[Tika (Kenya) 28th Reuters]–In an orchard owned by Kenya’s agricultural corporation Kakuji, workers are shaking down avocados on trees. Chris Flowers, CEO, is excited about the possibility that some of the crops will be shipped to China, the most attractive emerging consumer market.
Taking advantage of the Chinese government’s focus on trade with African countries, Kenya has been working to open the market for several years in an attempt to reduce its large trade deficit as much as possible. Signed an agreement to export raw avocado to China.
However, according to Kenya’s Avocado Producers Association, plant hygiene inspection authorities, and Kakuji, who interviewed Reuters, six months after the signing, it has never been shipped.
There are 10 avocado exporters that have passed the inspection in Kenya. However, the Chinese side is now insisting that it wants to do its own inspection. According to the experience of fruit producers in other African countries, it is no wonder that it takes 10 years to get a go-ahead.
“Even if there is a market, you won’t get any benefit if you don’t meet the standards,” said Stephen Karingi, head of the trade department at the United Nations Economic Commission for Africa.
Reuters interviewed about 10 African officials and businesses. They say that China’s complicated bureaucracy and its reluctance to conclude comprehensive trade agreements are holding back the Chinese government’s plan to promote imports from Africa.
However, expanding agricultural exports is one of the few options for African countries to improve their trade balance with China and obtain the foreign currency needed to repay huge debt. A significant portion of the debt goes to the Chinese government.
In the case of Kenya, the trade balance with China is a deficit of about $ 6.5 billion a year, and the debt to China is about $ 8 billion. This year, interest payments on debt alone will require nearly $ 631 million, which is almost three times the value of 2021 exports to China.
Many African countries say it is out of the question to increase borrowing from China any further and that exports to China must be increased. The Chinese side also recognized the need to deal with trade imbalances, at least prevent them from getting worse, and announced a strategic shift last November.
So far, the summit between China and African countries has been used as a place for China to announce surprisingly large loans, but President Xi Jinping said at the November meeting that he will total imports from African countries over the next three years. It has announced various policies to expand to 300 billion dollars and to reach 300 billion dollars a year by 2035.
Experts say that one of the most promising tools in theory is agriculture. While China is the world’s largest food importer, the agricultural sector is the number one worker and contribution to GDP in African countries.
In addition, 60% of the undeveloped cultivated land in the world exists in Africa, which means that it has great growth potential.
“It’s a win-win choice for both China and Africa,” said Iku Umeshin of the China Institute for International Trade and Economic Cooperation, a think tank affiliated with the Ministry of Commerce of China.
Over the last few decades, China has deepened its ties with African countries, mining mining resources and oil, and providing large loans for the construction of railroads, power plants and highways.
This has increased the scale of trade between China and Africa 24 times over the past 20 years, and last year, despite the global turmoil caused by the Korona-ka, the value of trade between China and Africa reached a record high of $ 254 billion. Reached.
However, in 2021, $ 148 billion worth of Chinese products were exported to African countries, while China imported only $ 106 billion from African countries. Of that amount, $ 75 billion is occupied by five resource-rich countries (Angola, Republic of the Congo, Congo (formerly Zaire), South Africa and Zambia).
Nigeria has the largest population in Africa and the highest import value of Chinese products. In 2021, it imported $ 23 billion, which is eight times the value of exports from Nigeria to China.
Uganda has a more pronounced imbalance. About 80% of the exports are agricultural products such as coffee, tea and cotton, and the export value to China last year was 44 million dollars, but the import value exceeded 1 billion dollars.
More than three-quarters of African countries have a deficit in their trade balance with China, according to data from Chinese customs authorities.
Wu Peng, director general of the African Affairs Bureau of the Ministry of Foreign Affairs of China, said these imbalances were not the intended result.
“China is always focused on developing trade between China and Africa in a balanced manner,” Wu Peng told Reuters.
Hannah Ryder, founder of Beijing-based African development consultancy Development Reimajind, says African leaders have long sought action in the trade arena.
