Economic diplomacy for prosperity through intra-African trade

NOW THAT THE African Continental Free Trade Area (AfCFTA) is a reality, countries within the continent need to get to work in dead earnest on how to turn this reality to opportunities. For all the pomp, ceremonies, good wishes, promises, expectations and hopeful outlooks, much work remains to be done. For a continent fractured along the lines of foreign political and economic interests, the fault lines will still remain an important issue to contend with. These include national language differences, currency differences, disparity in sizes of national economies, product specialisations and national economic policies, among others.

The extent to which countries in Africa are ready to give up their sovereignty to pave way for the implementation of AfCFTA is worth examining. The same applies to those of the various existing regional economic blocs such as the ECOWAS, COMESA, IGAD, SADC, etc. Undoubtedly, conflicts will either arise from, or are already embedded in, the new arrangement when juxtaposed with the old, existing ones. Take the African regional economic blocs, the European Union or the World Trade Organisation. Specific points of overlap, duplication, contradiction and reinforcement will have to be identified and sorted out for effective operation and implementation.

It is worth asking if the various participating countries have enough will, human capital and funds to commence timely implementation and streamlining where necessary as a way of taking advantage of global advances in economies. Integration at the continental level cannot afford to be mere paper work. It requires committed and supported foot soldiers, experienced diplomats and visionary drivers. Individual African countries have enough trouble managing their bureaucracies. Much more should be expected on the Africa-wide scale under any single entity. National interests might still float on the surface of many considerations and might stand in the way of any meaningful cooperation. It will be gratifying and reassuring to know that those areas of potential conflicts have been well identified and adequately guarded against.

The claims that intra-African trade has been hovering around 18 per cent for some time reveal a few worrisome and disturbing realities. First, these show that the continent has been prone to external and centripetal political and economic forces for a long while. Secondly, it shows that African nations have generally not been advanced in significant ways as to impact on each other. And if proximal countries embark only on minimal trades with each other, it means not much has been happening to warrant more of such trades. They have not been keen on talking enough to each other. And this is both a cause and consequence of low level of trade relations. Considering the frenzy of interests and excitement that football generates among African countries in continent-wide tournaments, there are signs that Africans can generate such interests among themselves in trade.

Various African countries have embassies and ambassadors in other countries. The low level of trade among these countries is a proof that the embassies have not been doing good jobs, or have not been doing any appreciable jobs at all. Another worrisome situation can be gleaned from the Common External Tariff (CET) and the ECOWAS Trade Liberalisation Scheme (ETLS) that has been implemented to the advantages of some countries at the expense of others. Nigeria, for instance, has been a net loser from ETLS as sharp practices by importers have given rise to the creation of trans-shipment points in the neighbouring Benin Republic. Such importers bring in products that hurt Nigeria’s productive sector of the economy into Benin at lower import tariff and prices lower than what obtains in Nigeria. Such products displace those in Nigeria on the basis of price competitiveness and have largely slowed down the industrial sector in the country.

Some years ago, importers of palm oil from Asia set up tank farm in Benin Republic, brought in cheap palm oil from Malaysia with the perverse intent of selling in Nigeria while hiding under the liberty and cover provided by ETLS. The West Africa free trade arrangement was therefore hurting Nigeria’s local producers while enriching importers. On a long term consideration, this does not bode well for industrial development and economic growth, either for the trans-shipment country or the destination country. This anecdote holds validity for many other countries, products and sectors in Africa. The larger the free trade area is, the more difficult to manage will the arrangement be. Poverty, inherent greed and avarice need to be addressed alongside these considerations as officials saddled with implementation might put spanners in the works. Considering the amount of undocumented transfers of goods across many national borders under the watchful eyes of Customs services, it is convenient to state that smuggling will be a lot more attractive now more than ever before.

Without advanced technologies for record keeping, tracking and surveillance, a lot of paperwork and all the accompanying tedium will make the works untidy and a lot of glitches and shoddiness will go unattended to. Transparency, speed, efficiency and responsiveness will all suffer. Investment in appropriate technologies is therefore one of the foundational actions that should underpin a continent-wide trade relations. We now live in an era of big data. African intra-continental trade will benefit enormously from this. But manpower development, relevant infrastructure and data security measures have to be in place to make a sense of any related endeavour. But, given the fact that not all countries are yet on the same level of knowledge, understanding, dedication and capability, these may take a fairly long time to actualise. We will be eager to know where the central coordination of data will be housed, by which secretariat and how well. A lot of guesswork is hitherto being done in data related activities in Africa, on national and regional levels. These will have to be changed.

The roles of private enterprises in the implementation of AfCFTA programme will need to be clearly and unequivocally spelt out to avoid making the initiative a mere political jamboree. Africa’s economy remains largely informal. This poses its own peculiar problems such as visibility, resilience, scale and sustainability. How AfCFTA factors these into their operational roles will be of great interest. Without prejudice to new aspects of economic cooperation and emergence of regional currencies such as the ECO (for ECOWAS countries), sound basis for sectorial growth and development need to be established. Otherwise, these grandiose arrangements will have to struggle against strong socio-political and economic headwinds that would reduce their effectiveness for a long time to come.

As the legal underpinning of the entire AfCFTA begins to unfold, it will be of interest to know how AfCFTA operates as a complement to the World Trade Organisation in fostering multilateral trade. Mechanisms that promote reciprocal trades need to be deliberately put in place in Africa. These may be circumstantially and substantially different from the conventional on the basis of Africa’s peculiarity. Officials of the various countries’ governments need to get down to basic and be as pragmatic as possible. Nigeria, for instance, imports a lot of apples from South Africa. Surprisingly, South Africa prefers to import banana from Ecuador, a South American country, despite the large volume of banana produced in Nigeria. Correcting situations like these are important and need urgent action.

Diplomats have a lot of roles to play here. While it is good to attend trade shows in the US, Europe or Asia, African countries need to give more emphasis to intra-African trade shows, with national diplomats identifying areas of possible collaboration to create better economies through improved trade relations.

Diplomacy among and between African countries has hitherto not spawned vibrant economic activities. With renewed efforts, however, and especially with the coming of ACFTA, it is expected that government representatives on diplomatic missions in various other countries will play prominent roles in bringing the continent together for robust trade relations, prosperous economies and sustainable growth. As AfCFTA unfolds and the roles of various operators become clear, it is hoped that official representatives of governments will play their roles well in repositioning the economy of Africa for the future.