This brief examines the challenges towards green energy transition in Africa and the prospect of regional integration in fast-tracking this process. Regional integration as being proposed among African countries can sidestep some of the constraints that countries, individually, face in the areas of finance, human capital and technology needed for transition. The study also reflects on the proposed Africa-Europe partnership as an important tool to strengthen this effort with support for regional integration and access to finance and innovations needed for green energy adoption.

Recommendations:

• National government: Domestic actors have a role to play in aligning their policy and regulatory frameworks with regional requirements. Specific interventions include: support with domestic resources (land, finance, inputs) to encourage regional infrastructure linkages, and appropriate legal measures to encourage local and foreign entries into the green sector.
• Regional Institutions (African Continental Free Trade Area Secretariat and AU): Gains and burdens from regional approach to energy transition are not expected to be shared equitably. A framework for compensating possible losers will be crucial to ensure broader support for renewable energy transition.
• EU: A shift in development assistance to encourage a regional approach in transiting to green energy in Africa is required when regional solutions prove more efficient and cost-effective.

This policy briefing has been published as part of a series under the project Partnership for a Green Transition and Energy Access: Strategic priorities for Africa and Europe. The project is a partnership between SAIIA and the Konrad Adenauer Stiftung’s Regional Programme on Energy Security and Climate Change in Sub-Saharan Africa.

The past three decades have been defining moments in human history. More than 1 billion people have been lifted out of poverty and humanity has rallied around a common purpose contained in the Millennium Development Goals and later Sustainable Development Goals. Global trade at about 59% of the world’s GDP in 2019, has enabled both developed and developing countries to tap into the global supply chain and spurred shared prosperity. This progress has deepened the existing development compact in the North South Cooperation, while producing new ones like the South South Cooperation (SSC), a modality for knowledge and development solution sharing among developing countries.

Then COVID-19 strikes and now threatens this significant progress.  As at 28th   May, 2020, more than 5.9 million have been infected, with about 350 thousand deaths. For the first time in more than three decades, poverty headcount is expected to increase this year. Many countries will experience recession or even depression and global trade is expected to decline. This puts development cooperation at a crossroad as to whether to be strengthened or dampened. In this piece, we make a case for strengthening development cooperation at this critical juncture amid COVID-19. We illustrate the beneficial effect of international cooperation from the lens of Africa- China relation, which is couched in the SSC ideas of equality and mutual benefit. While COVID- 19 crisis could affect international cooperation and disrupt prevailing global order, it is crucial to ensure no negative effect on the SSC, given susceptibility of many developing countries to adverse economic shocks. The SSC as demonstrated in the Africa-China relation is key to economic recovery and achievement of the sustainable development goals of leaving no one behind.

Before COVID-19 (BC): The good old days

Diplomatic and economic relations between Africa and China have been growing strongly over the past years. While several factors are driving this relation, it tends to reflect a two-way dynamic and symbiotic engagement for economic development. Africa has recorded about 24years of continuous growth and sustained poverty reduction in part driven by expanding export opportunities to the global south, while China development miracle benefited from natural resources from other developing countries.

In 2018, the value of China-Africa bilateral trade reaches $185 billion, which represents more than 16-fold increase from 2002. By comparison, the value of US-Africa trade in 2018 stood at around $61 billion. Although trade balance is skewed in favour of China export to Africa, it remains a win- win situation with access to quality and varieties of products. In addition, China through its Accessions Programme for Least Developed Countries (LDCs), which entails capacity building and special funding, has ensured trade facilitation and strengthened the participation of many Africa countries in the World Trade Organization activities.

Another important dimension in the Africa-China relation is in the area of development assistance. The conventional wisdom tends to view relations among countries in the global south as limited to knowledge sharing. However, China and many other developing countries have scaled up their engagement to include financial modalities in form of project and programme aids. For example, the share of China’s development assistance between 2000 and 2014 is estimated at about USD354.3 billion, which exceeded the contributions by the majority of the OECD countries over the same period.

