African countries should utilize the Africa Exchange Trade Platform (ATEX), which will boost digital trade for critical commodities under the Africa Continental Free Trade Area.
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 impacted food security. It is imperative that African countries increase food production by supplying critical inputs like fertilizers. Climate-change-related risks in Africa have included flooding, drought and heat waves which have reduced food production and agricultural productivity.
Morsy observed that climate change has exacerbated and increased food security risks for the most vulnerable nations. Four of the eight major climate-related risks have direct implications for food security.
Inflation rates in many African countries continue to rise with many experiencing double-digit inflation rates that exceed 20 percent. This is due to sustained global high fuel and food costs, disruptions in supply chains 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 countries in northern Africa were among the top five fertilizer-producing countries 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 nations to increase their sharing of information on demand, supply and quality of critical commodities, to facilitate participation of suppliers (Private sector) and to register to trade 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.
ATEX currently has 134 suppliers (104 African companies included) and 249 African buyers. Fertilizers (NPK Urea, Phosphates) are the commodities that are available on ATEX.
Fertilizer compounds, Agricultural chemicals), Agricultural product (Cashew coffee, Oilseeds Wheat, Maize, Rice, and Barley), Processed Food Products (Wheat products), Bulk commodity and food items) and Other industrial products (Construction material, Chemical products, and Fuel products).
OCP, a global fertilizer company will donate and sell 550K tons of fertilizer to African countries as part of the Africa Relief Programme. OCP committed 4.3 Million tonnes to the continent in the second phase. This will allow the continent to almost double its production capacity. We hope ATEX can assist with the logistics and financing challenges so that we don’t miss the next year.
Afreximbank and the ECA will collaborate with international players to ensure that fertilizers are channelled where they are needed most in Africa through ATEX.
Yusuf Daya is the Director of the AU/AfCFTA Relations and Trade Policy. He shared that the AfCFTA gives Africa the opportunity to produce and consume goods within Africa, thereby reducing the continent’s carbon footprint. All African economies should make the AfCFTA a priority. 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
According to Mr. Daya, the ATEX platform has enabled Africa to trade key critical inputs like fuel and fertilizers, helping it respond to the Ukraine crisis. He said that the platform was intended to allow businesses to tap into new markets in Africa and increase intraAfrican trade, in accordance with Agenda 2063 as well as the Sustainable Development Goals.
Maximo Torero from FAO said that Africa was already suffering from chronic hunger and malnutrition as a result of climate, water, and energy crises. The disruption in the supply chain has also aggravated food security concerns. The ATEX platform will increase supply and critical commodities in Africa, lower transaction costs, and accelerate crop mobility to reduce food loss.
Mr. Torero also explained that Africa holds many opportunities and challenges. While ATEX may be able to solve some problems, there needs to be accurate data on the demand side and the supply side of the continent. FAO is willing to share data in order to improve the platform’s ability to manage demand and supply to ensure that critical commodities and fertilers are delivered where they are needed 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 said that WFP collaborates with governments, international financial institutions, UN agencies, and the private sector to achieve ATEX goals, which aim to reach the most vulnerable people in the context of the global crisis.
He explained that acute hunger has steadily increased between 2019 and 2022, mainly driven by conflict, climate changes, and the Covid-19 Pandemic. He stressed the importance of strengthening local markets and producers to reduce food insecurity and eliminate food loss during production and transport. ATEX can help with timely access to the market.
“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.
Source: newbusinessethiopia
