Local Sourcing in Africa Can Aid Economic Growth and Poverty

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SEATTLE, Washington — Many countries in Africa have turned to local sourcing for economic stimulation as COVID-19 progresses. The new change in business trade is proving to be successful thanks to some initiatives and programs that made local sourcing in Africa possible.

U.N.’s Sustainable Development Goals and Farming Better Futures

One of the initiatives responsible for the growth of local sourcing in Africa is the U.N.’s Sustainable Development Goals (SDGs). The initiative calls for an increase in local raw material sourcing to 50% over the next few years.

Farming Better Futures is a program associated with the SDGs. They aim to foster growth through promoting the local sourcing of raw materials from “smallholder and commercial farmers.”

The program also includes water management and HIV/AIDS testing and treatment for farmers. The organization currently works with more than 32,000 farmers in Africa, Latin America and India.

Farming Better Futures supports direct farming jobs. A study conducted on the brewing company SABMiller found that the company’s commitment to raising the prevalence of local sourcing of raw materials to 50% over two years increased direct farming jobs from 100,000 to 150,000.

Another example of how the program supported direct farming jobs is the creation of a barley industry in Zambia. In 2012, Zambian Breweries Plc worked in tandem with 21 local commercial farmers. This resulted in about 4,000 rural farmers having a regular income for themselves and their families.

The U.N. is currently working with other programs, such as Farm Africa, to help create further markets and develop local sourcing for goods like cassava.

African Continental Free Trade Area Program

Another program that helps facilitate local sourcing is the African Continental Free Trade Area (AfCFTA). AfCFTA is a multilateral economic cooperation initiative that seeks to create a continent-wide market. It is seen as an opportunity to boost agribusiness and promote agricultural competition using technology.

The AfCFTA ultimately aims to reduce poverty and broaden economic inclusion. Implementing it could lift tens of millions of people out of poverty and raise the wages of nearly 70 million Africans. For example, the region of West Africa would see approximately 12 million people lifted out of extreme poverty.

The AfCFTA would also facilitate stronger cross-border trade. This includes measures to slash red tape and simplify customs procedures between signatory countries. The burdens on businesses and traders connected with international trade would, thereby, effectively be reduced.

However, creating an efficient, continent-wide market requires significant efforts to reduce trade costs in order to succeed. This requires legislation and regulations to enable the free flow of goods, capital and information across borders and create competition that boosts productivity and investments.

By facilitating regional and international trade by lowering trade costs and streamlining border procedures, AfCFTA would help African countries increase their resilience in the face of future economic shocks. Furthermore, it would help usher in the kinds of deep reforms necessary to enhance economic growth, including local sourcing.

What Needs to Be Done to Make Local Sourcing Work

In order for local sourcing to work in Africa, farmers need to bump up their productivity. Currently, the average African farmer yields 50 to 80% fewer products than anywhere else in the world. Economist Wandile Sihlobo told The Africa Report that increasing domestic production could allow people to be more open to technology and investment policies at the agricultural level.

Local sourcing has already shown success in places such as Tanzania. Before the coronavirus pandemic, sunflower oil in Tanzania was more expensive than cheap, imported palm oil. After investments in machinery and distribution networks, locally sourced sunflower oil became much cheaper. Those projects helped improve the lives of 500,000 farmers. This is just the beginning, as well. There is still much room for local sourcing in Africa to continue to grow and improve across the continent.

Jackson Lebedun
Photo: Flickr

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