Similarly, through the ambitious Belt and Road Initiatives, China’s infrastructure support to African has expanded. Overall, 40 African countries have signed on to the strategic initiatives for large infrastructural projects to reduce the infrastructural gaps and lower trading costs. For Africa, this could support regional integration efforts that require greater connectivity across countries and lower barriers to intra-regional trade.

To be clear, the Africa-China relation is not without its challenges, especially in terms of technology transfer, debt, and displacement of the local manufacturer base. However, the creation of engagement platforms like the Forum on China-Africa Cooperation (FOCAC) provides opportunities for deliberation and regular evaluation to address those challenges.

COVID-19: Testing our resolve

The COVID-19 pandemic is threatening to reshape international cooperation in many fundamental ways. According to the International Monetary Fund (IMF) forecast, African economy is expected to decline by 1.6% in 2020, while China’s economy will slow down to around 1.3%, the lowest growth in over four decades. This is already manifesting in lower trade relations as China-Africa trade fell by 14% in the first quarter of 2020[1]. Prolonged crisis will worsen this trade and growth, reversing some essential aspects of Africa-China cooperation.

The disruption of the global supply chain is another area that aftershocks of the pandemic might affect international relations. Nationalists see the crisis as an opportunity for deglobalization and protectionist policies. For developing countries, the global supply chain has positively improved their participation in international trade, greater exposure and adoption of advanced technology and promoted industrialization and high economic growth in recent years. Without international production fragmentation, the income gap between developed and developing countries will have widened and the tremendous progress made in poverty reduction could not have been achieved.

While Africa has not been substantially integrated into the global supply chain, it has indirectly benefited from global demand for more inputs and natural resources. Moreover, the African industrialization plan is built on upgrading strategy from low to high-value added activities. Given that China’s development trajectory also follows this trend, there is a lot that Africa can learn through international cooperation. However, the COVID-19 pandemic could halt this engine of growth, pushing the world into a past and unproductive period of autarkic states.                                                                                                                         .

Tough time never last but tough ‘relation’ do

The COVID-19 is a test of robustness of the present architecture of international relations. While the weakness in the North-South cooperation is revealed in terms of imbalance of power, the strength of south-south cooperation is revealed with emphasis on coordination rather than competition in responses. For Africa, the crisis illustrates the need for greater regional integration and stronger collaboration with countries in the global south. Africa-China relation is built on the principle of mutual benefits, non-conditionality and horizontality and equality, which are core attributes needed to fight and speedily recover from the COVID-19 pandemic. These principles can aid economic recovery in the following ways.

1. Coordination on recovery efforts: China experience with fighting COVID-19 virus in rural and among vulnerable populations needs to be widely shared with developing countries with similar conditions to effectively curb the spread of the virus. Coordination in economic responses is also crucial, such as through debt sustainability for highly indebted countries. Given the shock to demand in many countries and the resulting foreign exchange shortages, barter exchange and other modalities can be adopted between China and African countries.
2. International coordination on epidemic prevention and control: More interdependencies among nations mean any disturbances anywhere can spread globally. Building a strong epidemic prevention and control is needed in the post-pandemic era. However, such a system should not be limited to coronavirus alone, but to any other potential risk to international cooperation.
3. Greater integration of Africa into the global value chain: As part of rebuilding efforts, China- Africa relation needs to shift more towards greater linkages of Africa into the global value chain. The relation can only be sustained when benefits are fairly spread.

This article was first published here

The COVID-19 has now spread to every country in Africa, as of August 28, 2020, there are 1,220,511 confirmed infections, 28,850 deaths, and 953,643 recoveries across the continent. In Kenya, so far, there are 33,389 confirmed cases with 567 deaths. The first coronavirus case in Kenya was reported on March 13, 2020, and since then the Kenyan government has taken some measures to curb the spread of the virus by closing schools, airports, churches, mosques, restricting public gatherings, imposing curfews and restrictions on movement around the country.

Although it helped slow down the spread of the virus, these mitigation measures also caused some challenges to the poor and vulnerable groups. The majority of Kenyans are working in the informal sector, which accounts for 83.6% of the total employment in 2018.

