How Will The AfCFTA Impact Cameroon’s Agricultural Sector ?

By Henri Kouam, Bin Meh and Sandra Ayuk (Download pdf version)

How will the AfCFTA Impact Cameroon’s Agricultural Sector

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1. Introduction  

Intra-African trade has grown over the last decade, up to 27% of total agri-food exports and 17% of total agro imports (FAO, 2020). This trend generally holds true across all regional economic communities (RECs). In addition to lowering tariffs, the African Continental Free Trade Area (AfCFTA) will facilitate access to African agricultural exporters. Meanwhile, clear and logical rules of origin (Ighobor, 2022), will accelerate the incentives and pace of industrialization across Africa, ultimately supporting value-chains in textile and agro-processing (Ibid). In Cameroon, the value-added from the agriculture sector contributes 17.25% (World Bank, 2022).

The importance of the agriculture sector is equally notable based on the number of people employed in the sector. The agriculture sector employs 43.5% of Cameroonians (World Bank, 2020). The FAO (2022) finds that the agriculture sector employs 70% of the active population, accounts for 80% of the primary sector contribution to the country’s GDP. Additionally, it provides 1/3 of foreign exchange earnings. The agriculture sector is underpinned by domestic policy in Cameroon, which will likely adapt to the implementation of the AfCFTA. Given the socio-economic importance of the agriculture sector in Cameroon, it is important to take stock of previous policies that have been implemented in the sector and how future policies may be adjusted to reflect the AfCFTA.

The main objective of this policy brief is to identify the ways in which AfCFTA will impact Cameroon’s agricultural sector. More specifically to, (1) present a synopsis of Cameroon’s agricultural policy from the 1990s; (2) illustrates the ways in which these policies have impacted agriculture exports and productivity in the sector; and (3) propose policies that can boost the dividend of the AfCFTA on Cameroon’s agricultural sector. This policy brief is divided into four sections. Section one provides a brief overview of Cameroon’s agricultural policy from the 1990s. Section 2 illustrates the ways in which these policies have impacted agriculture exports, employment, incomes, and domestic food prices. In section three, we briefly outline the provisions in the AfCFTA that could materially impact Cameroon’s agricultural policy. It concludes with policy recommendations that are designed to boost the dividend of the AfCFTA on Cameroon’s agricultural sector.

2. Brief overview of Cameroon’s agricultural policy since the 1990’s

After the crisis of 1986, due to a sharp fall in the prices of export crops, new reforms had to be implemented to revive the agriculture sector.  The government embarked on a number of structural adjustment programs that increased the privatization of state-owned companies and market liberalization (Akonumbo, 2003). This initiative was accompanied by the World Bank-financed National Agricultural Extension and Research Program Support Project (NPARV–1998 to 2004) that promoted the cultivation of food crops and non-traditional agricultural exports such as flowers and tropical fruits (World Bank, 2006). Likewise, the African Development Fund set up a centre, the Institute of Agricultural Research for Development (IRAD) that focused on building the capacity of farmers. The project ran from 2000 to 2007 (AfDB, 2015). Other initiatives aimed at increasing agricultural production, such as the Roots and Tubers Market-Driven Development Program (PNDRT-2004-2012), Rural Microfinance Development Support Project (PADMIR-2010-2016), the Commodity Value Chain Development Support Project (PADFA-2010-2018), and ardent donors such as the International Fund for Agricultural Development (IFAD) sprung up (Kalim, 2013). Recent policies include the Cocoa and Coffee Development Fund which will distribute CFAF 50 million over five years to Cameroonian farmers (FODEC, 2022).

As indicated in the Growth and Employment Strategy Paper (GESP) – 2010/2020, Cameroon aims to intensify silvicultural, agro-pastoral, and fishing activities. This remains a worthy pursuit to date. Within the framework of the  National Development Strategy (NDS30) that runs from 2020 to 2030, the government intends to boost agriculture by signing partnerships with the local and/or foreign private sector, train “national champions” who will produce, process, and market the agriculture sector to subregions especially.

