How African Coffee Market Expansion Helps the Global Economy

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For many Americans, coffee is less of a luxury drink and more of a daily necessity. As of 2018, 64 percent of Americans consume at least one cup of coffee daily. East Africa, one of the world’s largest coffee producers, is a historically poor region that has seen recent growth in trade due to the growing demand for coffee and support given to its farmers from U.S. foreign aid. These factors are supporting the East African coffee market.

An Expanding Global Market

East African coffee market expansion is the result of a few recent developments. First, the global market for coffee has been expanding as more people are escaping poverty and gaining the means to afford coffee. For example, some of the fastest-growing markets for coffee include Asian countries on the rise such as Vietnam, Indonesia and India.

Due to the expanding coffee market, East African coffee producers can expand their business and look to the future with optimism.  Ugandan coffee producers are explicitly targeting these new markets. In 2017, the country reported a 36 percent growth in production and a 15 percent growth in exports. This fivefold increase in their share of the global coffee market is a direct result of new regions of the world being able to buy their product. In this way, reducing global poverty has a ripple effect that expands the global market and benefits everyone.

The Benefits of U.S. Foreign Aid

On top of the growing market, U.S. foreign aid has been helping to develop the infrastructure necessary to trade goods within Africa.  While European countries have built large infrastructure systems in East Africa to move goods all over the world, the necessities for more local trading have largely been ignored. Thirteen percent of East African trade is within the region, far below the numbers seen in Europe and Asia.

USAID is currently working with East African countries to remove legal trade barriers and make it easier for countries to trade with each other. Through its trade and investment hubs, USAID is able to generate an estimated $9 worth of trade for every $1 of public money spent. This trade helps the participating African countries greatly, but it also benefits the consumers of their products. With a wider market and more opportunity for growth, farmers can invest more in their business  This leads to more opportunities for trade with the U.S. and a higher quality product for coffee drinkers worldwide.

Diversifying the African Coffee Market

Sub-Saharan Africa is home to one of the largest deposits of oil in the world, leading to countries like Sudan building their economy around the resource. Unfortunately for many African countries, oil prices dropped dramatically towards the end of 2014, causing a sharp decline in the overall GDP of oil-rich countries. This drop has caused countries to look elsewhere economically, with agricultural businesses like coffee being a focus.

This shift in the global economic climate has led to a diversification of East African economies, marked in no small part by the booming coffee industry. Overall growth in sub-Saharan Africa rose to 2.4 percent in 2017, showing a rebound after the hit to the oil industry.  Agricultural industries such as coffee showed a spike in growth, as famous coffee producer Ethiopia’s growth rose to 8.2 percent, well above the average.

Drinking coffee may help people all over the world stay awake, but it also helps African countries expand their economies. By taking advantage of the global coffee market, many East African countries are poised to grow rapidly. With the help of USAID, these countries are making sure they improve their quality of life while they export their product all over the world. East African coffee market expansion and the diversification of African economies leads to greater stability and more trade for all countries that enjoy their coffee.

– Jonathon Ayers
Photo: Flickr

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