In May 2020, Kenya National Bureau of Statistics conducted a survey that shows that Kenya's labour participation rate has drastically decreased due to COVID-19.

This reduction in labor participation rates due to job losses have resulted in a loss of earnings which in turn led to shifts in the habits of food purchases as very poor households are only buying very basic food.A new survey by GeoPoll shows that 86% of Kenyans are worried about not having enough money to purchase food.

Also, poor people are having a hard time meeting their everyday expenses and paying bills such as rents, and according to Kenya National Bureau of Statistics survey 30.5% of Kenyans who are renting apartments and houses cannot pay their rent.

On March 15, 2020, the Kenyan government announced that schools and colleges would be closed across the nation and that online learning or technology-mediated learning on TV, radio, and mobile phones should be adopted.

However, this causes a big challenge for students in rural villages due to lack of internet connection, electricity as well as electronic devices such as computers, laptops, and smartphones which in turn makes online learning not accessible for students in marginalized communities.

Furthermore, school closures have also affected students who depend on the school feeding programs as their primary source of food. The strict measures imposed by the Kenyan government to fight COVID-19 have negatively affected women and girls as gender-based and sexual violence have increased significantly.

For instance, the calls to national helplines reporting domestic violence incidents have increased from 86 calls in February to 1108 calls in June. In addition, many girls are engaging in transactional sex in order to be able to buy food as many families have suffered from an income loss. This has increased the number of teen pregnancies whereas there have been more than 4000 pregnancy cases just in one county since schools closed in March.

Furthermore, some regions have reported that hundreds of girls have been subjected to female genital mutilation and child marriages. In addition, night curfews present some challenges to pregnant women as they have struggled to find transportation to hospitals.

There has been an incident where a driver who was taking a woman in labour to give birth in a hospital during the curfew has been stopped by the police and beaten brutally. The pandemic has also effected the refugees as there are thousands of refugees in Kenya who live in overcrowded spaces with little access to clean water and hence this makes it very difficult for refugees to practice social distancing and regular hand washing.

For instance, in the Kakuma Refugee camp and Kalobeyei Integrated Settlement, which have 196,666 refugees, social distancing is not an option as many households live near each other. The nationwide evening curfew has negatively impacted shopkeepers in Kakuma Refugee Camp because their most busy hours are usually between 7 pm and 9 pm.

As in the rest of the country, schools in Kakuma are also closed, but remote learning is not an option due to the lack of access to electricity, electronic devices as well as a poor learning environment due to overcrowded homes. Furthermore, due to the restricted movement imposed on refugees, they cannot travel to nearby towns to access remittances, which are vital for their survival.

The measures taken by the Kenyan government to support the poor and vulnerable during the COVID-19 pandemic though being useful, however, it has not fully considered the households with the lowest income. The Kenyan President provided a fiscal stimulus package to support Kenyans living below the poverty line. This package includes a 100% relief on income taxes for individuals whose monthly income is less than 24,000 Kenyan Shillings (225 US$).

Furthermore, the income tax rate has been reduced from 30% to 25% and turnover tax rate has been reduced from 3% to 1% for all micro, small, and medium enterprises while value-added taxes (VAT) has been reduced from 16% to 14%. These tax cuts might help businesses from collapsing, and increase the disposable income for individuals, hence boosting domestic demand and consumption. In addition, 10 billion Kenyan Shillings (93 million US$) has been devoted to supporting the elderly, orphans, and other vulnerable groups in the form of cash transfers. The government has created a COVID-19 Emergency Response Fund of 2 billion Kenyan Shillings from the recovered corruption proceeds to support the most vulnerable groups in these uncertain times.

