East_Africa_Stocktake_Report.pdf

Summary Report

Taking Stock of USAID’s Past and Ongoing Activities under the East Africa Feed the Future Multi-Year Strategy (2011-2015) and Work Completed from 2016 to 2018

This publication was produced on November 2018.

This publication was produced by the Institute for People, Innovation and Change in Organizations – Eastern Africa (PICO-Eastern Africa), now known as Emerge Centre for Innovations – Africa (ECI-Africa) Cover photo credit: Africa Lead

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 2

Contents List of Figures Executive Summary

Trade and Markets Resilience Nutrition Technology Development and Deployment Cross-Cutting Issues

I. Introduction A. Focal Areas For The Stock-Take B. Approach

II. General Analysis of Food Security Situation In East Africa III. Trade And Markets Integration And Private Sector Development

A. Background And Context Analysis Why Trade?

The Region And Its Potential And Challenges Patterns Of Regional Trade

B. Interventions C. Achievements

Regional Common Market And Customs Union Development (EAC, COMESA) Facilitating Transboundary Livestock Trade (Au-Ibar Smp-Ah) Development Of Trade Infrastructure And Related Facilities (Comesa, Eac, Trademark East Africa, EATIH) Harmonizing Of Standards And Improving Food Safety (EATIH, COMESA, EAC, CIMMYT, IITA, ATTC) Private Sector And Business Development Support (EATIH, EAC (EABC), COMESA (CBC)) Facilitation Of Cross-Border Trade For Peace (Comesa – With Trade Data Availability, Knowledge Management And Information And Analysis Regional Agricultural Development Policy And Caadp Support (EAC, COMESA, BFS/MDTF) Facilitating Increased Private Sector Investment And Trade (EATIH, TRADEMARK EA, COMPETE) Capacity And Institutional Strengthening (EATIH, TRADEMARK, AIIM)

D. Challenges And Gaps Limited Range Of (Largely Commodity) Exports Growing Agri-Food Imports Regional Vulnerability To Price Shocks Partial Or Ineffective Implementation Of Trade Agreements Within Regional Blocs (Recs) Other Challenges And Gaps

E. Opportunities Going Forward Iv. Strengthening Resilience Of East African Communities

A. Background And Context Analysis B. Interventions

USAID Ea Activities Under Igad Activities Coordinated By The USAID East Africa Regional Office

C. Achievements USAID-Recs Partnership Achievements From Activities Coordinated By The USAID Regional Office

D. Challenges And Gaps E. Opportunities Going Forward

V. Improving Nutrition And Food Safety

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 3

A. Background And Context Analysis B. Interventions

USAID And Nutrition-Sensitive Agriculture Making Trade Work For Nutrition Making Value Chains Work For Nutrition Making Biofortification And Fortification Work For Nutrition Food Quality And Safety

C. Achievements D. Challenges And Gaps E. Opportunities Going Forward

Vi. Technology Development And Deployment A. Background And Context Analysis B. Interventions

Aflatoxin Fall Armyworm Maize Lethal Necrosis Seed Technologies

C. Achievements Achievements Realized Through USAID/EA Interventions Discussed Above Are Briefly Discussed Aflatoxin Fall Armyworm Maize Lethal Necrosis Seed Technologies

D. Challenges And Gaps Aflatoxin Fall Armyworm Maize Lethal Necrosis Seed Technologies

E. Opportunities Going Forward Vii. Improving Regional Programming Approaches: Cross-Cutting Issues

A. Summary Of Perspectives By USAID Regional Stakeholders B. Challenges And Gaps

Regionality Political Economy Issues Inclusivity Sustainability Partnerships Capacities Of Key Stakeholders Funding And Reporting Cycles

C. Opportunities Going Forward Viii. Conclusions

Trade And Markets Resilience Nutrition Technology Development And Deployment Cross-Cutting

Ix. References

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 4

List of Tables Table 1. Intra-REC Trade Proportions Table 2. Export Concentration Indices Table 3. REC Membership in the East Africa Region Table 4. Opportunities and Recommendations on Trade and Markets Table 5. Opportunities and Recommendations on Private Sector Engagement Table 6. Summary of Opportunities and Recommendations for Investment Table 7. Prevalence of Undernourishment in the World (%), 2005 - 2017 Table 8. Value Chains Identified from FTF Documents Table 9. Opportunity Areas and Recommendations for Investments Going Forward Table 10. Prioritization of ARD Interventions and Approaches by Stakeholders Table 11: Opportunity Areas and Recommendations for Investment Going Forward Table 12. Summary of Perspectives from Stakeholders on Programming Approaches Table 13 . Opportunities and Recommendations on Cross-Cutting Programmatic Issues

List of Figures Figure 1: Trade and Food Security- the Interactions Figure 2: GDP, 2016 and GDP growth rates 2011-2017 Figure 3: Various Statistics Describing the Regional Agricultural Economy Figure 4: Major Trade Corridors Figure 5: Regional and Global Trade Volumes of Major Agricultural Commodities

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 5

Executive Summary The United States Government’s Global Food Security Strategy (GFSS) presents an integrated whole-of-government strategy and agency-specific implementation plan. It charts a course for the US government to contribute to the achievement of global food security and the Sustainable Development Goals (SDGs) together with partners across the globe. Aside from the whole government approach of the GFSS, USAID is also keen to strengthen the private sector through the newly launched (December, 2018) Private Sector Engagement (PSE) Policy so as to strengthen trade. PSE signals a shift towards an enterprise-driven development as a more sustainable way to empower people, communities and countries on their journey to self-reliance.

