West African economic growth rates have been insufficient in most countries to make significant reductions in poverty. Essentially, West Africa’s farmers and firms produce and trade in highly localized markets and do not achieve the sufficient economies of scale required to attract broad-based investment that could accelerate growth and reduce poverty. This is due to a number of constraints including inefficient transportation and trade barriers along corridors and at borders, a heavy reliance on family and informal sources of financing, and an insufficient supply of reliable and affordable power. These factors result in West African products being uncompetitive in the international market place.
USAID/West Africa’s strategy is to work through regional organizations and private sector associations to address critical constraints to competitiveness and demonstrate West Africa’s productive potential in order to trigger greater regional investment.
West Africa Trade Hub
USAID/West Africa’s Trade Program is implemented through the West Africa Trade Hub in Accra, Ghana, in close coordination with a network of African regional private sector partners and public institutions, including the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (WAEMU). The Trade Hub works through regional private sector associations to assist farmers and firms to meet product quality standards and market requirements, and to produce commercial quantities. The USAID West Africa Trade Hub also assists key regional private sector associations to negotiate and meet contractual obligations and access finance.
African Private Sector Alliances
USAID/West Africa focuses on private sector alliances in the Livestock and Grains, Transportation, Cashews, and Shea sectors:
Regional Trade in Livestock and Grains:
USAID/West Africa’s Feed the Future strategy identifies livestock (cattle, sheep and goats) and grains (maize, rice, millet and sorghum) as critical staple foods for regional food security. These provide a substantial portion of the protein and calories in the West African diet, and regional trade is essential to ensure access to food and improve nutrition and resiliency to drought and climatic shocks.
Regional trade in livestock and grains faces a number of competitive challenges. Low yields make local rice uncompetitive with Asian imports. The expansion of maize production is constrained by aflatoxin and informal bans by West African governments. Trade in cattle and small ruminants are constrained by poor transportation and graft along trade corridors. Livestock trade is confined to live animals because cuts of local red meat cannot compete with imports. Improving storage life and product quality are among the top priorities of regional agricultural association members.
USAID is building the capacity of the West Africa Grains Network (WAGN) and the regional association for livestock and meat (COFENABVI) to help their members meet product requirements, negotiate formal contractual obligations, and access financial services. The Trade Hub and Partner Network link West African farmers to regional processors and facilitate better access to information on market opportunities and increase the understanding of market requirements. This includes building smallholder farmers’ capacities to meet health regulations and grading, handling, and sorting requirements.
Smallholder production of cashews has more than doubled in the past decade, but processing in Africa remains a small share of global production. However, African cashew processing is on the rise (35,000 MT in 2006 to 114,500 MT in 2012). It is estimated that even a 25 percent increase in RCN processing will generate over USD 100 million in household income. The ACA, established in 2006, provides support and technical assistance, facilitates investments, and promotes market linkages in the cashew industry. The Alliance currently consists of 198 dues-paying member companies ranging from producers to processors and international buyers. The ACA has facilitated the establishment of new cashew processing factories in the region, including the largest cashew factory in Africa. In collaboration with the world’s largest cashew buyers - Kraft Foods, Intersnack, and Red River Foods - the Alliance developed the ACA Quality and Sustainability Seal program to assure compliance with international food safety, quality, and labor standards. The ACA Seal program has provided an opportunity to grow demand on the international market for cashews processed in Africa.
High transport costs in West Africa translate into lower prices for the goods of farmers and other producers, and make imports more expensive. Major causes of high transport costs include bribery, administrative delays, arbitrary check-points, high taxes, inefficient trade procedures, and poor infrastructure. Incorporated in September 2011, the Borderless Alliance represents a private sector-led coalition to increase trade in West Africa and foster change by exposing trade inefficiencies throughout the region. To address the issues of sustainability and effectiveness, the Borderless Alliance has evolved from an advocacy campaign into the region’s leading free trade advocacy organization. From an initial group of six, the Borderless Alliance now has more than 50 dues-paying members from the private sector across West Africa. Its membership base draws from a broad range of organizations involved in the various supply chains including port authorities, freight forwarders, logistics operators, manufacturers, traders and farmers. The Borderless Alliance’s premise is that by working together, businesses and traders can advocate effectively for change.
The shea industry in West Africa is rapidly expanding. Demand for shea butter produced in the region increased by more than 1,200 percent over the last 10 years. The GSA was established in 2011 to help make the shea industry more competitive, sustainable, and profitable for its workers who are primarily women. It has over 350 members from around the world, including the world’s largest buyers of shea nuts and butter, traders, processors, service providers, women’s groups, international brands and retailers, and non-profit organizations. The GSA supports major initiatives in quality control, standards, and traceability. It works to improve the quality of West African shea products through developing training materials that demonstrate best practices in post-harvest shea nut processing and handling. The GSA is developing industry-recognized quality standards for shea nuts and, finally, is facilitating direct purchases between collector groups and shea nut buyers to encourage faster processing, which also promotes traceability.
Last updated: April 17, 2014