The Central Bank of Kenya in collaboration with Safaricom (telecommunications provider) has waived mobile money transaction charges and increased daily limits for mobile transactions so that to encourage more people to send and/or receive money and to reduce cash handling in order to curb the spread of the virus. The Kenyan government has also developed an Education Emergency Response Plan to ensure continuity of learning in the short, medium, and long term. In the short term, it ensures the continuation of learning through remote learning programs while in the medium term, it will help students who had fallen behind in their studies to catch-up. In the long term, it focuses on improving the education system in Kenya so that it can be able to deal with risks and pandemics more smoothly in the future.

Regarding the spike in the cases of gender-based violence, the president ordered an investigation into these cases and the immediate prosecution of all criminals. However, refugees are not eligible for all the Kenyan government's support measures due to their legal status.

Overall, the Kenyan government has taken reasonable measures to support the poor and vulnerable groups during this pandemic. However, many people who are in dire need of this support do not receive them. The various tax cuts that have been announced by the Kenyan government will only benefit a small percentage of Kenyans who pay taxes, but it will not be helpful for the majority of the population that relies on informal and agricultural jobs. The reduction in VAT is not beneficial for poor households since they either suffer from a reduced or a loss of income, a better policy will therefore be to abolish VAT on essential goods.

Also, the 10 billion Kenyan Shillings that have been devoted to supporting vulnerable groups will need to be increased and should cover more groups. However, Kenya cannot fund more significant fiscal intervention due to its' very limited fiscal space and high public debt. Also, due to high corruption in Kenya, the government should be transparent and held accountable for using these funds to ensure that they end up benefiting the targeted groups and not in the pockets of corrupt leaders. Furthermore, these policy responses might not have helped the vulnerable groups due to the lack of a clear framework and good quality data to identify the most vulnerable.

All in all, the Kenyan government should work more on strengthening their social welfare programs, connecting more households to electricity, ensure access to clean water to everyone in the country, invest more in the education and health sectors as well as other basic needs that are crucial for improving the living standards of Kenyans and ensuring that they handle future risks and pandemics more smoothly. Furthermore, besides local efforts, support and aid from the international community are needed and debt relief.

This article was written by Dara Salih, Research Intern at CSEA

The outbreak of the Coronavirus (Covid-19) pandemic was accompanied by an unprecedented shock, with colossal impact on economic activities worldwide. One of the major effects is the global economic lock-down implemented to curb the widespread of the pandemic.  Nigeria as an oil-dependent nation, also experienced an external shock as a result of the oil price crash. The combination of these twin shock (covid-19 pandemic and oil price shock) worsened the scenario in Nigeria. For instance,  government forecasted a decline in oil revenue flow from 5.5 trillion Naira to 1.1 trillion Naira in 2020. Thus, due to these shocks, Nigeria is faced with a sudden fiscal crisis combined with other colossal effects. The effect of these twin shocks will vary across countries due to a number of factors among which the quality of fiscal space will be crucial.

Over time, Fiscal buffers have proven to be indispensable in enhancing macroeconomic resilience to external shocks by preventing them from plunging into financial strain. Meanwhile,  the Excess Crude Account (ECA) was created in 2004 in order to save excess  of the budgetary benchmark that will be generated from the sale of crude oil account. It was created to serve as an absorber of shocks caused by oil price volatility with the aim of protecting Nigeria’s budget from unprecedented shortfalls.

The ECA also serves as a buffer for public expenditure from being distorted by business cycle or waves, triggered by international oil markets. Since its inception (2004), the ECA has been taking an ascending trend until 2010 when it declined due to the financial crisis of 2007-2009. As at April 2018, the ECA account stood at $1.8 billion which declined to $324.9 million as at January 2020. It became quite daunting as the account deteriorated and further slumped to $71.8 million dollar within the range of 5 consecutive months (January 2020 – May 2020). Notably, the depletion of the ECA has a ripple effect on the economy, as it reflects not only the absence of funds that will serve as a buffer to another wave of recession, but also intensifying Nigeria’s economy, making it more vulnerable to external shocks.

