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Free Trade, Political Hurdles
Posted on April 21, 2023 14:23
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Progress towards an African Continental Free Trade Area continues, but at a glacial pace. While benefits are obvious, vested interests raise obstacles.
Africa has aspired, from early post-colonial days, to unification in one form or another. Perhaps the obvious success of the United States of America invited copying. Since its inception in 1963, the Organisation for African Unity (OAU) has aspired to unite its member states, and its successor, the African Union (AU), perpetuated this. At its 2018 summit, the AU adopted an African Continental Free Trade Area Agreement, soon ratified by the requisite number of member states.
Africa still presents a highly fragmented economic picture. Despite having 16.7% of the global population, Africa generates only some 3% of global trade, and only around 11% of African trade is with African countries. This compares somewhat with Europe in the 1700s and 1800s. In a sense, Africa is still colonized economically.
A number of Regional Economic Cooperation groups exist and have done much to erode tariff- and non-tariff barriers, but they have differing regulations, institutions, and practices, raising the level of complication to yet another level.
World Bank studies suggest that the removal of such intra-African trade barriers could have a significant effect: 30 million people could be lifted from poverty by 2035, real income could increase by US$450 billion, exports could increase by 29%, exports to non-African countries could increase by 19% and intra-African trade by more than 81%.
There might be further benefits. Value added to African raw materials could create significant local industry, and small enterprises, many run by women, might benefit. An example: Belgium and Switzerland produce the best of the world's chocolate, neither produce the raw material. Germany was, at one stage, the biggest coffee exporter in the world, and again it does not produce a single bean. Uganda produces some of the best coffee in the world, but Ministers would offer guests Nescafe.
There is another angle to greater economic integration. In a brilliant speech to the European Parliament, King Willem-Alexander of the Netherlands pointed out that, for the first time in half a millennium Europe had been free of war due to the existence of the European Union. This speech is now unobtainable because the King, so his courtiers insist, does not get involved in politics. But one may ask whether the war in Ukraine would have occurred if Kyiv and Moscow were members of a European Union.
However, and you knew there would be a however, didn't you? African predators, human and otherwise, have since time immemorial learned that hunting is easiest where there are barriers. Customs barriers are notorious as a way to raise cash. Sovereign power is jealously guarded by African leaders, including their power to control trade and the movement of goods.
The war in Eastern Congo caused thousands of deaths, and the displacement of millions, has at its origin a struggle for control over mineral wealth disproportionate to the poverty of the population.
A Free Trade Area will not be a walk in the park, but it is essential.
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