Addis Ababa – Two years after the emergence of COVID-19, Africa has absorbed a number of lessons which will prove crucial as the continent confronts the new food, fuel and fertilizer crisis reverberating across the world as the Russia-Ukraine war creates historic, global trade and commodity disruptions.
Ongoing studies will in time, no doubt, offer compelling explanations as to why the overall incidence of COVID-19 on the continent has remained low. But already, two things are clear: Africa reacted collectively, and it reacted early – and this has paid off.
Over 38 countries were locked down within three months of the crisis. While the lockdown caused untold harm to many economies, it allowed countries to assess their capacity to respond and begin putting in place rapid response systems. From Senegal to Togo, Kenya to Angola, new digital systems were set up and existing ones leveraged to manage the crisis.
For East Africa and West Africa, new protocols were adopted to manage cross border trade and associated traffic, and these were harmonised across regions.
The flagship collaborative efforts through the crisis have been central to preserving and reinforcing Africa’s resilience during the pandemic. It is the boldness of African Finance Ministers, the leadership role of Africa CDC and the financing ability of AfDB and AFREXIMBANK that have helped Africa mitigate against a threat that at one point seemed practically existential.
A key instance of such imaginative and visionary leadership was the creation of the Africa Medical Supplies Platform and AVAT, the Africa Vaccine Acquisition Trust, which enabled the continent to source critically needed supplies to fight the pandemic at competitive prices.
Faced with a new crisis, Africa must build on the experience of the past to pull together once again. The COVID-19 experience showed that organised pooling of demand can overcome supply chain challenges and deliver much-needed goods at competitive prices.
New markets within Africa were created, as pooled demand was matched with existing and repurposed capacities in the continent. Crucially, these achievements are replicable – and the same can be done to address the food, fertiliser and energy commodities crisis being experienced today.
The Russia-Ukraine crisis has increased the strain on critical supply chains in commodity markets, with current and expected price increases in agricultural products and inputs such as cereals and fertilisers.
This has in turn put pressure on sometimes fragile domestic production for several African countries relying on these supply chains for staple goods, some of which depend on these imports for up to 80% consumption of wheat for instance. However, the larger implications are the downstream effects of potential supply chain constraints that can raise prices, increase vulnerability and food insecurity, building unsustainable pressure on already stretched fiscal environments.
Aggregating its demand for these commodities will allow the continent to negotiate for competitive prices, especially for cereals and grains, assuring net food importers of the access and affordability of commodities like wheat and maize.
At the same time, aggregating fertiliser demand from importing countries can deliver African producers of inputs such as fertilisers, ensuring timeliness and affordability, and thereby reducing the risk of food shortages.
Building on the African Development Bank’s $1.5 billion emergency food production plan to mitigate the effect of the war on food prices through rapid production of wheat, maize, rice and soybean, AFREXIMBANK has undertaken a collaboration with other key continental institutions including, the AfCFTA Secretariat, and UNECA to launch the Africa Trade Exchange (ATEX), a platform to pool-procure bulk basic commodities and ensure countries access scarce supplies in a transparent and equitable manner.
ATEX is a digital trade platform which will complement the existing digital ecosystem constructed to support the implementation of the African Continental Free Trade Area (AfCFTA) Agreement.
ATEX will help realize the development potential of e-commerce and digitalisation, particularly by facilitating access for small and medium-sized enterprises (SMEs) to the wider African market. This will enhance intra-African trade and the African trade position in the global market, thus assisting in adjusting to disruptions in supply chains and the continued growth of African businesses and economies.
To support supply chain resilience, ATEX will digitally enable the trade of the main agricultural commodities and inputs imported by the continent from Russia and Ukraine: cereals (including wheat, maize, and grains), fertiliser and associated inputs, oils, oilseed, as well as other products and inputs critical to support agricultural value chains.
The platform will facilitate pooled procurement by African buyers of these commodities from African suppliers where possible, as in the case of fertilisers; and from outside the continent where necessary, as in the case of cereals and grains, thereby contributing to the creation of new, continental supply chains which insulate Africans from the volatility which has characterised recent years.
Just like the solutions developed in the pandemic, ATEX constitutes an African innovation designed to address another crisis facing the continent – it is a measure that the broader international community should support, and from which we can all learn.
Through this and other comparable programmes, Africa is demonstrating leadership and ownership over its own challenges. But to say this is an African solution to an African problem is not to dismiss or discourage international collaboration – indeed, our global partners will be pivotal in ensuring that Africa is included in the conversation on supply chain resilience.
Africa must develop a more secure and stable mechanism to obtain critical commodities and cultivate stronger intra-African links between suppliers. ATEX represents only a fraction of Africa’s economic and innovative potential, but it promises a transformation in the continent’s approach to imports and trade.