Consequently, some loopholes were identified with the running of the ECA, which includes; lack of transparency and non-legal backing. Hence, in  2011, the Sovereign Wealth Fund (SWF) was created to amend the disagreements surrounding the ECA. The SWF comprises three categories of funds with visibly stated objectives. They include; the stabilization Fund, the Future Generations Fund as well as the Nigeria Infrastructure Fund. So far, Nigeria has invested only $2.53 billion in the SWF between 2012-2019. While the Stabilization fund of the SWF serves the same purpose with ECA, only 20 percent accounts for the fund, while the future generation fund and Nigeria infrastructure fund justify the remaining 80 percent. As at December 2019, the Stabilization Fund which ought to serve as buffer to economic shocks was reported to have only $351 million. However, in April 2020, a withdrawal of $150 million was granted by the federal government to  serve as a supplement to the government’s Federation Accounts and Allocation Committee’s disbursements for allocation to the 3 tiers of government. This brought down the balance of the SWF to the total amount of $201 million, a far cry from $0.5 billion.

Furthermore, Nigeria’s growth rate is forecasted to plunge to -3.4% in year 2020 which by indication is worse than the growth rate of -1.6% when Nigeria experienced recession in 2016. The bottom line is the nation is distressed with a double shock from Covid-19 pandemic as well as dwindling oil price. This scenario was more aggravated by the fact that the buffers that were created to absorb these forms of shocks have not been effective. While the ECA is faced with a hitch of depletion, the SWF is faced with problems of low savings. Accordingly, the World Bank stated that, “External balances are fragile to hot money movements, and fiscal buffers are exhausted, making Nigeria’s economy vulnerable to external risks”. Therefore, the absence of a strong buffer to these shocks will only push the economy to another wave of recession with a more difficult recovery path. As a result, the prevalent scenario will continue to constrain the budget envelope, consequently limiting its fiscal space.

Building Fiscal Resilience: Some Policy Suggestions

The incidence of these scenarios – the Covid-19 pandemic and the plunge in crude oil price underscores the need for government to look inward to build more fiscal resilience or fiscal buffers that would absorb any unprecedented shocks.  Many countries around the world, including Nigeria, are now faced with massive instability, and if a next wave of recession hits the global economy, most countries will not be able to recover without sufficient buffers.  

It is therefore imperative for Government to take a deep look at how to save and invest more in critical infrastructure that will generate substantial revenue. The following are viable solutions that can help build fiscal buffers and economic resilience in both the short and long term.:

Prudent Management of Funds

There are criticisms surrounding the use of the ECA funds in particular. Its lack of legal support and proper structure has made it subject to urgent and inadequate withdrawals. Likewise, the ECA does not have sufficient debit and credit records as well as conforming withdrawals or approvals for these withdrawals This has mandated the incorporation of the ECA with the SWF since the latter has covered the identified loopholes of ECA and is doing even better despite meager funds under its authority.  The accounts should be treated prudently, of the utmost importance. Withdrawals of funds should be restricted and made only exigent reasons such as the recent economic situation.

Ultimately, the federal government needs to look inward and adopt a more judicious spending regime, improve efficiency to guard against waste and deploy more technology, it is often cheaper and innovative, so it can generate new opportunities.

Structural Reforms

Fiscal reforms are of paramount importance in this situation. The government needs to intensify and embrace structural reforms to build an efficient institutional and policy framework to manage the volatility of fluctuations in the oil sector fluctuations, in order to sustain the growth of the non-oil sector. More importantly, unwavering reforms that have a significant impact on the trajectory of the economy, such as the removal of subsidies, elimination of forex and trade restrictions, greater transparency and predictability of monetary policy and increased domestic revenue mobilization should be put in place. These Structural reforms will attract private investment, given that private investment serves as an engine growth for the economy as well as a good fiscal stimulus, and will therefore stand as good resilient in absorbing shocks. In 2019, Nigeria  ranked 131 among 190 economies in the Ease of Doing Business. This result is quite daunting looking at the prominence of business in an economy.  As a stabilizer of many macroeconomic variables as well as a driving factor of the economy, it becomes very vital for government to vigorously implement responsive policies to support the expansion of businesses.