The USAID Kenya/East Africa Office of Economic Growth and Integration (USAID/KEA OEGI) is in the process of developing the East Africa Regional GFSS Plan, implemented through Feed the Future (FTF), to guide its programs for the next five years. In this connection, USAID/KEA commissioned a review to take stock of the progress of previous and ongoing activities (covering the 2011 - 2018 period) in the region, with a focus on the status of investments, achievements to date, challenges and gaps, and opportunities for investments going forward). The major thematic areas covered were trade and markets, resilience, nutrition, and technology development and deployment. The assessment also reviewed cross-cutting issues which underpin performance and impact – quality and appropriateness of partnerships, inclusivity, regionality content of the portfolio, sustainability, stakeholder capacity strengthening, and resourcing and reporting cycles.

TRADE AND MARKETS

The USAID Regional East Africa FTF Strategy seeks to facilitate improved food security through regional market integration and trade. It is considered that integrated markets, expanded access to technology, and larger volumes of private sector investment work together to increase trade in food staples across the northern and central regional trade corridors (which carry 70% of regional trade). The strategy assumes that regional market integration and trade has direct and indirect positive influences on each of the four dimensions of food security: availability, access, utilization, and stability. In the long run, trade in agricultural products can enhance production efficiencies and optimize resource allocation among other benefits.

Trade and market interventions and achievements during the period covered by the stock-take included: (i) Regional common market and customs union development (in EAC and COMESA); (ii) Facilitating transboundary livestock trade regional standards, methods, and procedures for livestock disease management and the brokering of livestock export relationships with the Middle East; (iii) Development of trade infrastructure and related facilities increasing efficiency and reducing non-tariff trade barriers; (iv) Harmonizing of standards and improving food safety including the development of the COMESA Seed Harmonisation Implementation Plan (COMSHIP) and Variety Release System; (v) Private sector and business development support (e.g. capacity strengthening of small and medium-sized enterprises (SMEs) and facilitating linkages with the U.S. private sector; (vi) Improved availability and access to trade data; and (vii) Capacity and institutional strengthening of regional economic communities (RECs) & government agencies.

Some priority trade and markets intervention opportunities identified were: (i) Regional Trade Policy Harmonization, Domestication, and Implementation; (ii) Regional Commodity Value Chain Development Approach – especially involving high value commodities critical for employment, nutrition, and food security across the region; (iii) Special Focus on Seed Trade and Unlocking Crucial Bottlenecks- develop and implement a specific initiative aimed at unblocking the current bottlenecks to seed trade in the region; (iv)African Growth and Opportunity Act (AGOA) Trade Facilitation- by supporting a strong, private-sector driven, regional approach based on specific commodities, bulking strategy, supply chains and delivery logistics, so that sufficient quantities of commodities may be delivered in the right format and quality.

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 6

RESILIENCE

Drought is a recurrent feature in the arid and semi-arid lands (ASALs) of East Africa. Drought and the harsh environment, exacerbated by climate change, war, and conflicts have created situations of chronic vulnerability, extreme poverty, persistent food insecurity, and human suffering. The extent of current devastation caused by droughts clearly shows that traditional coping mechanisms and responses are no longer working in terms of enabling vulnerable populations to adapt and recover from crises. The challenge has been to find new, innovative approaches to build the capacity of communities to cope with and recover from these disasters. Since the 2011 drought, USAID, other donors and governments have adopted a model for resilience building based on a multi-sectoral, integrated and inclusive systems-strengthening approach.

The model was adopted by the Horn of Africa Resilience Network (HoRN) and projects planned under the HoRN and implemented by USAID bilateral missions were successful in reducing vulnerability of communities to drought.

Under Feed the Future, USAID East Africa interventions to improve the region’s ability to respond to shocks were mainly implemented in the framework of the partnership with the Intergovernmental Authority on Development (IGAD) and under the HoRN. Major achievements include the harmonization of methods and procedures for the control of cross-border livestock diseases and the laboratory analysis procedures for the diagnosis of livestock diseases; the establishment of a regional network for quarantine using harmonized procedures; the signing of three bilateral and one multilateral agreements for control of livestock diseases across borders; the harmonization of trade policies; the implementation of the IGAD Drought Disaster Resilience Sustainability Initiative (IDDRSI); strengthening the capacity of national meteorological services to use climate forecast as decision support tools for planning agricultural production and strengthening the capacity for conflict prediction and response.

The stock-take identified opportunities for investments in resilience including: (i) strengthening resilience programming at regional and national levels; (ii) building resilience response and recovery capacity of communities, and (iii) strengthening resilience management institutions at national and regional levels.

NUTRITION

Africa is the only continent in which the number of stunted children is rising (as evidenced by 2000-2016 data), and East Africa has the highest prevalence of undernourishment among all sub regions of Africa – making East Africa, by extension, the most undernourished sub region in the world. The trends in two nutrition indicators (undernourishment and stunting) for the East Africa region show that, although there are notable exceptions, the region has made visible, albeit variable, gains in its efforts to address malnutrition since 2000, including the period covered by the stock-take (2011-2018).

