Page 24 - Abyssinia Business Network ABN August 2019

across certification schemes and Great Britain and Northern Ireland simple average tariffs levied by
their different outcome in terms of and the United States. Even African countries on tea imports,
broader developmental gains. though Kenya only exports 15 per reporting the most-favoured nation
cent of its tea to the rest of Africa, tariff rates and intra-African
While Asian countries such as it is the leading player in intra- preferential tariffs . For each
China, India and Sri Lanka retain a African trade, mainly because importer, the difference between
dominant position in the global tea of its exports to Egypt ($173 the most-favoured nation rate and
market, several African countries million), and to a lesser extent, the preferential tariff provides an
are playing an increasingly visible Nigeria ($12 million). The pivotal indication of the potential
and dynamic role. Africa accounted role of Kenya in intra-African tea preference margin that could
for over 20 per cent of global tea trade goes beyond mere export be accrued through the African
exports and 12 per cent of imports flows; its prominence also stems Continental Free Trade Area.
in 2015–2017. In this respect, from the importance of Mombasa
Kenya is by far the leading African as a venue of dollar-based tea Two main observations First, apart
country as the world’s third-largest auctions, where tea from the from a few countries such as Egypt
tea exporter, with a market share of whole subregion is traded under and South Africa, it appears that
approximately the auspices of the East African most-favoured nation tariffs remain
17 per cent during the same period. Tea Trade Association (Trade substantial in the African context,
Tea represents an important cash- Law Centre, 2017; Wambui, even for a product that is not
crop export for a number of other 2015). Over 90 per cent of the particularly sensitive, such as tea.
African countries, especially in tea exported from Rwanda and This is especially relevant since
Eastern and Southern Africa . Uganda and 40 per cent of the tea many of the main African tea
exported from Burundi and the exporters trade with key regional
In contrast, Northern African United Republic of Tanzania are markets such as Algeria or Ghana
countries are the main importers of directed to Kenya, where the tea and other ECOWAS countries at
tea in Africa. Egypt and Morocco is auctioned along with domestic most-favoured nation rates. In this
alone account for over half of total produce. South Africa also imports context, the establishment of the
tea imports, followed by Libya, significant amounts of tea from African Continental Free Trade
South Africa and Ghana .Between other African countries, especially Area could significantly boost
2015 and 2017, about 43 per Malawi, the United Republic of intra-African tea trade, as it could
cent of tea imports to Africa was Tanzania and Zimbabwe. Part extend preferential treatment
sourced from China, another 40 per of such imports are destined for across existing regional economic
cent from within Africa; the rest internal consumption, and part communities, resulting in sizeable
originated primarily from India and for re-export to neighbouring preference margins. However,
Sri Lanka. While over 90 per cent markets, often after blending and these potential gains do not depend
of tea exports from Africa are made packaging. solely on supply responses from tea
up of black tea (overwhelmingly producers, but also on the capacity
in bulk, under HS code 090240), Though tea production is largely to broaden the range of available
green tea, widely consumed in the centred in Eastern and Southern products, notably by moving into
Maghreb region, accounts for over Africa, the regional value chain green tea production to satisfy
40 per cent of the tea imported to extends well beyond COMESA, demand in the Maghreb region
Africa. EAC and SADC. Many existing and by enhancing value addition
and potential trade corridors span through blending, flavouring, final
Overall, the intra-African market across different regional economic packaging or the preparation of
accounts for roughly 25 per communities and might thus be ready-to-drink tea (FAO, 2018a).
cent of tea exports from Africa; unlocked by tariff cuts envisaged
the remainder is sold mainly to in the context of the African Not all these diversification options
Kazakhstan, Pakistan, the Russian Continental Free Trade Area. may be attainable in the short term,
Federation, the United Arab shows through box-plot but some related activities,
Emirates, the United Kingdom of diagrams21 the distribution of such as green tea processing,

22 Abyssinia Business Nework ነሃሴ 2011 / August 2019