Gold, cocoa and oil are goods that are sought-after globally. And they can all be found in abundance in Ghana.

This explains why the West African country earns more from exports than it has to pay for imports.

To receive beneficial export conditions, Ghana granted market access to trading partners for suboptimal returns.

Here’s an example that shows how complex the effects of such trade agreements can be - and why export surpluses can belie a situation where some people will lose out.

For example, 80% of chickens in Ghana do not come from local producers, but are instead flown in frozen from Europe, the US or Brazil, where breeders often only use the breast fillet domestically and sell the rest to foreign markets.

READ | Africa: What oil producers can do to counter price shocks

Despite having to pay 30% import duties, imported chicken can still be up to 35% cheaper than local products, according to a study from 2023, making chicken farming increasingly unattractive in Ghana.

“If you produce the chicken, they’re not buying it. So you can’t produce it,” said Charles K Donkor, chair of the Poultry Farmers Association in the Ashanti region, who runs a farm with 200 employees, where thousands of laying hens are kept, supplying eggs rather than meat.

He explained to DW:

Treaties: Free trade for large parts of Africa

To understand the context of the current situation, some background is necessary: For half a century now, a growing number of treaties and agreements have been designed to ensure mutually beneficial trade between Europe and Africa - at least in theory.

It all began in 1975 with the Lome Convention between the then-European Community and the then-newly founded Organisation of African, Caribbean and Pacific States (sometimes abbreviated as OACPS, other times as ACP Group).

Sub-Saharan Africa accounts for around half of the 79 member states of that convention.

The Lome Convention and its successors - named after the respective summit locations: Cotonou (2000) and Samoa (2023) - are considered to be the framework agreements on which regional and bilateral free trade agreements are based.

A total of 44 of Africa’s 54 countries have duty-free access to the EU’s internal market this way, with many also having to abide by so-called “everything but arms” rules for trade with developing countries.

This overall arrangement, however, does not always result in mutual benefit.

Trade between Europe and Africa growing

DW has analysed trade flows over the last 25 years, although no data is yet available for 2025.

There has been a clear trend developing since the turn of the millennium: Trade volumes between Africa and Europe are growing in both directions.

In the recent past, African economies tended to have an overall trade surplus with Europe.

That is, they earned more euros from exports than they spent on importing European goods.

However, there are major regional differences: These export surpluses are largely attributable to oil and gas from Libya and Algeria, while in Nigeria and Angola, the trade in fossil fuels is also flushing European foreign currency into state and private coffers.

From 2020 to 2022, the value of these exports to the EU has more than doubled.

At the beginning of the Covid-19 pandemic, crude oil was traded very cheaply at times; then, with the start of the Russian invasion of Ukraine two years later, the commodities market saw immense price increases.

There’s also Côte d’Ivoire, an outlier that generates a significant surplus with its cocoa and rubber exports.

By contrast, however, more than half of African countries have a negative trade balance with Europe.

Africa still more dependant on foreign favour

There are important factors beyond the overall balance too: African exports to Europe fluctuate more strongly, while trade flows from North to South appear to develop more evenly.

This is because Africa exports many raw materials, the price of which is formed on the world markets, while Europe typically moves at least partly developed and processed products for the most part.

Africa is therefore much more dependent on Europe as a buyer than the other way around, explains Anja Berretta, Head of the Africa Regional Economic Programme at the Konrad Adenauer Foundation, which is affiliated with Germany’s centre-right Christian Democrats.

“Exports of goods from Africa to Europe amount to around 25%-30%. But the African market is negligible for Europe,” says Berretta.

“The products that come from Africa are largely unprocessed products, for example, in the agricultural sector, but also other raw materials.

“Conversely, Africa imports industrial goods or products from Europe that already have a certain degree of manufacturing.”

A look at the data confirms this picture: If you only look at the largest product groups in the vegetables and minerals and processed goods sectors, you will see how one-sided the movements of these products are in either direction.

Growing potential for more trade between EU and Africa

“There is currently an imbalance to the detriment of Africa,” according to Berretta.

“Not only with Europe, but also with China, America and other regions of the world. But from my point of view, you can’t say that Africa is being kept structurally small.”

Most African economies have failed to reinvest the commodity profits of previous years back into their respective markets, and so have failed in diversifying their industries, she adds.

Berretta cites Ghana and Mauritius as positive examples, whose industrial policy is geared toward diversification in order to ensure that individual price fluctuations will be cushioned.

Joseph Matola, an economics expert at the South African Institute of International Affairs (SAIIA), thinks that within this imbalance, there lies an opportunity to expand trade for mutual benefit.

“The EU is looking to diversify and de-escalate its [readiness to take] risks from the United States, given the change in the policy landscape of the United States,” Matola says.

“Europe is actively looking at other markets. They’re looking for suppliers of critical minerals. And I think Africa has a lot of these minerals that the EU needs.”

African free trade zone still a work in progress

Matola also stresses the need for African governments to prioritise the export of processed products so more value and growth can be created locally.

To this end, the EU has pledged its support through its Global Gateway Initiative, with investments of €150 billion ($173 billion) committed to infrastructure and energy production in Africa.

Africa is also trying to get the African Continental Free Trade Area (AfCFTA), which entered into force in 2021, fully up and running.

The 55-member free trade zone remains a long way away from fulfilling its promise to dismantle barriers to economic exchange.

Berretta believes that great potential for European exporters lies in the project, since AfCFTA is intended to standardise markets and reduce so-called non-tariff trade barriers.

“By this I mean, above all, the long waiting times at the borders, the sometimes-completely different customs conditions, but also the very poor infrastructure.

“For example, if you try to get your goods from Namibia to Kenya, it takes a really, really long time. Any improvement in this area would make African markets much more attractive,” he says.

Could this free trade zone eventually lead African governments toward pooling their diplomatic weight in economic agreements?

Matola is hopeful.

“They should use the AfCFTA as a negotiating platform instead of acting alone. It would be helpful if many African countries did this,” he says.

This article was originally published on dw.com.