Under the nutrition theme, the USAID EA Regional Strategy (2011-2015) identified four broad intervention areas which aimed to synergize agriculture, trade, and nutrition objectives in collaboration with USAID/EA’s Regional Health and HIV Office (RHH). The areas were: a) fortification and biofortification; b) food quality and safety; c) dietary diversity; and d) institutional capacity. In addition, the strategy considered improved trade as an important means of addressing nutrition through movement of safe and nutritious food commodities from surplus to deficit areas. The major focus of the food quality portfolio was Aflatoxin control and harmonization of safety and quality standards as part of the SPS interventions (under Trade).

The major achievements of nutrition interventions included: Harmonization of standards for 22 staple foods to liberalize and increase regional trade; Introduction of simplified certificates of origin to allow duty-free cross-border shipment of EAC-originated goods (including foods) worth less than $2,000; Progress made with scaling of biofortified crops (e.g. orange-fleshed sweet potato (OFSP) in Uganda and iron-biofortified beans in Rwanda); Intentional inclusion of nutrition-rich foods as priority value chains in the trade portfolio; “Proof of concept” of aflasafe technology, resulting in registration in Kenya, Tanzania and manufacturing plant and commercialization in Kenya with plans in progress in Tanzania; East, Central and Southern Africa Health Community (ECSA-HC) development, of 17 food fortification and inspection manuals for staple foods, and control manuals for salt, oil, sugar, maize flour and wheat flour; and Progress made with SPS (e.g. Pest Risk Assessment) conducted to review phytosanitary import conditions and to establish a systems approach for

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 7

risk mitigation in food staples and horticultural products in COMESA countries. The latter has opened export possibilities, such as Kenya avocado exports to South Africa, which opened in early 2018.

Intervention opportunities for nutrition going forward include: Ensuring that identified value chains for trade include nutrient-rich commodities (such livestock products, fish, fruits and vegetables, including biofortified food commodities); Mapping out available and affordable effective drying and food preservation technologies and working with bilateral missions to enhance accessibility by rural smallholders in the region; Putting value chain monitoring systems (sampling and testing) in place for prioritized food safety hazards (e.g. mycotoxins, pesticide residues, heavy metal residues, microbiological hazards, and facilitating mutual recognition by East Africa member states); Strengthening institutional competencies of agencies responsible for food safety (e.g.

through virtual learning platforms); Continuing to support bio-fortification research focused on priority East Africa staples; and Adoption and enforcement of the ECSA-HC food fortification manuals remains a challenge, including working with bilateral missions to facilitate dissemination and implementation of guidelines for fortifying locally milled flour.

TECHNOLOGY DEVELOPMENT AND DEPLOYMENT

Agricultural research for development (AR4D) is a key factor in food and nutrition security as it helps generate technologies which are key drivers of growth in agricultural productivity. USAID/EA’s support targeted two areas for technology development and deployment: (a) the management of pests and diseases that affect major crops, focusing on Aflatoxin (working with IITA), Maize Lethal Necrosis (MLN) (with CIMMYT) and Fall Armyworm (FAW) (with CIMMYT and EAC); and (b) development, scaling up and commercialization of seeds of crop varieties with specific desirable traits (with ASARECA).

The main achievements in technology development and deployment include the following: (i) The development, registration and commercialization of Aflasafe for management of Aflatoxin; (ii) The effective management of MLN in East Africa and control of its spread beyond the region; (iii) Sensitization of EAC stakeholders on FAW best practices, and facilitation of regional commitment towards its management; and

(iv) Production and scaling up of a variety of improved crops, including quality protein maize, beans, and African indigenous vegetables. The main challenges that warrant technology development and deployment derive mainly from the nature of both pests and diseases. Their very rapid spread calls for ongoing effective monitoring (e.g. to track possible changes in biology that lead to adaptation that reduce effectiveness of pest and disease resistance of existing crop varieties and, therefore, demand technology improvements); and newly emerging disease problems that call for new research to develop management approaches.

The stock-take identified the following major investment opportunity areas: (1) Speeding up commercialization of Aflasafe in the EAC member states; (2) Scaling up availability and application of technologies for management of Fall Armyworm (FAW); (3) Enhanced support of countries in the region for MLN control; and (4) Putting research into use through demand-based programming and capacity strengthening.

CROSS-CUTTING ISSUES

The major priority cross-cutting opportunities for interventions going forward are: (i) Clearly defining regional vs bilateral roles; (ii) Deepening understanding of underlying national interests and positions that slow down regional policy implementation; (iii) Intentional engagement of local stakeholders in programming;

(iv) Developing regional programs which are demand-based and have built-in exit strategies; (v) Improving the quality of partnerships at all levels; (vi) Strengthening partners’ capacities to take over roles undertaken by USAID funded staff; and (vii) changing funding disbursement and reporting frequency and cycles to enhance efficiency.

