New models for increasing producer benefits through sustainability standards and trade in Africa

The potential for sustainable trade to be a catalyst for socially and environmentally sound development on the African continent is enormous. How can new partnerships and approaches to developing and implementing sustainability standards in Africa drive more benefits to producers?

Despite its enormous size, the dynamism of its inhabitants, and the natural riches of its territory, the African continent accounts for less than two percent of international trade. Given the potential of sustainable trade flows to be a driving force for achieving the Sustainable Development Goals (SDGs), the question of how African producers can benefit from sustainable value chains (GVCs) is crucial to answer.

The reasons for Africa’s lack of connectivity to global trade are many and complex. The newly-ratified Trade Facilitation Agreement (TFA), aid for trade programmes, and other approaches aim at addressing some of these structural issues. However, for GVCs to contribute effectively to sustainable development, their development has to go hand in hand with responsible business conduct and social and environmental safeguards.

Credible sustainability standards systems are tools for promoting sustainable trade flows. By defining sustainable performance for a certain production process in a transparent and inclusive manner and coupling this to independent certification or verification, sustainability standards systems are increasingly shaping global trade flows. This article reflects on how the use of sustainability standards in Africa can foster new value chains with the potential to accelerate the continent’s progress towards the SDGs.

Sustainability standards, sustainable value chains, and the SDGs

Complying with standards to gain access to international markets is nothing new for producers and exporters in Africa. In export-oriented industries such as mining or agriculture the use of quality and safety standards are common. Companies operating in African countries are well aware of the need for complying with technical, quality or safety standards (for example HACCP, GlobalGAP, or ISO14000).

Apart from such standards, voluntary sustainability standards have a wholly different scope; they address a range of production factors ranging from labour rights to waste management to biodiversity protection. In doing so, they go beyond mere quality or safety issues. Their criteria and requirements are linked to one or more of the 17 SDGs meaning that the implementation of a credible sustainability standard by a company or producer can contribute to achieving SDG progress.

In contrast to their increasing role in global trade, the uptake of credible sustainability standards in African countries is limited. Exceptions include the West-African cocoa producing countries, where standards systems such as UTZ, Fairtrade, organic, and Rainforest Alliance have a long track record in creating sector-wide changes by providing incentives to producers.

Challenges

Despite these inroads, sustainable production verified by independent standard systems is still rare and represents a fraction of Africa’s total production in any sector.

The adoption barriers that prevent the implementation of sustainability standards in Africa are not specific to the continent. They are prominent in many contexts characterised by poor regulatory and governance capacities. One specific challenge relates to the lack of clear property rights, especially land tenure and use. The informal and fragmented nature of smallholder production is another important factor, which in turn complicates access to credit and investment. In this context, the costs for producers to implement sustainable practices and undergo assessment to a standard is high and upfront finance difficult to obtain.

Many efforts, often supported by international cooperation and investment, have sought to overcome such barriers. However, a recurring problem is the lack of clarity on consistent, long-term demand for sustainable certified products, which prevents producers from assessing the potential returns on investment.

For each of these challenges, there are high expectations and limited abilities for sustainability standards to address all of the issues on their own. To be accessible, effective, and impactful, sustainability standards require coherent and concerted support efforts that bring together producers and their communities, policymakers at various levels, and coalitions of private actors (retailers, traders, investors, etc.) committed to achieving sustainability goals. The need for such partnerships is nowhere greater than in Africa.

Transforming African markets through new partnerships

New partnerships – especially partnerships with governments – offer new potential for producers to access international markets while making progress on sustainable development. These partnerships involve building local ownership and capacity to meet the standards, while also ensuring a connection to the demand side in consuming markets and reducing compliance costs through new models.

One ongoing effort is the creation of sustainable cotton value chains in Africa through the Better Cotton Initiative (BCI) and its Better Cotton Standard System (BCSS). The African continent provides around 5 percent of global cotton production, and cotton production is the mainstay of the livelihood of more than 2.5 million Africans. The BCI was established to improve cotton production practices globally and has taken off in three major African cotton-producing countries: Mali, Senegal, and Mozambique. Through strategic partnerships, BCI engages stakeholders in these cotton-producing countries to implement the principles and practices set by its standard. Government extension services are strengthened by the BCI’s support, thus facilitating sustainability improvements and compliance with the BCI standard. Importantly, the BCI and its partners are supported by an increasing number of buyer commitments from large producers and retailers, which ensures export markets and reduces price volatility.

Another example is that of South Africa’s experience with the Marine Stewardship Council (MSC) certification for its hake fishery. This certification played a significant role in allowing the South African hake sector to weather the 2008 financial crisis by ensuring strong value-added export markets for its sustainably-caught fish. The government of South Africa has been a strong partner for the implementation of MSC. Specifically, the government has developed the Government’s Offshore Resource Observer Programme, which contributes scientific data and enforcement capacity to ensure that fish trawling is sustainable, resulting in a “co-management” of the fishery that leverages the strengths and resources of each partner.

Standards and beyond: Can policymakers create positive incentives?

The use of sustainability standards as building blocks for sustainable supply chains is already opening up promising avenues. The above examples are not just illustrations of how new partnerships are making sustainability standards more accessible to African producers; they also indicate a renewed interest of governments in producing countries to engage with standards systems constructively.

However, to create sustainable trade flows, governments have a range of unused options at their disposal to provide strong incentives and ensure that adoption of credible sustainability standards makes economic sense for producers.

Various trade-related instruments already integrate commitments or provide trade benefits linked to sustainability, for example, the Generalised System of Preferences (GSP) and free trade agreements (FTAs) – which often integrate sustainability aspects, but without effective enforcement. Other instruments, such as EU regulations and directives, have been developed to focus on specific issues such as illegal logging and conflict minerals, and offer strong incentives to ensure that supply chains leading into Europe are more responsible and sustainable.

Governments could facilitate the trade of sustainable goods further by revising their GSP frameworks or other trade-related benefits (subsidies, development aid, etc.) to go beyond the country level and target the sector, cluster, or individual firm level – using credible standard systems as the basis for an effective co-regulatory approach to provide such incentives.

Aside from trade-related measures, stronger demand can be mobilised at national or subnational levels. The implementation of sustainable public procurement has been an impactful way for policymakers to incentivise sustainable GVCs. A more recent development is the rise of multi-stakeholder sectoral “covenants” in countries such as Germany and the Netherlands, whereby governments aim to lock in whole industries towards greater sustainable sourcing. A promising measure, although untested so far, would be to reduce the value-added tax for sustainably-produced products, something which national governments could decide unilaterally to offset the additional costs of sustainable production.

In all of this, it is important to underline that credible sustainability standards provide the most accurate and transparent way to enable differentiation based on sustainable and responsible practices. Under the WTO’s Agreement on Technical Barriers to Trade, governments are asked to take “reasonable measures” to ensure that standards operating within their jurisdiction meet WTO principles and disciplines. Governments should take WTO norms into account when using private sustainability standards in public policy that affects trade and only work with standards that are accessible, transparent, and minimising overly burdensome requirements. To do this, a growing body of information is available to policymakers to understand the differences between different types of sustainability standard systems, including ISEAL’s Codes of Good Practice, the ISEAL Credibility Principles, and the Standards Map of the International Trade Centre.

To unlock the potential of sustainable trade for African producers and markets, public and private actors will need to collaborate to provide enabling conditions, immediate investments, and long-term incentives. Credible multi-stakeholder sustainability standards offer themselves as points of convergence for such collective efforts.

This blog was co-authored by Joshua Wickerham and David D'Hollander and first published on Bridges Africa, ICTSD. Read the full piece here.