Africa opens world’s largest single market (5)

TRANSBORDER COMMERCE ACROSS Africa is likely to be an interesting reality under the new Free Trade arrangement. One of the indices expected to improve is the value of intra-African trade, expected to boost trade beyond the 18 per cent that has been reckoned as insignificant since the past couple of years.  This does not, however, preclude international trade between Africa and elsewhere outside, such as Europe, Asia, Middle East or the Unites States. It presumably includes, but not limited to, commodities and other physical goods. However, Africa has not been known to have performed well in knowledge and information goods trade for obvious reasons.

The first thing to note is the amount of money spent every year on Research and Development (R&D) by State-Own Enterprises or by private companies as the case may be. While there has been a preponderance of commodities mainly from the extractive industries, Africa’s trade in knowledge goods has been relatively low – an area that Africa has to develop if it must grow economically and take good advantage of the nascent AfCFTA. In particular, Africa has not been big enough in the global knowledge economy, which is driven partly by intellectual property.  The World Intellectual Property Indicators published in 2017, on patents, indicated that, “for the first time, more than 3 million patent applications were filed worldwide in a single year” in the previous year, up 8.3 per cent from 2015.

The percentage of this that came from Africa, in all likelihood, was negligible, despite the work of the past four decades on strengthening Africa’s intellectual property (IP) system through the African Regional Intellectual Property Organisation (ARIPO), which administers four protocols covering patents, utility models, industrial designs, marks, new varieties of plants, traditional knowledge and folklore. The growing market of knowledge goods and the attendant increase in relevance of intellectual property rights (IPR) warrant some deliberate considerations for the subject within the context of Africa-wide commerce. But Africa will still have a lot to grapple with on trade in knowledge goods when considered within the ambit of AfCFTA. As applicable to intellectual property issues, patents are territorial and require official presence in any geo-political terrain where applicable. 

While some would argue that Africa has not scratched the surface in intellectual property-based economy and needs to encourage inventions, others might say that patents do not seem to be rewarding and so do not require such an elaborate action. But most African countries are notable for operating on outdated laws that urgently require amendment and, sometimes, replacement. How the various regimes of patents will affect the fortunes of countries within and outside Africa will vary from country to country. For instance, a patent is valid for 20 years in Germany, France or the US, but valid for 15 years in Angola, Ethiopia, Gambia, or Madagascar, but may be even less, as in Tanzania and Namibia. Harmonising the prevailing national conditions under intellectual property rights all across Africa will require a great work. To date, the most patent filings in Africa originate from Europe, the US, and industrialised countries, but only a small fraction of inventions globally comes from Sub‐Saharan Africa.

Integrating unequal economies is not an easy task, especially in Africa where 33 of the world’s 47 Least Developed Countries (LCDs) are found.  Except such LDCs are taken on a new technology pathway, discussing IPR issues might be pointless. Even at that, ignoring the inevitable predisposes such countries to destructive outside influences. Although AfCFTA will have a lot to learn and emulate from the World Trade Organisation (WTO) on Trade Related Intellectual Property Rights (TRIPS), some might still argue that IPRs in developing countries are counterproductive to economic development, since more applications come from inventors in high‐income countries, and such a patent system serves might help to transfer wealth from domestic consumers to inventors in high‐income countries. Again, on the local front, it might be reasoned that stronger patent regimes in developing countries could hinder domestic industry from competing against global technological leaders.

Let us consider the trade in the context of environment and sustainability, beginning with technologically improved commodities such as Genetically Modified (GM) Foods. Producers of GM seeds will have disproportionate influences on markets, especially where and when their seeds distribution system is purely commercial, unlike institutional arrangements that emphasise more of charity or liberal access to seeds without paying fees. The latter is essentially smallholders’ arrangement and not commercial scale agriculture. Climate change is increasingly creating some crises in businesses that depend on nature and commodities. In many countries, the nexus of livelihoods, poverty, environment and security can be understood in the context of charcoal production and trade, a Sub-Saharan African phenomenon. Extensive utilisation of charcoal as plant-based energy resources has put Africa’s forest at risk as growing population demands more energy. How will this play out under AfCFTA? In other words, will AfCFTA connive at, or be complicit in, trade that destroys the environment?