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 8

I. Introduction The United States (US) government’s Global Food Security Strategy (GFSS) presents integrated whole-of-government strategy and agency-specific implementation plans which chart a course for the US government to contribute to the achievement of global food security and the range of the Sustainable Development Goals (SDGs), together with partners across the globe (see https://www.usaid.gov/what-we-do/agriculture-and-food-security/us-government-global-food-security-strategy). The GFSS emphasizes the role of regional programs in expanding trade, strengthening risk management, and increasing access to safe and nutritious foods. Specifically, regional programs have a unique role and contribution to make in terms of strengthening the capacity of regional and national systems and institutions, influencing policy, and promoting intraregional trade and investment. Regional programs, institutions, policies and investments are expected to impact national level outcomes across a region, putting countries on a stronger path of self-reliance by mobilizing public and private resources, leveraging partnerships, and designing and implementing their own solutions.

The USAID Kenya/East Africa Office of Economic Growth and Integration (USAID/KEA OEGI) is in the process of developing the East Africa Regional GFSS Plan, implemented through Feed the Future, to guide its programs for the next five years. The overall goal of the 2011-2015 East Africa Feed the Future strategy was to increase access, availability, and utilization of staple foods in regionally-integrated markets in the northern and central corridors of East Africa, thereby reducing poverty and malnutrition. This goal was to be achieved through better integrated national and regional markets; expanded regional access to improved technologies, knowledge and inputs; and increased private sector investment in regional agriculture and nutrition.

In order to inform the development of the East Africa Regional GFSS Plan, USAID/KEA commissioned a stock-take to review the progress of previous and ongoing activities in the region, with a focus on the status of investments, achievements to date (including the period 2016 to 2018), challenges and gaps, and opportunities for investment going forward. The major thematic areas covered were: Trade and Markets, Resilience, Nutrition, and Technology Development and Deployment. The assessment also reviewed the cross-cutting issues which underpin performance and impact – quality and appropriateness of partnerships, inclusivity, and regionality of the portfolio content, sustainability, stakeholder capacity strengthening, and resourcing and reporting cycles. The stock-take was primarily informed by in-depth desk reviews, stakeholder consultations (with a heavy focus on USAID implementing partners and regional, as well as national, beneficiaries) conducted through questionnaire surveys (24 respondents), 19 key informant interviews (KIIs), three focus group discussions (FGD) and a validation workshop following the preparation of an initial draft report. The survey instruments used in the data collection are summarized in Annex 1B (KII), Annex IC (FGD) and Annex ID (Online Survey Questionnaire), which is a separate standalone sister document to this report. The key Implementing Partners who were deeply engaged in the consultation process are summarized in Annex 3 in that same document.

A. FOCAL AREAS FOR THE STOCK-TAKE

• Food Security: food availability and accessibility through improved production, trade, and management of regional challenges

• Trade and Investments: an analysis of the agribusiness market place; trade as the means to food security (for food buyers) and wealth creation (by food producers and value chain players, including traders)

• Resilience: “A journey towards self-reliance” and how the population responds to shocks in the system

• Partnerships with the RECs: what has worked and how to strengthen partnership with the private sector https://www.usaid.gov/what-we-do/agriculture-and-food-security/us-government-global-food-security-strategy https://www.usaid.gov/what-we-do/agriculture-and-food-security/us-government-global-food-security-strategy

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 9

• Harmonization of policies to integrate trade, improve/harmonize standards, and create efficiency (e.g. one-stop borders): What have been the successes and how have these actions facilitated intraregional trade and partnerships?

• An examination of development and deployment of technologies that are scalable

• Focus countries (i.e. countries where USAID has investment in terms of projects and staff for Feed the Future, including resilience interventions). The focus countries are: Ethiopia, Kenya, Rwanda, Tanzania, Uganda and Zambia. Specifically, for resilience: Ethiopia, Kenya, Uganda, Somalia, South Sudan, and Democratic Republic of the Congo (DRC).

• Regional flagship projects were classified on the basis of the source of funding and the partner institution that implemented them. It was also noted that a given institution could have implemented more than one project under the same program. The flagship projects were:

− Regional Feed the Future: The sixteen (16) projects/project groups include those implemented by RECs (EAC, COMESA & IGAD), ASARECA, CGIAR organizations (IITA, CIMMYT, ILRI, ICRISAT), ReSAKSS, Market Linkages (ACDI/VOCA), AIIM ASSIST- AIIM (Ag Mark, EAFF), AU-IBAR, RELPA, Africa Lead

− Trade Africa: Six projects/project groups which include those implemented by COMPETE, East Africa Trade and Investment Hub (EATIH), Trade Mark East Africa (TMEA), RECs (COMESA and EAC), and Financial Services Volunteer Corps (FSVC).

B. APPROACH

This was a stock-take and not a comprehensive evaluation or assessment of USAID programs in the region.

The stock-take tried to balance depth and breadth to ensure that the final report provides information of adequate specificity - supported by credible analysis and evidence – to inform the intended plan. Data was gathered primarily through desk reviews and stakeholder consultations. The latter was completed through a combination of approaches including online questionnaire surveys, key informant interviews and focus group discussions with USAID Mission staff and other selected stakeholders, and a validation workshop with selected stakeholders of all categories, with a major focus on implementation partners and the private sector.

The results of the stock-take are presented in two parts:

1. This Summary Report presents a synopsis of each of the thematic areas – Trade and Markets, Resilience, Nutrition, and Technology Development and Deployment – covering, for each, interventions undertaken, achievements, challenges and gaps, and investment opportunities going forward.