On the other hand, the Korona-ka has raised interest in the debt problem. In about 60% of low-income countries, especially Africa, the burden of debt repayment is the heaviest in the last 20 years, and insolvency or its risk is high.
“African countries are under pressure to borrow no more,” Ryder said. “(China) is wondering if something can be done in the trade sector.”
China’s imports in the food and agricultural sector were worth $ 13 billion 20 years ago. It jumped to $ 161 billion in 2020, of which imports from African countries accounted for only 2.6%.
Wu, who is in charge of Africa at the Ministry of Foreign Affairs of China, said controlling growth will ensure balanced trade, increase employment opportunities in Africa and support the industrialization of the African Continent.
“(China) has been proactive in responding to the important concerns African countries feel about trade cooperation between China and Africa,” he said.
President Xi Jinping’s plan is to set up an intensive customs zone called “Green Lane”, expand tariff-free market access, and 100 to Chinese companies responsible for imports from Africa in order to expedite inspection of African agricultural products. He is advocating a $ 100 million trade loan.
Lauren Johnston, a visiting senior lecturer at the University of Adelaide’s Institute for International Trade, points out that, in theory, rising food demand in China is a great opportunity for Africa to leverage agricultural exports to earn foreign currency.
“Agricultural exports have come to the forefront because of the debt problem,” Johnston said. “In the first place, it’s a very reasonable investment.”
However, some countries, including Kenya, have been slow to take advantage of this opportunity. Kenya is Africa’s number one producer of avocados, and last year exported $ 154 million, mainly to Europe.
Eric Were of the Kenya Plant Sanitation Inspection Office (Kefis) says 10 avocado producers have passed inspections for export to China this year through complex procedures.
“For China, we need to inspect orchards, packing plants, and fumigation and disinfection facilities,” he said.
According to Welle, Kenya’s largest avocado producer, Kakuji, took a month to show traceability of the production process from seeds to fruit tree management, avocado harvesting, processing and packaging. In contrast, the European Union only requires inspection at the time of shipment, he said.
But last month, Kefis announced that Chinese authorities had decided to carry out their own inspections. Looking at the experience of neighboring Uganda, this is not always a good story.
“It’s very common for Chinese inspections to point out this incompleteness,” Uganda’s chairman of foreign trade, Emmanuel Mutahunga, told Reuters.
Coffee farmers in Tanzania also did not stand out in exports to China. In Namibia, it took nine years from the signing of the beef export agreement to the satisfaction of Chinese regulatory authorities, and finally the first shipment was completed in 2019.
Wu says China’s planned efforts should help farmers in African countries improve their quarantine and food security capabilities, while Ume and Johnston import from Africa. He said it is unlikely that phytosanitary control on goods would be mitigated.
“There are no obstacles that are more difficult to overcome than China and food safety,” Johnston said.
Some experts say that China has overlooked other ways to promote imports. One of them is Wandile Siflovo, chief economist of the South African Agricultural Business Council.
The Chinese government, like the EU, should be able to negotiate a comprehensive trade deal with African countries and regional economic blocks, according to Siflovo.
But China is still sticking to bilateral trade, which is also the trade of individual agricultural products.
“The most important thing to say is that we want China to be a little more open to food exports from Africa,” said Siflovo. “There is a lot of strain on individual countries negotiating for a more favorable agreement.”
Among African countries, one of the pioneers in the Chinese market is South Africa’s citrus industry, which signed the first agreement with the Chinese government in 2004. In 2021, 162,000 pallets of fruit were exported. However, the road to success was not easy.
“China was a dream market for South African citrus fruits,” said Justin Chadwick, CEO of the South African Citrus Producers Association.
However, the overwhelmingly large export destinations for South African citrus fruits are the United Kingdom and the European Union, which should have strict food safety standards, accounting for 44% of last year’s exports.
“If you want to enter the Chinese market, you have to make individual agreements for each produce. It takes about 10 years on average for each,” Chadwick said.
“Unfortunately, China only negotiates one type at a time.”
(Duncan Miriri reporter, Joe Bavier reporter, translation: Acrelen)
