By Duncan Miriri and Joe Bavier
THIKA, Kenya (Reuters) – Chief Executive Chris Flowers watches workers in an orchard of Kenyan agribusiness company Kakuzi pick avocados from the treetops and muses that some may soon head to the crown jewel of emerging consumer markets: China.
Kenya took advantage of Beijing’s increased focus on trade with African countries to narrow gaping deficits, and in January struck an export deal with China for fresh avocados after years of lobbying for market access.
Six months later, no more shipments had left, Kenya’s avocado company, the east African country’s phytosanitary inspectorate and Kakuzi told Reuters.
While 10 avocado exporters have passed Kenyan inspections, China now wants to conduct its own audits and based on the experiences of some other African fruit producers, it could take a decade before it is given the green light.
“You can actually have a market, but if you can’t meet the standards, you can’t take advantage of it,” said Stephen Karingi, chief of trade at the United Nations Economic Commission for Africa.
Reuters spoke to nine officials and companies across Africa who said Chinese bureaucracy and a reluctance to secure comprehensive trade deals were undermining Beijing’s plan to boost African imports.
But boosting agricultural exports is one of the few options many African countries have to rebalance their trade ties with China and earn the hard currency they need to service mountains of debt, much of which is owed to Beijing is.
Take Kenya. Its annual trade deficit with China is about $6.5 billion, and it owes about $8 billion in debt to China. To service that debt alone it will need nearly $631 million this year, but that’s almost triple its exports to China in 2021.
Many African nations are now saying they simply cannot afford any more Chinese loans and need to boost exports to China. Acknowledging the need to address the imbalances, or at least prevent them from worsening, China announced a change of strategy in November.
At a China-Africa summit, usually used by Beijing to unveil staggering loans, President Xi Jinping announced a series of initiatives to boost China’s imports from Africa to $300 billion over the next three years and by 2035 $300 billion per year.
In theory, farming is one of the most promising avenues, experts say. China is the world’s largest food importer, while the agricultural sector in Africa is both the main employer and economic driver.
In addition, 60% of the world’s uncultivated arable land is in Africa, which means there is enormous growth potential.
“It’s a win-win election for China and Africa,” said Mei Xinyu of the Chinese Academy for International Trade and Economic Cooperation, a think tank under China’s Ministry of Commerce.
For decades, China has lent billions of dollars to Africa to build railroads, power plants and highways while deepening ties with the continent while extracting minerals and oil.
That has helped the Sino-African trade balloon 24-fold over the past two decades, with two-way trade hitting a record $254 billion last year despite the turmoil of the global pandemic.
But for $148 billion in Chinese goods shipped to Africa in 2021, China imported just $106 billion, and five resource-rich nations – Angola, Republic of the Congo, Democratic Republic of the Congo, South Africa and Zambia – made $75 billion dollars from it.
Nigeria, Africa’s most populous nation, is the top importer of Chinese goods, absorbing $23 billion in 2021, but those imports dwarfed Nigeria’s exports to China by eight times.
The discrepancy is even clearer in Uganda, where around 80% of exports are agricultural commodities such as coffee, tea and cotton. It sent $44 million worth of goods to China last year, but its imports exceeded $1 billion.
Chinese customs data shows more than three-quarters of African nations have trade deficits with Beijing.
Wu Peng, director-general of the Chinese Foreign Ministry’s African Affairs Department, said such imbalances were unintentional.
“China has always focused on promoting the balanced development of China-Africa trade,” he told Reuters.
African leaders have been pushing for trade measures for years, said Hannah Ryder, founder of Development Reimagined, an African-owned development consultancy headquartered in Beijing.
The pandemic, meanwhile, has sharpened its focus on debt. About 60% of low-income countries – mostly in Africa – are either in a debt crisis or at high risk, with debt service burdens at their highest levels in 20 years.
“African countries were under pressure to stop borrowing,” Ryder said. “Trade is where (the Chinese) think they can do something.”
When it comes to food and agriculture, China’s imports were worth $13 billion two decades ago. By 2020 they had risen to $161 billion, but Africa accounted for just 2.6% of that.
China’s Africa affairs chief Wu said harnessing this growth would ensure balanced trade, improve job opportunities in Africa and help the continent industrialise.
“(China) has actively responded to the important concerns of African countries regarding China-Africa trade cooperation,” he said.
President Xi’s plan includes centralized clearance zones, or “green lanes,” to speed up inspections of agricultural goods from Africa, more duty-free access and $10 billion in trade finance for Chinese firms importing from the continent.
On paper, China’s growing food needs present Africa with a major opportunity to use agricultural exports to source foreign exchange, said Lauren Johnston, senior visiting lecturer at the University of Adelaide’s Institute of International Trade.
“The debt situation has brought it to the fore,” she said. “First and foremost, it’s just a super logical investment.”
But some countries are struggling to seize the opportunities, such as Kenya. It is the largest avocado producer in Africa, exporting $154 million last year, mostly to Europe.
Eric Were of the Kenya Plant Health Inspectorate Service (Kephis) said they were doing everything they could to open 10 avocado companies to Chinese exports this year.
“For the Chinese, we have to inspect the orchard, we have to inspect the packhouse and we have to inspect the fumigation plants,” he said.
He said Kakuzi, Kenya’s largest avocado grower, spent a month showing it follows its produce from seed to tree management and how the avocados are harvested, processed and packaged. The European Union, on the other hand, only requires a check at the exit point, said Wer.
Last month, the regulator announced that Chinese authorities had decided to conduct their own audits – which wasn’t always a positive experience next door in Uganda.
“When they come, quite often they find that we are not doing well,” Emmanuel Mutahunga, Uganda’s foreign trade commissioner, told Reuters.
Tanzanian coffee farmers also struggled to make a name for themselves, while in Namibia it took nine years after signing a beef export deal to please Chinese regulators, leading to the first shipments in 2019.
Wu said China’s planned initiatives would help African farmers improve their quarantine and food safety capacities, although Mei and Johnston said relaxing phytosanitary regulations on African imports is unlikely.
“There is no bigger red line than China and food security,” Johnston said.
China is also missing out on other opportunities to speed up access, say experts like Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa.
He said Beijing, like the EU, can negotiate comprehensive trade deals with African countries and regional blocs.
Instead, China continues to do bilateral deals, and even then only through individual products.
“The key message here is that China is a little more open to Africa’s food exports,” he said. “A lot of this will come down to individual countries negotiating better deals.”
South Africa’s citrus industry was among the continent’s early pioneers in China, signing its first protocol with Beijing in 2004. In 2021 it exported 162,000 pallets of fruit, but success did not come overnight.
“It’s been an incredible market for South African citrus,” said Justin Chadwick, executive director of the Citrus Growers Association of Southern Africa.
Nonetheless, the UK and European Union, which have strict food safety standards, are still by far the most important destination for South African citrus, which accounted for 44% of exports last year.
“If you want to go to China, you have to get a separate log for each agricultural product. It takes an average of about 10 years to complete the protocol for each product,” Chadwick said. “Unfortunately, China is making this one product after another.”
(Duncan Miriri reported from Thika, Kenya and Joe Bavier reported from Johannesburg; Additional reporting from Elias Biryabarema in Kampala, Ellen Zhang in Beijing, Nuzulack Dausen in Dar es Salaam and Nyasha Nyaungwa in Windhoek; Editing by David Clarke)