2. A comprehensive Annex submitted with the first draft which has detailed the stock-take process and results including survey instruments used, major stakeholder categories interviewed, analysis and findings, and a list of references. The current version of the summary report has benefitted from reviews by Africa Lead and there may be some differences in content or presentation format, but the longer versions of Resilience, Nutrition, Technology Development and Deployment and cross-cutting thematic write-ups are also available as Annex 2.

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 10

II. General Analysis of Food Security Situation in East Africa East Africa is a region where more than 60% of the landmass is under arid and semi-arid climatic conditions, experiencing frequent droughts, rainfall variability, and food insecurity. The region is characterized by a high level poverty, persistent hunger, famine, and conflicts. The frequent conflicts observed in the region (Somalia, South Sudan, and northern Kenya) are also a major cause of food insecurity which is amplified by climate change thereby affecting food availability through increasing adverse impact on crop yields, fish stocks, and animal health and productivity. Promoting regional market integration and trade is expected to have a positive direct and indirect impact on each of the four dimensions of food security including availability, access, utilization, and stability. However, regional trade is hampered by policy implementation challenges, infrastructure deficits (especially along key trade corridors), and poor logistics, competition between national interests and regional trade policies, and inadequate human and organisational capacity.

The arid and semi-arid areas of East Africa are also characterised by recurrent drought which has serious consequences on the socioeconomic conditions of poor people. Currently the interventions being put in place recognize the need to find more sustainable solutions to address vulnerability and exposure of communities in disaster-prone areas.

In East Africa, undernourishment of children under five years of age increased from 112.7 million to 137.2 million from 2000-2016, (FAO, 2017). In terms of percentage, the undernourishment decreased from 39.8% in 2000 to 30.9% in 2010, and since then has risen to 33.9% in 2016. The high level of malnutrition reflecting food insecurity was also indicated by the high level of stunting of children under five years old, established at 36.7% in 2016. It was the highest in sub-Saharan Africa. The trends in the two nutrition indicators (undernourishment and stunting) show that, although there are notable exceptions, the region has made visible, albeit variable, gains in its efforts to address malnutrition during the period 1991 to 2015. Despite the decline, malnutrition in the region is still very high (above 30%) according to World Health Organisation classification.

In spite of their invaluable contribution to economic growth, farmers in in East Africa (as is the case across most of Africa) often lack the tools, money, and skills to respond to agricultural development challenges.

Pests and disease destroy crops and animals. Extreme weather events slow work and limit production.

Growing populations increase the demand for nutritious food. Science and technology solutions are critical in meeting the growing demand for food, maintaining market competitiveness and adapting to and mitigating risks. Agricultural research helps generate new technologies and improved policies which are key drivers of growth in agricultural productivity and resilience. In East Africa, the primary challenges limiting growth of the agricultural sector include but not limited to: production and processing-related challenges; inadequate infrastructure and investment; natural resource management and climate change-related challenges; and policy and market-related challenges.

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 11

III. Trade and Markets Integration and Private Sector Development

A. BACKGROUND AND CONTEXT ANALYSIS

WHY TRADE?

The USAID/KEA OEGI FTF strategy seeks to facilitate improved food security through regional market integration and trade. Integrated markets, expanded access to technology, and larger volumes of private sector investment work together to increase trade in food staples across the northern and central regional trade corridors, which carry 70% of regional trade. The premise of the strategy is that regional market integration and trade has positive direct and indirect influences on each of the four dimensions of food security -- availability, access, utilization and stability. USAID is also undertaking a major cultural and operational transformation in their engagement with partner countries. In addition to the whole government approach of GFSS, there is an intentional shift aimed at pursuing market-based approaches and investment as a means of accelerating countries’ progress on the Journey to Self-Reliance. US Government has launched the Private Sector Engagement Policy, with potential programs such as Prosper Africa being proposed to follow in line with Presidential initiatives such as Feed the Future. Prosper Africa which is intended to increase mutually beneficial trade and investment between the United States and Africa, will increase USAID’s portfolio in the areas of trade, energy and food production.

Figure 1 illustrates the links between trade and food security. The regional FTF strategy also makes the obvious links to economic growth (which largely results from increased productivity, employment, and incomes across value chains); better nutrition (due to faster and wider delivery of diverse and safe foods);

and, increased resilience (the ability of households and communities to withstand and recover from shocks).

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 12

Figure 1: Interactions between Trade and Food Security

Source: Adapted from E. Díaz-Bonilla, M. Thomas, S. Robinson and A. Cattaneo. 2000. Food security and trade negotiations in the World Trade Organization: a cluster analysis of country groups. TMD Discussion Paper 59, Figure 1. Washington, DC, IFPRI.

In the long run, trade in agricultural products can enhance production efficiencies and optimize resource allocation.1 In addition to income and employment opportunities, increased trade leads to transfer of technology, political, and sociocultural harmony.2 The basis for regional trade in agricultural commodities is strong. Seasonal surplus and annual deficits create arbitrage opportunities, as do high inter-temporal and spatial price differences. However, regional trade is hampered by policy implementation challenges, infrastructure deficits (especially along key trade corridors), and poor logistics, competition between national interests and regional trade policies, and inadequate human and organizational capacities. A longer list of challenges and gaps is presented below in Section 3.D.

