Trade

On January 12, 2024, trade between Rwanda and Burundi came to a halt when the border crossing was unexpectedly closed. Food prices in Rwanda may have been expected to fluctuate more than normal as a result—both falling prices for commodities typically exported to Burundi that instead began flooding local markets and rising prices for commodities typically imported from Burundi that faced suddenly limited local supply.

Cocoa bean prices have been rising since the last quarter of 2023, hitting a record high of $10.97 per kilogram on April 19 (Figure 1). The price spike is due to a significant drop in bean production by major global suppliers—four key producing nations in West and Central Africa account for more than 60% of the world's supply of cocoa beans: Cote d’Ivoire (with 38% of the global production in 2022), Ghana (19%), Nigeria (5%), and Cameroon (5%).1

Parts of Southern Africa have been experiencing a severe drought since late 2023, fueled in large part by the ongoing El Niño Southern Oscillation. Falling harvests have led to disaster declarations in Malawi, Zambia, and Zimbabwe and affected countries across the region. In particular, maize yields have fallen sharply, threatening food security for millions of households depending on this key staple for a significant share of total calories consumed on a daily basis (Figure 1).

During 2021 and 2022, global food and fertilizer prices spiked due to several overlapping factors. Demand rose as the world economy emerged from the COVID-19 recession; global supply chains suffered major disruptions associated with the uneven recovery; and the outbreak of war between Russia and Ukraine—both key food and fertilizer producers—generated yet another shock.

Africa’s agricultural sector has the potential to drive important economic growth and development in the region. Agriculture accounts for 16 percent of Africa’s annual GDP and employs over half of its labor force, particularly youth and women workers. Despite the sector’s vast potential, however, African agriculture remains hampered by low resource productivity and little or no value addition; shocks like climate change, ongoing regional and local conflict, and supply and market disruptions resulting from the COVID-19 pandemic and global conflicts have only exacerbated these challenges.