EAC Coffee Business: Unlocking Trade and Investment Opportunities

Published on 3rd March 2020

Tanzanian Peaberry Coffee with its floral notes. Ethiopian Harrar Coffee grown at over 6, 000 feet above sea level. Kenya AA Coffee with its rich aroma. Uganda’s Good African Coffee with its citrus flavours. Burundi AA Kirimiro Coffee with its hints of spiced clove. Madagascar Excellence Roasted Coffee with its variety of roasts. Cameroon Arabica Coffee with its spicy, mellow flavour. Côte d’Ivoire – Ivory Coast’s Coffee Beans with its bitter and flavourful beans. And I could go on and on. Africa is the coffee bean of the world.

Happily, we find ourselves in a region that has made considerable progress in implementing reforms in these areas. Bold steps have been taken toward more inclusive economic growth and regional integration. This is reflected in the region’s 2018 real GDP growing by an estimated 5.7 percent - the highest among African regions. Economic growth remained strong in 2019, at 5.9 percent and is projected to reach 6.1 percent in 2020. In a period of trade tensions and slowing growth, this resilience is important. 

Against the backdrop of the African Continental Free Trade Area, building on the integration attained by the existing Regional Economic Communities (RECs), Africa has a unique opportunity to prove that openness and regional integration are ingredients for success. With an all-Africa market covering over 1.3 billion people; consumers, businesses and trading enterprises across Africa will have the opportunity to turbocharge their diversification strategies and support the achievement of sustainable development objectives in line with the African Union’s Agenda 2063 and the United Nation’s 2030 Agenda for Sustainable Development. 

The MARKUP initiative is a perfect example of what can be achieved through strategic partnerships, built on shared principles, vision and goals contributing to these crucial shared objectives.

Over the years, the coffee value chain in EAC has witnessed a remarkable transformation. It has established East African coffee in speciality coffee markets around the globe with coffee exports continuing to be an important export and revenue-generating commodity for this region. In fact, the region is increasingly being known internationally for some of the best coffee in the world. I am pleased that the MARKUP project has contributed to the growth of the industry by enabling businesses, particularly Micro, Small and Medium-sized Enterprises, to take full advantage of international markets by addressing the specific challenges that hinder them from moving up the value chain. In an ITC publication launched today - "More From the Cup-Better Returns For East African Coffee Producers" - we see that coffee producers can earn significantly higher margins by transforming their green beans into branded coffee - in essence by adding more value. 

So far, our collaboration and strategic partnership have yielded positive and encouraging results. And this would not have been possible without the partnership and support of the EAC Secretariat and European Union (EU). 

Allow me to highlight some of these: 

• Access to finance is a persistent issue for many MSMEs. This project is trying to address this. For example, the Tanzanian Postal Bank has pre-approved loans worth $400,000 for three small local businesses after reviewing their business plans. The Mambo Coffee Company Ltd from Tanzania received a loan of $1 million as working capital for a coffee export trading business from National Microfinance Bank with a guarantee of 50% by PASS (Private Agricultural Sector Support Trust. 

• Recognizing and meeting standards is an important element of getting to market. In Rwanda, 12 coffee exporters passed an international exam offered by the Specialty Coffee Association focused on how to evaluate coffee’s natural characteristics and flavour. This well-known certificate gives recipients better employment prospects and helps them negotiate better positions with foreign buyers. This was the first time this qualification was offered in Rwanda, and I'm happy to say, the pass rate was 100 percent! 

• Connecting MSMEs to international markets is a prerequisite for trade. Following B2B activities in Germany in June 2019, more than 200 importers met 18 coffee exporters from EAC countries and entered business negotiations worth $5 million. 

• Addressing regulatory barriers is an important part of getting to market. In the EAC, the private sector has been empowered to partner and work constructively with policymakers and the public sector to jointly find solutions to the procedural and regulatory challenges that constrain traders in the region: 

o For example, over 150 public and private stakeholders have been trained in trade facilitation topics and how to leverage the World Trade Organization’s Trade Facilitation Agreement, and are now participating in public-private platforms to drive reforms

o In addition, five national coffee traders’ associations have produced detailed, evidence-based recommendations on how to overcome the procedural and regulatory trade barriers that hinder the coffee sector.

o And we are proud of the 123 Quality Champions that have obtained the Basic Quality Professional Certificate issued jointly by ITC and the World Alliance for Quality.

I could go on. Many more positive results have been registered. But for the purposes of this gathering, I wanted to highlight just a few.

As an implementing partner, I would like to take this opportunity to acknowledge in particular the cooperation and support of the German Development Cooperation Agency (GIZ) for working not only to promote systematic improvements in quality infrastructure but also to ensure that the results and achievements of the MARKUP initiative are effectively measured and communicated.

I am encouraged by the commitment of our project teams, who have learnt many lessons during the implementation period of this project. There have been challenges along the way, but together, we have internalized the constraints and feedback into the project cycle to deliver better results. It is these lessons, which have helped us to become more efficient and effective and have enabled us to register a greater and tangible impact.

But how do we move forward and consolidate this progress? 

• First, the EAC must intensify and reinforce the implementation of the Continental Free Trade Area and ensure complementary measures in investment, production, trade facilitation and trade-related infrastructure. And exporters should endeavour to take full advantage available tools to garner the potential benefits. 

Second, give recognition to the important role of women in the coffee sector -- and their relatively high level of participation in your respective economies. By some estimates, women own between a third and half of all businesses in the EAC region. We must, therefore, put in place policies that underline the importance of skills development and programmes that enable women to benefit fully from international trade. We must ensure that we continue to facilitate women’s empowerment by delivering practical solutions that help women coffee producers and exporters who trade across borders in East Africa.

Third, I cannot conclude my remarks without highlighting the importance of the digital economy. Digital technology plays an increasingly integral component of the movement of goods and services. This is especially true in light of the rise in business-to-business and business-to-consumer platforms.

With this in mind, I am very pleased that the EAC Quality Compass is a new online tool that will help businesses in the EAC regional better understand and address quality requirements of destination markets. 

MARKUP will connect coffee importers from all over the world to the EAC companies that are attending the African Fine Coffees Association cupping session. Coffee exporters will be able to sell their products during a live Mini-Auction that takes place on an online platform for the very first time. 

I urge all partners present, to redouble efforts. Invest in effective trade facilitation mechanisms. This will strengthen regional integration. Stronger integration supports more effective multilateralism. And stronger multilateralism and partnership helps us to achieve the Sustainable Development Goals - which remain our shared compass to prosperity.

by Dorothy Ng’ambi Tembo

ITC Executive Director ad interim  

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