1 In general, the literature shows that free and balanced trade is beneficial in multiple ways and there are multiple references to support this (from classical to modern trade theories). For purposes of this document, an extensive review of the literature on trade theory is unnecessary, except to note that it supports the general premise of the FTF strategy here. As with most subjects, there are ifs and buts, caveats and complications – various authors on general trade theory - Dornbusch & Fischer, Bardhan; and specific to the region Jayne and Tschirley 2009 and Minot 2014.

2 One USAID-supported, COMESA-implemented project, trading for peace, was focused on enhancing cross border harmony through trade – more details here: https://www.africatradefund.org/projects/project/comesa-trading-for-peace-program-comesa-tfp- 4/ https://www.africatradefund.org/projects/project/comesa-trading-for-peace-program-comesa-tfp-4/

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 13

THE REGION AND ITS POTENTIAL AND CHALLENGES

The USAID/KEA region spans three Regional Economic Communities (RECs): COMESA, which has 21 Member States, and a population of 520 million with a combined GDP $639.4 billion; EAC with six Member States and a population of 156.8 million, with a combined GDP $122.1 billion; and, IGAD with seven Member States and a population of 120 million, with a combined GDP of $101.2 billion.

Figure 2 shows the GDP levels and GDP growth rates (in constant 2011 international USD)3 of some of the countries in the region (Somalia is excluded because of unreliable data). The region has positive GDP growth rates – with Ethiopia and Rwanda among the fastest growing economies in the world. The economic growth in Burundi and the DRC has been undermined by conflict and political unrest, underlining the importance of stability.

The African Development Bank (AfDB) defines “middle class” as having per capita daily consumption of USD 2-20 (in 2005 purchasing power parity terms) and indicates that its share of the population in sub-Saharan Africa expanded from 27% in 1990 to 34% in 2010. However, roughly 60% of the middle class in 2010 were in the USD 2 - 4 per capita range. Although high inequality constrains the growth of the middle-class, the size of the middle-class in Africa is projected to continue to grow and reach 1.1 billion (42% of the population) by 2060.4

Figure 2: GDP 2016 and GDP Growth Rates from 2011-2017

Source: World Development Indicators – WDI.

This affluence, along with increasing urbanization and absolute populations, will see a greater demand for food and a shift towards processed staples, fish and meat, and milk products. Figure 3 presents an array of statistics that illustrate features of the regional agricultural economy including a rising middle-class, lower poverty rates (albeit still high), low yields with much potential for growth, and rising number of imports.

3 Of note, is that Tanzania also belong to SADC, but not COMESA, DRC belongs to both COMESA and SEDC, while Rwanda and Burundi are also members of a Central African RIGO, ECCAS. Kenya is a member of CEN-SAD.

4 AFDB (2018) Tracking Africa’s Progress in Figures -https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Tracking_Africa’s_Progress_in_Figures.pdf https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Tracking_Africa's_Progress_in_Figures.pd

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 14

Figure 3: Various Statistics Describing the Regional Agricultural Economy

Sources: ReSAKSS and World Development Indicators – WDI.

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 15

PATTERNS OF REGIONAL TRADE

The intraregional trade performance compares favourably with other trading blocs, but pales when compared to the European Union (EU) and other advanced countries (Table 1). The ratio of intra-EAC export trade (20%) is the highest of African RECs, but imports are lower (at only 6.8%). COMESA, which overlaps with EAC, has a lower intraregional trade performance at 10% and 5% for exports and imports respectively.

Table 1. Intra-REC Trade Proportions

Trade REC

Exports (%) Imports (%)

Intra-

REC

Rest of the World

Intra-

REC

Rest of the World

Arab Maghreb Union (AMU) 4.1 95.9 2.5 97.5

Association of Southeast Asian Nations (ASEAN) 24.2 75.8 22.7 77.3

Common Market for Eastern and Southern Africa

(COMESA) 10.2 89.8 5.3 94.7

East African Community (EAC) 20.3 79.7 6.8 93.2

Economic and Monetary Community of Central Africa

(CEMAC) 3.1 96.9 4.2 95.8

Economic Community of Central African States (ECCAS) 1.8 98.2 3.6 96.4

Economic Community of West African States (ECOWAS) 10.6 89.4 9.4 90.6

Southern African Development Community (SADC) 20.6 79.4 21.5 78.5

West African Economic and Monetary Union (WAEMU) 14.4 85.6 8.2 91.8

European Union (EU ) 63.6 36.4 59.7 40.3

Southern Common Market (South America) (MERCOSUR) 13.1 86.9 15.8 84.2

Source: Adapted from UNCTAD-stat (2018), http://unctadstat.unctad.org/. (2018)

Seventy per cent of all regional trade passes through northern and central transport corridors, as illustrated in Figure 4 and Figure 5. There is, however, a scope for the development of new corridors, the Lapset Corridor, particularly with the greater integration of Ethiopia, which is landlocked. Despite the positive thawing of relationships between Ethiopia and Eritrea, and Somalia (which both offer access to ports), Ethiopia still wants to have the additional strategic option for movement of goods through Kenya. The most important agricultural trade products are staples.

