Banks in many African countries still favour lending to governments and large companies, resulting in less finance for small and medium-sized enterprises (SMEs), according to Banking in Africa, published by the European Investment Bank on February 27.
Swine flu in China opens new opportunities for African food exports
China's supply of pigs is being decimated by the African Swine Flu epidemic, creating opportunities for African food exporters.
Namibia, which at the end of May became the first African country to export beef to China with a first consignment of 21 tonnes, is pointing the way.
Up to 200m pigs could die from the fever in China this year – equivalent to Europe’s annual production. According to a report from the UN Food and Agriculture Organization (FAO) published in May, the epidemic in China will have a greater impact on global markets than most developments in Chinese agriculture. With China accounting for about half of the global pig herd, world meat trade volumes are set to increase as Chinese pork production falls. The fever, known as ‘Africa Swine Flu’, is thought to have its historical origins in sub-Saharan Africa.
The trade dispute between the US and China looks set to reduce Chinese reliance on US meat imports. China-based analyst Christopher Balding says in a piece on SmartKarma in June that, even in the context of the swine fever epidemic, US pigs “are not making it to China. That is the enmity China has for the US right now.”
Namibia is a small player in the global market, with a cattle herd that represents less than 0.5% of the global total. But the country’s agriculture sector is highly geared towards exports: according to the annual report of MeatCo, the company supplying beef to China, 77% of Namibia’s agriculture sector’s combined value is exported.
Changes in the patterns of Chinese pork consumption are likely to be long-lasting, creating opportunities for exporters of other protein foods such as beef, chicken and fish. Devi Subhakesan, director at Singapore-based boutique independent equity research firm Investory, wrote on SmartKarma in May that Chinese consumers are likely to become increasingly wary of pork-based products. Subhakesan writes that China’s pork production has dropped 30%, with prices up 40% on the year.
Namibia has been working on the export plans for a long time.
- The country became the first in Africa to sign a beef export agreement with China in 2015.
- Trade and industrialisation minister Tjekero Tweya said in March that the constraint is not whether Chinese consumers will accept the meat, but the amount that Namibian farmers are able to produce.
South Africa is also a potential beneficiary. Wandile Sihlobo, agricultural economist and head of research at Agbiz in Johannesburg, says that the value of South Africa’s agricultural exports to China increased 26-fold between 2001 and 2018 – but still accounted for only a 0.5% share of the Chinese market.
- Sihlobo writes that the country’s agricultural export strategy to China needs to be focused on livestock products, and especially beef.
- He also argues that South Africa urgently needs a clear framework on land reform to encourage investment and stimulate production on under-used land. This needs to be followed by trade agreements to open up new markets.
Africa’s new free trade agreement should provide a stimulus for farmers to scale up production. Governments should also be looking to exploit new opportunities for food exports to China.