New publication explores potential contributions to continental development

"The secret of the wealth of nations is clear: developed nations add value to everything they produce, while poor nations export raw materials,” noted African Development Bank President Akinwumi Ayodeji Adesina, in the forward section of the Bank’s 2017 publication ‘Industrialise Africa: Strategies, Policies, Institutions, and Financing’. “Africa must quit being at the bottom of global chains and rapidly industrialize, adding value to everything it produces,” Adesina continued. “Africa must work for itself and its people, not exporting wealth to others.” Similarly, the African Union (AU) posits industrialization as a critical pathway to African growth, as it builds on and seeks to accelerate the implementation of continental initiatives for growth and sustainable development such as the AU Agenda 2063.

The level of infrastructural development in Africa is an important element of the investment climate, as it facilitates access to markets, reduces the cost of doing business, and is critical in advancing technology and trade integration across the continent. The growth of the industrial sector in Africa depends on a sound and attractive business environment, and basic infrastructure such as good roads, airlines, seaports, energy supply, and communication. Tree crop commodities offer specific opportunities and options to help progress industrialization across the continent. They are core products for Africa’s commodity strategy, and for continental development initiatives that are key to its growth.

‘Industrializing Africa through Tree Commodities’ – one of the thirty chapters of the Tree Commodities and Resilient Green Economies in Africa book launched during the 5^th World Congress on Agroforestry in Quebec in July 2022 – explains these opportunities and options in further detail. The book, written by 55 authors from 35 institutions led by World Agroforestry (ICRAF), examines how best tree crop commodities can contribute to achieving sustainable development goals in Africa. The book focused on six essential tree commodities grown in Africa: cocoa, coffee, oil palm, rubber, shea, and cashew, representing some of the continent's fastest-growing land uses. It combines a case study approach and innovation perspectives from across the continent with several case studies along production, market and economic, environmental, and policy innovation pathways. It also draws lessons from Latin America and Asia, in a bid to enable global learning.

Making tree crop commodities count for African economies

The chapter notes that Africa already punches above its weight in terms of tree crop production, claiming 73%, 11%, and 3% of global output for cocoa, coffee, and palm oil production, respectively. Cocoa accounts for 40% of Cote d'Ivoire’s export revenues and 25% of Ghana’s, while coffee contributes 34% of Ethiopia’s total exports. By processing these products locally, such crops can significantly propel green economic growth, potentially doubling contributions to GDP through revenue jobs. For example, Ethiopia – the largest coffee-producing country in Africa and the world’s fifth largest – involves smallholders in the production and processing of coffee, making the sector one of the country’s main employers, with over 20 million people depending directly or indirectly on coffee for their livelihoods.

The benefits of value addition and industrializing the commodity sectors in Africa include job creation, improved livelihoods, food security, revenue generation, and increased foreign exchange earnings. But challenges related to infrastructure, skills, intra-African trade, and corruption are significant obstacles to industrializing the continent. For instance, cocoa contributes only 15% and 7% to the GDP of Cote d'Ivoire and Ghana, respectively, while the share of coffee in Ethiopia's GDP is just 5%. This can be explained by the fact that these commodities are often exported in raw or semi-processed forms. In contrast to the African context, Indonesia has over the past decade exported more than 50% of its production in semi-processed form (cocoa paste, butter and powder), while Malaysia exports almost all its cocoa at the higher end of semi-processed stages (cocoa butter and cocoa paste).

Creating green entrepreneurs, an "African brand of value-added products", and enhancing intra-African free trade areas can significantly boost the industrialization agenda, including for tree crop commodities. A holistic and inclusive approach to industrialization through tree crop commodities would therefore help promote domestic processing and include smallholder farmers, research and development, and the development of key skill sets.

Developing industrial processes will equally reduce negative environmental impacts, enhance environmental efficiency through material and energy efficiency and circularity, and ensure product durability for African economies to propel industrialization of their economies through the processing of tree crop commodities. Policies and the business environment must provide comparative advantages.

“African economies that depend on exporting basic products with low value-added cannot deliver solid and sustainable economic growth,” said Lalisa Duguma, Senior Scientist at CIFOR-ICRAF. “African countries, therefore, need to undergo a structural transformation of their economies by adding value to their raw materials and turning them into processed products. Conceptually, shifting from a purely agrarian to an industrialized society starts with adding value to primary commodities.”