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 16

Figure 4: Major Trade Corridors

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 17

Figure 5: Regional and Global Trade Volumes of Major Agricultural Commodities

Illustration of key exports of staples from the East Africa region over a five-year period (maize, barley, oilseeds, millet, pulses, rice, wheat and sorghum).

Source: Anonymous

B. INTERVENTIONS

Typically, regional trade programming has been carried out through a variety of implementing partners.

RECs, including EAC, COMESA and IGAD (and affiliated business associations) have implemented projects aimed at improving the policy environment for trade. The USAID/KEA mission has also intervened through implementing partners in trade-focused activities such as COMPETE (February, 2009 – August, 2014), EATIH, and Trade Mark East Africa. Furthermore, some capacity strengthening work has been carried out through Africa Lead I and II. Specific value chain interventions aimed addressing technical innovations, diseases, pests, and knowledge management have been channelled through partners such as CIMMYT, ICIPE, CIAT, and ReSAKSS among others. Table 2 is a high-level summary of the main objectives and themes of regional projects since 2011.

Table 2. Main Themes of FTF Regional Trade and Market Integration Investments (since 2011)

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 18

Main Themes of FTF Regional Trade and Market Integration Investments (since 2011)

● Increased access and availability of staple foods (overall food security)

● Increased regional trade flows of staple foods linked to the northern and central transportation corridors (70% of the trade)

● Enhanced trade and integration of regional economic communities and markets (COMESA, IGAD and EAC integration agendas)

● Creation of integrated agricultural markets (integrated value chains)

● Increased trade with US companies (both directions and including through AGOA)

● Trade policy harmonization, with a particular focus on seed trade. There was also significant work on grain trade policy and systems

● Reduced cost of staple foods

● Enhanced capacity of RECs, regional trade associations, and regional development partners

● Enhanced resilience to internal and external shocks

● Increased public and private sector capacity and investment in the agriculture sector

● Increased safety of food (which includes better management of Sanitary and Phytosanitary Standards)

● Increased livestock trade through, among other things, better disease management and standard testing protocols

● Private sector development

● Better access to trade data and knowledge systems (e.g. through ReSAKSS)

Of special interest are regional investments designed to develop the capacity of the private sector. Overall, a significant proportion of USAID’s regional work is focused on either helping to remove bottlenecks that prevent the private sector from thriving or working to directly build the capacity of the private sector. The East Africa Trade and Investment Hub (EATIH), the COMESA Business Council (CBC), and the East African Business Council (EABC) have been the primary mechanisms for engagement of the private sector. Private sector development work has included capacity building through training, troubleshooting focusing on major problematic issues, market linkages, trade and investment facilitation, grants to organisations supporting policy reform for increased investment, and business-to-business (B2B) events, among others. There has also been some limited work with SMEs and micro, small and medium-sized enterprises (MSMEs) – particularly at border points. USAID, through the newly minted private sector policy is taking initiative to strengthen the private sector. Although work has been done to understand and address informal cross-border trade, more is needed in this area. Anecdotal evidence suggests that undocumented cross-border trade continues despite progress being made to improve border efficiency. This raises the question as to whether there are other drivers increasing informal, undocumented cross-border movement of goods.

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 19

C. ACHIEVEMENTS

This section summarises some of the key results of regional FTF investments. In brackets are the key implementing partners.

REGIONAL COMMON MARKET AND CUSTOMS UNION DEVELOPMENT (EAC,

COMESA)

• Establishment and implementation of an EAC Customs Union enabling freer movement of people and goods through a harmonized customs procedures, common external tariffs, and compliance with WTO/WCO for EAC.

• Establishment of an EAC Common Market to liberalize trade in goods, services, cross-border finance, and the movement of people. Work focused on 16 border posts and the EAC region can now be sold as a single market to external investors.

• Continued support to COMESA (including ACTESA) and EAC capacities, organizational development (including payment for staff positions) among others to enable the integration of the two RECs into a true common market.

FACILITATING TRANSBOUNDARY LIVESTOCK TRADE (AU-IBAR SMP-AH)

• Increased livestock trade through the development of regional standards, methods, and procedures for livestock disease management (with a focus on nine key diseases) and the brokering of livestock export relationships with the Middle East.

• Livestock quarantine guidelines published and a regional forum for quarantine management established to harmonize procedures for certifying livestock for export.

• Working with IGAD, MOUs were signed between several ASAL countries on cooperative management of cross border issues such as livestock diseases.

DEVELOPMENT OF TRADE INFRASTRUCTURE AND RELATED FACILITIES (COMESA,

EAC, TRADEMARK EAST AFRICA, EATIH)

• Increased efficiency and reduction of non-tariff trade barriers resulting from USAID regional resources being deployed/leveraged to build strategic access roads, port borders, and infrastructure. Improved systems and processes to enhance regional trade and market efficiency (time, cost, prices).

• A Geographic Information System (GIS) prepared for the regional transport infrastructure networks;

mapping of geographical data generated on roads, rivers, towns and utilities; a Very Small Aperture Terminal (VSAT) installed at the five Ugandan border posts of Entebbe, Malaba, Busia, Katuna and Mpondwe. A fleet management system installed in Rwanda to track cargo movement to Kigali helped identify risks and reduced illegal diversion of transit goods into local markets.5

• Introduction of Single Window Information for Trade (SWIFT) in Uganda and Kenya. To facilitate this, COMESA prepared and modelled procedures for model legal instrument for electronic transactions for customization by states.

