Africa is a richly diverse continent of many countries with one of the world’s fastest growing populations. The continent’s population is more than 1.4 billion and is projected to become the most populous geographic region in the world by the end of this century, reaching up to 3.4 billion people according to the United Nations. The share of the population living in urban areas is accelerating, resulting in consumer preferences shifting toward more convenient foods such as prepared cereals. Rising urban incomes are also leading to greater demand for animal-based protein, fats and sugars, and fruits and vegetables. Current production trends indicate Africa’s agricultural output alone will not be enough to meet the growing demand.
These trends in demographic, income, and food demand patterns in Africa offer potential opportunities for trade and investments in African agriculture and agri-food value chains—the processes connecting food production, delivery, and the consumer. The launch of the African Continental Free Trade Area (AfCFTA) on January 1, 2021, is expected to help expand opportunities through economic integration, intraregional trade, and investment among member countries. Combined with investments to lower transportation and trade costs in the region, AfCFTA could help transform the region into an economic powerhouse for global trade and investments.
The expectation of increased trade and investments under AfCFTA is facing several challenges across the continent. First, intra-African trade faces some of the highest costs in the world. While the free trade agreement is expected to harmonize regulatory requirements across borders, making it less expensive for African countries to do business with each other, poor transportation infrastructure would still add to higher costs. Second, some African countries continue to rely heavily on a single natural resource for export earnings. Therefore they are vulnerable to global commodity price shocks, and consequently, their ability to afford agricultural imports when foreign exchange earnings fall. Third, agricultural productivity growth has been slow to meet the increasing demand for agricultural output. Finally, some African countries continue to experience a high incidence of organized violence and conflict, potentially inhibiting trade or forcing traders to re-route their goods. This contributes to widespread acute hunger and food insecurity in the affected areas.
Researchers at USDA’s Economic Research Service (ERS) are assessing these trends and prospects for economic transformation in Africa. Their findings on issues related to trade, development, and food security in the region are published in ERS reports. Some of the issues covered recently include:
Africa’s Agricultural Trade: Recent Trends Leading up to the African Continental Free Trade Area, by Michael E. Johnson, Jarrad Farris, Stephen Morgan, Jeffrey Bloem, Kayode Ajewole, and Jayson Beckman, USDA, Economic Research Service, November 2022.
Foreign Direct Investment in Africa: Recent Trends Leading up to the African Continental Free Trade Area (AfCFTA), by Stephen Morgan, Jarrad Farris, and Michael E. Johnson, USDA, Economic Research Service, October 2022.
COVID-19 Working Paper: The COVID-19 Pandemic and Changes in Greenfield Foreign Direct Investment in Africa, by Jarrad Farris, Stephen Morgan, and Michael E. Johnson, USDA, Economic Research Service, October 2022.
Sub-Saharan Africa’s Reliance on Oil Exports Leads to Decline in Agricultural Imports During Pandemic, by Adam Gerval and James Hansen, USDA, Economic Research Service, September 2022.
Rural Tanzanians Turn to Processed Food and Meals Away From Home as Incomes Rise and Employment Patterns Shift, by Christine Sauer, USDA, Economic Research Service, October 2022.
Poultry Expected To Continue Leading Global Meat Imports as Demand Rises, by Matthew Miller, Adam Gerval, James Hansen, and Grace Grossen, USDA, Economic Research Service, August 2022.
International Food Security Assessment, 2022–32, by Yacob Abrehe Zereyesus, Lila Cardell, Constanza Valdes, Kayode Ajewole, Wendy Zeng, Jayson Beckman, Maros Ivanic, Reem N. Hashad, Jeremy Jelliffe, and Jennifer Kee, USDA, Economic Research Service, September 2022.