A 2018 report from the United Nations Food and Agriculture Organisation (FAO), observed that dependence on charcoal or firewood is highest in Africa and Asia as some African cities are almost completely dependent on charcoal for cooking. An example was Kinshasa, the capital of The Democratic Republic of the Congo, where 90 per cent of residents reportedly depend on charcoal. Some countries illegally trade on charcoal and firewood across national borders in a business that requires cutting down trees to support an illegal it – so widespread in Somalia, according to the U.N., leading to desertification that further threatens its stability in addition to terrorism and extremist violence. The report estimated “the value of the charcoal export trade from East Africa to the Middle East and other places at over $360 million a year, even when such a trade remains officially illegal.” AfCFTA will need to do an extra work of persuading and helping the United Arab Emirates, Bahrain, Kuwait and Oman – Middle East consumers of Somali charcoal – to seek alternatives.

Zambia, a country in the Southern Africa region, has also demonstrated its own notoriety as it reportedly “burns so much vegetation that its land-use-related emissions surpass those of Brazil, a notorious—and much larger—deforester.” It is important to examine how this destructive habit could impact on the Zambia’s prospects of exporting agricultural commodities within the AfCFTA framework. Same applies to South Africa. Nigeria in West Africa is also notorious for its reliance on dirty diesel generators for 14GW of power, more than the country’s installed capacity of 10GW.” When such generators are used for production or processing by the SMEs, the added cost does not allow for price competitiveness in trans-boundary trade. For countries that are either backward economically due to other factors such as discussed here, or are backward because of their sheer sizes, the challenges of how to make them competitive are real. For instance, how will small countries such as Benin, Burundi, Cape Verde, Djibouti, Equatorial Guinea, Eritrea, Gambia or Lesotho be expected to compete on the same field of play in AfCFTA, particularly in agro-commodity trade where size matters a great deal, except they are given some special preferences? Some mechanisms have to be in place for them if their sovereignties are not to be quickly eroded.

The scourge of COVID-19, along with conflict and climate change, has not merely slowed global poverty reduction but reversed it for first time in over twenty years. There is much to be learned from the initial response to COVID-19 that has broader implications for development policy and practice.  A World Bank 2020 publication on Latin America and the Caribbean (LAC), titled “Going Viral: a book on post-pandemic period in LAC region,” has a number of lessons for Africa. The book explained some “pre-pandemic trends observed in the region—namely, premature deindustrialisation, servicification of the economy, and task automation—that were significantly changing the labour market landscape in the region and that have been accelerated by the crisis.” It pointed out that, while there is still uncertainty about the economic impacts of COVID-19, policymakers need to start planning for a rapidly evolving future that will come sooner than expected. A strong focus on productivity, technology development and adoption, and training in relevant skills will be key to adapting and taking advantage of the new opportunities in the post-pandemic world. In order to avoid becoming trapped in the illusion that AfCFTA offers the largest single market on auto-pilot, practical steps need to be taken early enough to avoid the COVID-19 traps.

Africa’s economy still remains largely agrarian. The continent can therefore benefit from the expositions from the report, which explores how countries can strengthen the resilience of their agricultural sectors to multiple risks. A shifting risk landscape in agriculture – due to increasing weather variability, natural hazards, pests and diseases, and market shocks – will require public and private actors to consider the risk landscape over the long term, place a greater emphasis on what can be done ex ante to reduce risk exposure and increase preparedness, and prioritise investments that build resilience capacities both on-farm and for the sector as a whole. The experiences of Mozambique during Cyclones Idai and Kenneth in 2019 and the Cyclone Eloise of a week ago are sad reminders of the vulnerability of countries that depend on agricultural commodities in the main. Very important is our ability to respond to greater environmental challenges lying ahead. These cannot be divorced from the larger picture of AfCFTA as its implementation got underway.