The recent signing of the Continental Free Trade Area (CFTA) for Africa brings us a step closer to the dream of a united Africa, one of the goals under the African Union’s Agenda 63, aimed to achieve the “Africa We Want”. But a game plan is needed if Africa is to hold its own amid globalised economic competition.
“Seek ye first the political kingdom, and all else shall be added unto you”, Ghana’s first president, Dr Kwame Nkrumah, entreated Africans. For Nkrumah, the “political kingdom” meant not just the political liberation of a single African country, nor even all the countries of Africa, currently numbering 55. It meant reversing Africa’s colonial balkanisation to reunify the continent as a single pan-Africanist political entity, a union of African states. With political union, Africa would be in a position to compete economically with the advanced industrialised countries of the world.
Some 60 years later, with the political unification of the continent still a distant prospect, efforts to launch the AfCFTA are predictably not moving in a straight line. Two of Africa’s biggest economies, Nigeria and South Africa, have held back from signing the agreement, on the grounds that they needed to consult interest groups and other stakeholders at home.
Nigeria did not hold back from expressing its fear that Africa’s less protected economies would be used as conduits for the world’s biggest exporters to dump cheap goods across the continent, thereby threatening its industrialisation project.
Such fears are quite real. The free trade agreement as it stands is yet to specify the rules of origin, making it politically sensitive in both countries.
But these fears can be addressed when Africa’s citizens, business leaders and politicians come together to agree on and implement a pan-Africanist strategy for economic development that would enable even the smallest African economies to draw strength from an expanded continental market and survive competition by global forces.
As the founders of the Organisation of African Unity recognised, unity was needed to avoid “economic friction” and “bitter political rivalry”, the points made by Nkrumah in the conclusion to his 1963 book, Africa Must Unite.
For despite the fears, the arguments for economic union are quite compelling. Economies of scale, job and income opportunities and mobility of investment capital were some of the arguments reiterated recently by AUC Deputy Chairperson, Ambassador Kwesi Quartey, speaking at the 51st Conference of African Ministers of Finance, Planning and Economic Development in Addis Ababa.
“How to boost African production and move the continent from its position as a producer of primary commodities and exporter of raw, unprocessed goods has been a preoccupation of Africa’s leaders since independence.”
African integration would deliver the prospect of a combined African GDP of over three trillion dollars a year, boost consumer spending to about US$1.4 trillion in 2020 and increase intra-African trade by as much as US$35 billion a year, or 52% above the baseline by 2022, Ambassador Quartey pointed out, adding that boosting intra-African trade is the most effective route to African growth and development.
“But in order to trade,” Ambassador Quartey said tellingly, “Africa first has to produce – and not just primary commodities. We must begin to apply science and technology to production.” Encouragingly, he added: “Statistical evidence has demonstrated that intra-African trade has tended to be mainly in processed foods; that is, goods and commodities to which value has been added.”
How to boost African production and move the continent from its position as a producer of primary commodities and exporter of raw, unprocessed goods has been a preoccupation of Africa’s leaders since independence.
To address this question, Nkrumah brought some of the world’s leading development economists to Ghana, the first black African country to achieve political independence from European colonialists.
Among Nkrumah’s advisors was Albert Otto Hirschman, a German economist to whom is attributed the expression “linkages”. Today, our understanding that economic development depends on creating backward and forward linkages between agriculture and manufacturing sectors is due to Hirschman’s work in the 1950s and 1960s.
Hirschman argued that the needs of a developing economy are so vast and the obstacles to manufacturing so great that what is needed is to identify sectors for investment that have the potential to drag the rest of the economy behind them. Hirschman’s strategy for economic development implies a level of specialisation that could serve the AfCFTA in two ways.
In the first place, specialisation, be it in food processing, textiles production or other activities often observed in the early phase of a country’s industrialisation, is the secret to productivity increases. This is why secondary production in manufacturing always outperforms primary production in agriculture in terms of productivity gains.
Secondly, specialisation among groups of countries with particular comparative advantage in certain areas – let’s say in the manufacturing of chocolates, cement or aluminium sheeting in one part of the continent; gold and diamond rings in another; and fertilizer and pharmaceuticals in yet another – could result in the optimal use of Africa’s resources towards the production of goods for the kind of mutually beneficial intra-African trade that would boost employment and minimise the tendency of countries to undercut each other.
Agreement at continental level on how countries produce and export what goods under what conditions could ensure a level of collaboration and commitment to a common goal that would meet Agenda 2063’s aspirations, both for a “prosperous Africa based on inclusive growth and sustainable development” and for an “integrated continent, politically united, based on the ideals of Pan-Africanism and the vision of Africa’s Renaissance”.
Within a sector such as textiles, for example, different countries and regions have different products and specialisations that could be recognised as unique and accorded particular status, for example in the case of hand-woven kente cloth in Ghana or bogolan in Mali.
Textiles is an area of manufacturing that is particularly instructive because of the much-reported collapse of textile firms across the continent under the liberalisation policies of the 1980s and 1990s. China’s visible rise since the early 2000s and its aggressive dumping of copycat signature African textiles with fake African trademarks, a form of unfair competition, calls for a continental approach to the protection of high-potential African manufactures.
Indeed defending Africa’s interests is one of the goals of Agenda 2063. Since the cost of patents is far beyond the means of most individual African producers, and not always culturally appropriate, support for the establishment of community or sub-regional patents and copyrights is one area in which the intellectual property rights of African textile producers could be facilitated by the African Union in its quest for transformative leadership to drive Agenda 2063.
Within such a scenario, countries with fewer natural endowments in terms of population or natural resources would also find their place, making them less willing to be used as conduits for the illegal dumping of fake or overproduced goods from other regions of the world.
Moving through the early stages of the production of basic goods and services towards production of an increasingly sophisticated range of products demanded by a technologically savvy and growing youth population, while respecting African values of reciprocity and collaboration, could go a long way towards creating the Africa We Want. For too long it has remained a dream.
Dr. Dede Amanor-Wilks is Director of Communications & External Relations at the African Center for Economic Transformation (ACET) and a specialist in economic development. The views expressed here are those of the author and not necessarily of ACET.
This blog was first published by Africa Portal