• Utilization of electronic and automated customs management systems and procedures at border posts resulted in reduced paperwork, improved efficiency, and increased transparency.

5 These views were shared by stakeholders at a private sector forum in Nairobi, October 2018.

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 20

• Implementation of the East African Warehouse Receipt System, which was not successful, but has evolved into structured trading systems developed in partnership with EAGC.

HARMONIZING OF STANDARDS AND IMPROVING FOOD SAFETY (EATIH, COMESA,

EAC, CIMMYT, IITA, ATTC)

• Launch of a newly gazetted standard for staple foods in East Africa in March 2018.

• Development of the COMESA Seed Harmonisation Implementation Plan (COMSHIP) to harmonise COMESA seed rules and regulations with the ultimate objective of increasing seed production, reliability, trade and competitiveness of the seed industry in the region.

• Establishment of COMESA Variety Release System to encourage investment in seed business in the COMESA Member States.

• Development of the SPS policy measures that facilitate trade in agricultural commodities among Member States and with other countries were developed by both COMESA and EAC. This includes:

o COMESA developed a regional action plan on food safety equivalence with a focus on Aflatoxin developed by Member States.

o Principles and procedures of standards for selected staple foods within the COMESA tripartite arrangement.

o Reviewed the guidelines for COMESA regional bio-pesticides registration and laboratory testing /sampling procedures.

o Developed the Mutual Recognition Framework (MRF) for technical standards and regulations to facilitate intra-COMESA trade (especially for maize).

o Harmonization of SPS measures within COMESA o Capacity building for COMESA Member States; institutionalization of the Multi-Criteria Decision Analysis (MCDA) tool o Assessment done of SPS border operations to get baseline information o Trained on food safety import requirements for trade in horticulture, legumes, maize, fish and fishery products to improve levels of compliance amongst SMEs.

o EAC developed a regional protocol for Sanitary and Phytosanitary (SPS) control including Standard Operations Procedures (SOPs) covering various areas (crops, livestock, fish). A regional SPS bill was drafted in 2013. Five years later, the bill has already been ratified by all Members States, except Tanzania. As soon as the bill is ratified by all countries, it will move to implementation.

• Development of the EAC Strategy and Action Plan on Aflatoxin Prevention and Control and EAC Regional Protocol for Sanitary and Phytosanitary (SPS) Control. The EAC also developed Aflatoxin briefs.

• Development and implementation of harmonized EAC agricultural commodities standards including grain standards.

• Development of EAC harmonized guidelines for the exchange of farm inputs including guidelines for registration of pesticides already adopted by the region and ready for implementation.

PRIVATE SECTOR AND BUSINESS DEVELOPMENT SUPPORT (EATIH, EAC (EABC),

COMESA (CBC))

• Capacity building of SMEs in the region improving their readiness for investment, appreciate alternative source of funding, technical capacity (product development) and shared information. One particular area

USAID EAST AFRICA FEED THE FUTURE STOCK-TAKE REPORT | 21

has been AGOA trade facilitation, where the EATIH has supported Ethiopia, Kenya, Madagascar, Mauritius, Rwanda, Tanzania, and Uganda to increase their exports – facilitating more than $350 million since 2014. Most of the AGOA support is through firm-level technical backstopping, information, market linkages and broader policy support.

• Establishment of SME policies and a regional strategy.

• Business policy advocacy and capacity building (e.g. CBC developed a private sector position on rules of origin and NTBs presented at the Tripartite Business Forum which informed policy development).

• Institutional development of EABC and CBC to effectively lobby with strategy, governance, a Secretariat, chapter development, websites, and activities.

• Strengthening cross-border trade associations.

• Facilitating linkages with the US private sector.

FACILITATION OF CROSS-BORDER TRADE FOR PEACE (COMESA – WITH LEVERAGED

SUPPORT FROM GERMAN DEVELOPMENT BANK (KREDITANSTALT FÜR

WIEDERAUFBAU-KFW) OF EIGHT MILLION EURO)

• Supported 12 Trade Information Desks along six borders between the DRC and its neighboring countries since 2009 to help formalize informal cross-border trade with the ultimate objective being to promote economic opportunities, mitigate conflict, and reduce poverty (see:

https://www.africatradefund.org/projects/project/comesa-trading-for-peace-program-comesa-tfp-4/)

• Funding has been leveraged from other development partners like KfW (the German Development Bank), which has pledged to support the program with €8 million over five years 2013-2017).

• Increased benefit of trade to small-scale cross-border traders to promote economic opportunity.

TRADE DATA AVAILABILITY, KNOWLEDGE MANAGEMENT AND INFORMATION AND

ANALYSIS (RESAKSS, COMESA, EAC, EAGC)

• Improved access to trade data and information for COMESA (COMSTAT) via support to the RECs.

• Conducted studies which informed business plans by regional partners (EAFF and EAGC).

• Strengthened capacity of COMESA Secretariat and state Statistics and Revenue Authorities to improve trade data.

• Establishment of the Regional Food Balance Sheet, designed to provide information on the status of food availability in the region through analysis of food situation…