Intensify Economic Diversification

The recent events in the Nigerian economic performance especially the effects of  the twin shocks re-echoes how important it is to diversify the Nigerian economy .Economic diversification has unlimited potentials to increase Africa’s resilience to external shocks as well as influence the attainment of its economic growth and development. Although, some actions have been taken to diversify the Nigerian economy from excessive dependence on crude oil to development in the non-oil divisions, Nigeria is still inexperienced as far as diversification is concerned. This is because it is not enough to invest in a particular sector and abandon it.  There is a need for constant follow up and the formulation of appropriate policies in place to ensure that the sector develops to a desired point.

If evidence were still required, the coronavirus pandemic and the consequent nosedive of oil prices has once more reminded us of the shortcomings of Nigeria’s oil dependence.

Despite decades of rhetoric on the merits of diversification, oil still represents more than 90 percent of the total value of Nigerian exports, and more than half of all government revenue, thus largely determining the government’s expenditure potential. The federal government’s budget for 2020 was designed on an assumed average oil price for the year of US$57 per barrel — a price that has proved a mirage since the start of the health and economic crisis.

Since strategic, and preferably abundant, government expenditure is a necessary requirement on Nigeria’s path towards achieving the Sustainable Development Goals (SDGs), it therefore follows that the fate of Nigeria’s development project remains hostage to the unpredictable fortunes of the oil industry.

When the pandemic eventually subsides, finding different, less volatile sources of government revenue, foreign exchange and employment will need to be an absolute priority for policymakers. This will have to begin with a modernisation of Nigeria’s agricultural sector.

The world is changing, development theory should too

Following Arthur Lewis’ research in the 1950s, traditional development economics has envisioned the shifting of a rising portion of labour into higher productivity activities as the centrepiece of an economy’s development. In this light, economists have mostly employed a convenient tripartite division of economic activities into agriculture, manufacturing and services — with increasing employment in the latter two sectors seen as the Promised Land. This was mostly with good reason: industrial development promised highly productive, labour-intensive economic activities that traditional agrarian economies could only dream of.

Yet this has ceased to be the case. As Cramer et al. (2018) point out in their brilliant study of Ethiopian horticulture, excessive neglect of agricultural activities in the obstinacy to promote transition towards industrial manufacturing can lead to the loss of numerous opportunities — ones Nigeria can hardly afford.

The changing tastes of international consumers, coupled with the increased efficiency of global cargo transportation, have opened up a market for agricultural products that would never have been possible just decades ago. Processing agricultural goods, therefore “industrialising”, is no longer the only way to add value to primary commodities. The ever-growing global demand for a year-round, fresh, and increasingly higher quality (think “organic”, “fair trade” etc.) supply of “raw” agricultural products is turning the once archaic practice of agriculture into a knowledge intensive, highly productive activity, often much more complex than many forms of manufacturing.

To illustrate this point, Cramer et al. discuss the astounding complexity and coordination required in the production for export of poinsettia flowers in Ethiopia — in comparison, Adam Smith’s proverbial pin factory comes across as child’s play.

While the final good is ultimately unprocessed and may appear the product of little more than traditional agricultural practices (several botched attempts make it hard for the author to believe, but you need not be a botanist to grow a flower), the surface-level simplicity masks a sea of highly-technical knowledge and expertise in fields as far apart as biology, supply-chain logistics and marketing that make modern horticulture no less valuable than many industrial activities. Throughout the process, jobs are created along the supply chain, steady streams of foreign exchange are generated and the economy’s overall productivity is increased — the three main purposes of seeking industrialisation in the first place.

It is therefore no wonder that development economists are starting to develop theories surrounding what Cramer et al. call the “industrialisation of freshness”, but the same concept of adding value within agriculture can be extended to the quality of the good and the efficiency of yield, not just the freshness with which it is brought to developed markets.

All of this should be more than sufficient to convince Nigerian policymakers that investing in agriculture must at least be considered in the country's post-COVID recovery.

