countries to enhance sharing information on demand and supply of critical commodities, facilitate the participation of suppliers (Private Sector) of critical commodities and to register and start trading through the ATEX platform.
“This goes without saying that redirecting fertilizer within Africa is key to fill the gap left by the Ukraine crisis, specifically for nitrogen and phosphate-based fertilizers, said Ms. Morsy noting that sourcing fertilizers and food commodities from within the continent would help cushion Africa from the debilitating impacts of recurrent shocks.
Currently 134 suppliers have been onboarded on ATEX (including 104 African companies) and 249 African buyers. The commodities available on ATEX are Fertilizers (NPK, Urea, Phosphates, Fertilizer Compounds, Agricultural chemicals), Agricultural products (Cashew Coffee, Oilseeds, Wheat, Maize, Rice and Barley), Processed Food products (Wheat products, Bulk commodity and food products) and Other industrial products (Construction materials, Chemical products and Fuel products Global fertilizer company, OCP will donate and sell 550K tonnes of fertilizer to African countries in the context of the Africa Relief Programme. In the second phase of the programme, OCP committed 4.3 million tonnes available for the continent to nearly doubled production capacity and hope ATEX can help address the logistics and financing challenges, so we do not miss the next season.
The ECA and Afreximbank will work with key international players to ensure fertilizers is channelled where it is needed the most in Africa through ATEX.
Mr. Yusuf Daya, Director of the AU/AfCFTA Relations and Trade Policy, shared that the AfCFTA offers an opportunity for Africa to produce and consume goods within the continent, thereby reducing its carbon footprint. Implementing the AfCFTA should therefore be a priority for all African economies. He shared that by aggregating demand across the continent and supported by Afreximbank’s financing, the ATEX can contribute to food security and mitigate the impact of current global supply disruptions.
Mr. Daya said the ATEX platform has helped Africa respond to the Ukraine crisis by enabling the trade of key critical inputs, including food, fuel, and fertilizers. He said in the long term it was envisaged the platform would enable businesses to tap into new markets on the African continent and increase intra-African trade in line with Agenda 2063 and Sustainable Development Goals.
Maximo Torero, FAO shared that Africa was already facing chronic hunger and malnutrition due to climate, water and energy crisis and the disruption in the supply chain has aggravated the food security issues. The ATEX platform will boost supply of inputs and critical commodities in Africa, reduce transaction cost, and accelerate the mobility of crops to minimize food loss.
Mr. Torero, further explained that Africa has enormous opportunities and several challenges. Proposing that ATEX can help solve some challenges but there should be precise data on the demand and supply side at the continent. FAO is open to share data to fine tune the platform to manage the demand and supply in ensuring that critical commodities and fertilizers are delivered where it is needed the most.
Mr. Frick, WFP shared that WFP supports food value chains and intra-regional trade in Africa through several initiatives including local and regional procurement, school feeding programs, smallholder farmers access to markets, as well as initiatives like the “Save Crops Operation” and FARM launched in 2022. He shared that WFP collaboration with governments, International Financial Institutions, UN agencies and private sector contributes to ATEX objectives, aiming to reach the most vulnerable communities within the context of the global food crisis.
He explained that the number of people experiencing acute hunger has increased steadily between 2019 to 2022, mostly driven by conflict, climate change, and the Covid-19 pandemic. Stressing that there is the need to strengthen local markets and producers to eliminate food loss during production and transmission and reduce food insecurity. That may require timely access to the market which can be made possible by ATEX.
“It is said never let a crisis go to waste. This initiative does that by taking from the crisis we are facing and how we can come together with solutions that will lead to a better life for Africans,” said Ms. Morsy.