3. The Implication of Agriculture Policies on Output and Trade

   • Impact on output

Due to the privatization of state-owned enterprises as per the action points of the donor-assisted structural adjustment program that was implemented in the 1990s, the agriculture sector experienced an up-turn. The privatization of previously state-owned enterprises such as SOCAPALM has led to an increase in its production from 57,800 tons to 140,349 tons in 2019 (SOCAPALM, 2021). This has also led to an upward revision of wages and a drop in the cost of palm oil, thanks to to economies of scale. Similarly, the value-added from agriculture to Cameroon’s GDP has fallen from 26.5% in 1992 to 17.3% in 2020 (World Bank, 2022). However, in net terms, the value of the agricultural sector has risen from USD 3.18 billion to USD 6.952 billion in the same period. As such, Cameroon’s agricultural policies have had an impact on   firms productivity but have also increased the volume of exports.

• • Impact on agricultural trade

Lower tariffs and other provisions in the AfCFTA will positively impact formal trade flows as customs procedures and regulatory norms may be changed to reflect policies and trade facilitation across both countries. The World Bank (2013) finds that actual bilateral trade is estimated at over USD 230 million, which is significantly higher than officially recorded trade flows. Nigerian exports are estimated at USD 176 million based on this estimate while Cameroonian exports are estimated at USD 62 million, largely consisting of paddy rice and agricultural products such as eru. Lower tariffs, greater cooperation, and trade facilitation measures will boost trade flows in agriculture and support the formalization of traders in the informal sector.

4. Brief outline of the provisions in the AfCFTA that will impact the Agricultural sector in Cameroon

Certain provisions in the AfCFTA will have implications for Cameroon’s agriculture sector. Article 8(2) states that countries must consult each order on border posts and take steps to ensure that goods pass through jointly approved routes.  Cameroon and Nigeria are prone to security risks linked to Boko Haram and began exchanging military intelligence (Cameroon Tribune, 2022). As such, Cameroon’s agricultural policy and trade flows will be impacted by this provision, especially due to the major trading routes i.e. Mora – Amchide into Nigeria in the Extreme-North region (Westside) and Ekok into Nigeria in the South-West region.

Part IV, Article 15 posits that each country should aim to prevent avoidable loss or deterioration of perishable goods, provided that all the requirements have been met. This will ensure that both Cameroonian and Nigerian producers and traders’ benefit from streamlined and digitized trade procedures. This could encourage cooperation on issues related to ‘Rules of Origin’ and the implementation of sanitary and phytosanitary measures.

Once operational, traders will equally be able to arrange for storage that is designated by the relevant authorities. Over time, the domestic policy will increasingly reflect AfCFTA provisions as the CEMAC region has a low level of integration as illustrated in Part V, Article 19 (1, 2).

5. Recommendations to increase AfCFTA dividends on Cameroon’s agricultural sector.  

• In order to boost agricultural trade flows with Nigeria, policymakers should consider creating a special agricultural fund used to subsidize small farmers and agricultural exporters. This fund should target farmers directly, rather than other actors across the agricultural value chain.
• Cameroon and Nigeria can jointly implement the AfCFTA to boost free trade between them. For example, both countries should share and publicize their tariff schedules Custom procedures should be clearly spelled out to help exporters and support the rate of formalization. In addition to cooperating on security and border posts, special emphasis should be laid on the agricultural sector and the formalization of cross-border trading activities. This will support two-way trade, the formalization of informal actors and ensure traders are aware of new tariffs for specific products.
• Cameroon and Nigeria should commit to “Zero trade embargoes for agricultural products”: They should commit to reducing if not completely lifting trade embargoes on agricultural products. By applying shared measures in their agricultural policy, this will increase access to millions of informal workers in the agricultural sector as well as exporters.

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