Cutting out chocolate

To illustrate what this paradigm shift could mean, let us take the case of Nigeria’s most important agricultural product: cocoa. Cocoa beans remain Nigeria’s largest agricultural export, yet the sector has witnessed a steady decline since the heydays of the post-independence period: in the decades from the 1960s to 2016, average yearly cocoa production declined from 420,000 tons to just 192,000 tons.

Talk of reviving the sector has been a constant feature of political debate particularly since the return to democracy in 1999, but the vast majority of the conversation has centred around statements such as: “Nigeria is yet to fully capitalise on cocoa production, as most of the beans are sold unprocessed” — as quoted from the Proshare intelligent investment platform.

While it may certainly be true that strengthening Nigeria’s fairly meagre processing capacity could be a job-creating, productivity-enhancing, forex-attracting development — you will certainly not find opposition to strategic forms of ‘traditional’ industrial policy here — the narrowness of this vision neglects the potential for generating positive outcomes from the improvement of cocoa bean production itself.

Yield-enhancing practices could certainly be explored, but even more important would be government support for the specialisation in higher quality cocoa bean production.

To the untrained eye, different varieties of cocoa bean may appear rather similar. However, in truth, cocoa quality is assessed through a plethora of complex criteria including: the genetic origin of planting material; morphological characteristics of the plant; flavour characteristics of the cocoa beans produced; chemical characteristics of the cocoa beans; colour of the cocoa beans and nibs; degree of fermentation; drying; acidity; off-flavours; percentage of internal mould; insect infestation and percentage of impurities.

Obtaining the desired levels of each parameter requires sophisticated expertise that makes the notion of agriculture as a ‘backwards’ trade seem rather inapt.

As the International Cocoa Organisation (ICCO) points out, there is growing value in producing ‘fine and flavour’ cocoa as most major chocolate manufacturers include premium quality chocolate products in their range that “require fine or flavour cocoa from specific origins in their recipes, in order to achieve the required distinctive taste or colour of the chocolate. Many new chocolate artisans are emerging as well, bringing more demand for this cocoa type”.

However, as with most African producers (Madagascar being the exception), Nigeria has exclusively produced lower grade ‘bulk’ beans, where productivity and value-addition is lower and margins are tighter, leaving the dominance of the fine and flavour production to South American competitors.

Moving forward, strategic partnerships with top-of-the-line chocolate producers to develop capacities to enter niche final product markets should certainly be explored. In so doing, the Nigerian cocoa sector could cut out a strategic angle into the northern markets, guaranteeing higher value exports, and protecting itself from regional competitors that have often outperformed Nigerian producers due to, among other things, better infrastructure and more efficient organisation of the cocoa markets.

In general, policies to facilitate knowledge production and dissemination, strengthen infrastructural support and incentivise quality upgrading within agriculture can form the basis of a successful industrial policy without the imperative to industrialise.

Moving industrial policy beyond ‘industry’

With the (frankly, too slow) fall from grace of the Washington Consensus, a new consensus is emerging surrounding the paramount importance of government industrial policy to foster structural change. This development is welcome. However, the return to prominence of industrial policy must take stock of the changes in the global economy that have occurred since the peaks of government-led development in the post-war, post-independence period. This article has sought to echo Cramer et al. in highlighting the risks of maintain the monolithic view of structural change as a unidirectional move away from agriculture.

While the Nigerian cocoa beans example would require a much more in-depth evaluation than that provided above to guide policy design, it is important that this sort of thinking — one that sees the value of agriculture beyond being a breadbasket and labour source for industry — enters the mindset of development practitioners and policymakers.

Ultimately, industrial policy to engender structural change is about investing in activities that are able to foster employment, generate foreign exchange and shift larger portions of the workforce into higher productivity occupations. Traditionally, this has been synonymous with prioritising industrial manufacturing over agriculture. This should no longer be the case.

This article was first published by the Africa Portal

(Main image: A cocoa plant at Shofolu village in Ogu State, southwest Nigeria, on 30 August 2016. - Pius Utomi Ekpei/AFP via Getty Images)