by Japheth Omojuwa
Africa would begin to trade with itself when African countries produce the finished goods needed by Africans. The other factors that have often come on the radar for blame have since been improved upon but there has not been a proportional increase in their expected effects.
African unity has been a feel good phrase for many Africans for over half a century. Ghana’s legendary Dr. Kwame Nkrumah pushed for one Africa and his efforts along with that of others established the Organisation of African Unity (OAU), which has since metamorphosed into the African Union (AU). 50 years since that idea of one Africa, certain realities point to anything but that. To be clear, this is not about whether African economies are doing well – commodity prices and the demand for same by the likes of China, India and the regular suspects in the West has helped to place many African countries on the world’s fastest growing economies’ list. We should look beyond that though, because in the midst of this seeming forward movement in the African economic reality, a lot would happen if we fixed an age-long African challenge; Africa remains disconnected within
Economics is a phenomenon based on incentives and disincentives. It is based on the realities of cost and benefits. This writer believes that Africa’s poor trade numbers within itself has been made to remain virtually the same way because the arguments for African integration have focused more on the political side. This is the part where unquantifiable feelings like brotherliness, unity and the sense of “if we don’t come together, we can’t fight our enemies” amongst African leaders over the years dictate the need for Africans to come together. You can make out who these enemies are for yourself. The problem with this debate is that investors do not move their capital based on this feel good factors, they do that based on returns. It is time to move the question of African integration away from political expediency to the point of economic necessity. If Africa trades with itself, the politics of unity and brotherliness will take care of themselves.
60 percent of the trade carried out by European countries is within the European continent. 40 percent of trade by North American countries is within the continent. In Africa, the number is 12 percent. The difference says more than just the arithmetic disparity between these numbers; it says everything about Africa’s economic development as a whole. To fix this challenge, one must look at the major factor militating against trade within the continent.
Many analysts point at inadequate infrastructure as a factor. It is not a factor in itself; it is the consequence of the challenge not the cause. The necessity of moving raw materials from the continent to Europe forced the hands of the colonial governments to build the enabling infrastructure for the export of the materials away from Africa. The raw materials were not readily transported because the infrastructure was there, the need for the exportation brought about the infrastructure. A need created the purposive construction of rail lines and seaports to shift Africa’s resources away. I’d think the fundamental reason Africa does not trade with itself is because African countries do not produce enough of what the continent needs. Most of the African economies are similar in that they mostly export raw materials. There has not been a concerted focus on creating finished goods. This has meant that most of the countries look abroad for their finished goods.
Africa would begin to trade with itself when African countries produce the finished goods needed by Africans. The other factors that have often come on the radar for blame have since been improved upon but there has not been a proportional increase in their expected effects. Poor telecommunications infrastructure within the continent was blamed for the inability of most African countries to expand on intra-Africa trade. This has been more or less fixed because Africans are now more connected by mobile phones more than they have ever been. Banks like Ecobank and some other Nigerian banks are making intra-continental business transactions as easy as ever. I get to pay columnists on my website by just making direct bank transfers to their accounts in other African countries. It is now far easier to move from one African country to another. Mind that the free movement of Africans within Africa needs a lot of improvement but we are very far from the days of almost impregnable borders. All of the factors are a consequence of inadequate trade amongst African countries not the cause.
If Cote d’Ivoire becomes a maker of chocolates instead of just exporting cocoa, Nigeria, Ghana, Liberia and the likes would have found a need to create the channels to connect with Cote d’Ivoire’s chocolates. If Nigeria refined its petrol and produced other finished products from the refined crude, other West African countries will see economic reasons to open their borders for such products. When these become the norm across the regions, the roads and railways will open up, the waterways will become busy and a network of trade would have been created across the regions and the continent at large.
We are approaching this reality. Several projects are either ongoing or in the pipeline to connect Africa with itself. The development of the Trans-Sahara Highway that connects the West of Africa with the North will help close the obvious gaps in the relationship between North Africa and the rest of the continent starting with the West. Trade within the North African region is actually worse, accounting for just about 5 percent of the total carried out by the countries. You would expect the seeming homogeneity in culture to defy economic principles but it is what it is; people will only trade with you if you have what they need or if you make them need what you have. Apart from the Trans-African Highway network projects like The Lagos-Mombasa Highway, the Beira-Lobito Highway, the Algiers-Lagos Highway being financed and developed by development partners, several African countries are indeed committing to opening up inter-country road routes. Ethiopia this year completed a deal to construct three road projects that’d link the country up with Sudan. The World Bank is also financing a Kenya – South Sudan road.
The ideas for some of these projects are older than the African Union (as OAU) itself. It is important for African countries to start thinking of a next stage for their economic growth. This commodities led growth has been jobless. They have come without jobs because these are capital-intensive projects. These countries must begin to focus on Agriculture, the Services sector and of course Manufacturing that are not only going to expand the continent’s growth potentials, they also come with jobs. Revenues generated from commodities should be used as a form of seed to diversify these economies and not as the harvest itself. You cannot have an economic harvest where jobs are not being created.
Finally, as noted above, when African countries start manufacturing at a level that necessitates finding markets for the finished manufactured goods, abandoned trans-African road projects will be completed, new road projects will be needed, rail lines will appear, more African countries will have direct flights to other African countries because when this happens, African countries will naturally look within the continent for their finished goods. So then, African integration is more an economic question than a political one. What do you think?
Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.