By Kelechi Deca
Something happened last week that made me to start reappraising how best Africa as a continent can either engage, or disengage with the global trading system in the face of the disruptions associated with the United States tariffs. It is no more news that Africa is at the cross road of the global trading system which is heavily stacked against the continent. However, what is more disturbing is that Africa has been shooting itself on the foot by the inability to expand trade amongst itself.
Africa’s share of global trade remains relatively low, hovering under 3%. This is despite the continent’s vast resources and potential, its contribution to global trade is disproportionately small mainly because commodities have continued to form the mainstay of African economies, yet the continent plays only a modest role in global commodities markets. The inability to identify regional opportunities for diversification and value addition specifically focusing on agriculture, energy and metals remains a thorn in the flesh of its quest for economic independence.
Intra-African trade currently accounts for approximately 15% of Africa’s total trade. While this percentage has seen some growth in the last few years, it still lags behind other regions like Asia (over 55%) and Europe (over 70%).
This is why it is imperative to examine the call by the President of Angola at a recent gathering in Luanda that “It is time to replace the logic of aid with the logic of investment and trade.” President João Lourenço who joined other African leaders for an urgent review of U.S. tariffs on African exports, urged for a shift towards transformative partnerships and investment in Africa’s economic potential.
Against the backdrop of changing trade and geopolitical dynamics, there is the need for Africa to seek ways of engaging development partners and reassessing existing trade and business relationships. This was given wings recently by the African Union Commission Chairperson Mahmoud Ali Youssouf who pointed out that “We’re not seeking aid, but building co-created solutions.” The AUC Chairperson called for the removal of punitive tariffs and visa restrictions, noting that Africa’s 1.3 billion people and abundant resources remain among the world’s most significant untapped economic opportunities.
The outgoing President of the African Development Bank (AfDB) Dr. Akinwumi Adesina has joined other leaders of the continent is requesting for the review of high tariffs on Africa, in his words, “We should review the high tariffs on African countries. What is needed is more trade between Africa and the U.S., not less.”
While the need for the continent to demand for reviews of punitive tariffs, especially by the United States, is imperative, there is need for Africa to explore opportunities within its vast borders and peoples. Africa has not shown high levels of responsibility in looking inwards and coming up with ideas and strategies for self support. Supporting the call, the African Continental Free Trade Area (AfCFTA) Secretary General Wamkele Mene reinforced Africa’s integration agenda, highlighting the importance of open regional markets. “The undertaking of the AfCFTA is an ambitious one—It has to be ambitious,” Mene said. He emphasized that the success of AfCFTA is essential to scale investment, reduce fragmentation, and accelerate industrial development across the continent.
Some of the challenges facing trade in Africa could be intriguing, if not shocking. This is because a lot of the obstacles are within the powers of African leaders to address. Take the Yamoussoukro Decision for example. Based on the Yamoussoukro Agreement, is a treaty adopted by most members of the African Union (AU) which establishes a framework for the liberalization of air transport services between African countries, as well as fair competition between airlines. The Decision was signed by 44 African states in 1999, and became binding in 2002.
The treaty grants first, second, third, fourth and fifth freedom transit rights between all its signatories, granting airlines based in member states greater freedoms in each others’ airspaces. It also seeks to eliminate restrictions on ownership of airlines as well as capacity and frequency limits on routes between signatory states.
As great as this idea is, and inspite of holding the key to unlock its practical implementation has faced lots of stumbling blocks over the years because some African countries have been foot-dragging with full implementation. The cost of travelling across Africa is the highest compared to other continents because of the challenges of open sky. This is why in in 2018, the Single African Air Transport Market (SAATM) was launched, with the intent of fully implementing the Yamoussoukro Decision.
Aside from the challenges of air travel across the continent which hinders movements of persons, another major challenge is the movement of goods and services. According to a study carried out by the African Union Commission in 2016, it is cheaper to ship a 50 feet container from Guangzhou China to any port of in Africa, that from say South Africa to Nigeria.
The need for Africa to navigate its way from aid dependency towards self sustenance has been on the front burner since the Trump administration started cutting America’s global development assistance commitments. This development calls for a major shift in both economic policy formulations and geopolitics. The continent needs transformative investment partnerships to unlock Africa’s trillion-dollar potential.
Kelechi Deca, a journalist and public affairs analyst writes from Lagos.
