How significant is Africa to the West, to the world? (7)

THE WORLD IS SITTING ON AFRICA. The global economic growth and growing affluence are resting on Africa’s prop. The major drivers of current and possibly future economic growth will remain the unsung Africa, for a number of reasons, some of which are under consideration here. Unfortunately, for the world, keeping Africa perpetually backward is one way of holding back the development of the entire world. This is because various mechanisms in place, designed to make Africa – a major source of the engine that keeps the world economy going – continually depend on those countries that depend on commodities imported from Africa for their own survival, will also be negatively affected, albeit indirectly. Evidence abounds. Global disruption in the supply chain during the COVID-19 lockdown created huge shocks within the manufacturing sector in the West and, in particular, China that has come to assume the status of global manufacturing powerhouse. Although the impacts were widespread, the industrialised countries experienced huge shocks from the supply chain disruptions as raw material exports were truncated while the lockdown lasted.

To understand the relevance of Africa in the world economy, a look at the maritime industry could provide an insight. The relevance of Suez Canal to global maritime industry and global supply chain became more obvious than ever before during an unusual event that held world trade to a standstill. From March 23 to 29, 2021, a 20,000 twenty-foot equivalent unit (TEU) container ship named Evergreen blocked the Suez Canal in Egypt, with dire consequences. The grounding of Evergreen and the blocking of Suez Canal, one of the world’s busiest waterways and a major maritime corridor connecting Asia to Europe and the trans-Atlantic route, led over 300 vessels – including 41 bulk carriers and 24 crude oil tankers – stranded at both ends of the canal. The blockade disrupted supply chains and raised the cost of maritime freight and insurance. The cost to world trade has been estimated at a total trade loss of roughly $54 billion, based on one estimate of $9.6 billion per day. Or, according to Lloyd’s List, the value of the canal’s westbound traffic only was roughly $5.1 billion a day.

Africa’s raw materials are needed cheaply if the economies of the industrialised countries are to continue to run well. The very day the raw material exporting countries of Africa begin to process locally and send finished products to the world market is when the yoke of dominance of the raw material importing countries is broken. It looks like a dreaded prospect for many industrial countries, particularly in the West. Take the chocolate industry, as an example. In 2017, the combined export value of whole or broken grades, raw or roasted cocoa, reportedly amounted to $8.6 billion, with an estimate that the global cocoa market would grow at an annual rate of 7.3 percent, from 2019 to reach $16.32 billion in 2025. But the chocolate is just one among the array of products from cocoa. The chocolate market alone was estimated to be worth roughly $131.9 million in 2021 and is expected to reach $171.7 million by 2028. Europe is projected to dominate the worldwide chocolate market, but it does not grow even a backyard orchard of cocoa trees, much less a plantation. But Africa’s cocoa-producing countries capture just three percent of global chocolate industry revenue by value, according to the International Cocoa Organisation (ICCO).

Without accounting for Cameroon that is classified as a Central African country, the trio of Nigeria, Ghana and Côte d’Ivoire account for 68 percent of global cocoa supply. Only recently did Ghana and Côte d’Ivoire, through a joint initiative, manage to convince chocolate traders and makers to raise the price they pay for cocoa. By way of comparison, Côte d’Ivoire output of 2.1 million tonnes, which represented 44 percent of global output in 2017 fetched just $3.3 billion compared to $22 billion earned by the cartel of chocolate majors the same year.

As the world political and business leaders, as well as environmental activists are intensifying talks and lobbying on energy transition, Africa holds the key, even if those leading the initiatives do not openly admit it. The recent upsurge in the green energy industry derives from Africa. As electric vehicles are now being aggressively promoted as replacements for the age-long internal combustion engine vehicles in response to calls on mitigating the effects of climate change, Africa comes to the centre stage. The politics and activism on climate tend to give more attention to the effects on developed countries in the global north more than the global south. Even though Africa contributes only four percent of greenhouse gas emissions in the global mix currently, the continent bears a disproportionate brunt. The electric car market is driving an insatiable demand for lithium and copper – two metals with abundant deposits in Africa. The Democratic Republic of Congo (DRC) mines around two-thirds of the world’s cobalt, an ingredient in lithium-ion batteries for powering electric vehicles. The country is Africa’s leading producer of copper and world’s number four in the production of the same commodity. In 2020, the DRC produced around 1.4 million metric tonnes of copper, positioning as the leading copper-producing country in Africa, followed by Zambia, at 861,100 metric tonnes.

Copper is a major component in electric vehicles, used in electric motors, batteries, inverters, wiring and in charging stations. Based on the claims by the International Energy Agency (IEA), copper will remain the most broadly used metal in renewable energy technologies and Africa will remain relevant in its production and export. Demands for copper are projected to be impacted by the growing market for electric vehicles (EVs) over the next decade, according to new research. While over 60 percent of the world’s cobalt originates in DRC, its mining is chaotic and rife with corruption with a long history of foreign exploitation of workers, a high level of human rights violations, history of health hazards and land degradation. The IEA’s estimate shows that there are now around 16 million electric cars on the road worldwide, most of which are in China. On the contrary, the electric vehicle still remains a stranger to the DRC from where a bulk of the essential components originate. It is important to stress early enough that a supply crisis of the cobalt or even copper could dent the world’s chances of future growth and expansion of the electric vehicle revolution.

Skewed bilateral trades between individual countries of Africa and individual countries of the West, made more difficult by the complexity of the World Trade Organisation (WTO) operations, are not far-fetched from the causes of Doha failure. In January 2016, at a meeting of the WTO in Nairobi, the Doha rounds had to be stopped after trade ministers from more than 160 countries failed to agree that they should keep the negotiations going. The Doha round of negotiations therefore ended, after 14 years of talks that failed to achieve the ambitious goals since the talks began at the capital of Qatar in late 2001, consistently failing to substantially lower trade barriers, contribute to development in poor nations and tackle difficult issues like agricultural subsidies that were not resolved in earlier pacts, such as the General Agreement on Tariffs and Trade (GATT). Since 2016, the WTO, even after the collapse of its Doha Development rounds of talks, has – quite sadly – remained incapable of addressing some peculiar anomalies, leaving room for doubts as to the extent to which the WTO as a global trade arbiter can go in facilitating equitable and fair multilateral trade. The WTO member countries now need to think anew about the global trading system that is fairer, a situation that probably encouraged the strengthening of regional groupings or establishment of new ones. Failure to achieve this Doha ambitious agenda has undermined the credibility of the multilateral trading system and hurt the least-developed countries, which are desperate to export more of their goods to richer countries. What this has not succeeded in achieving is the turnaround in the thinking of leaders of affected developing countries that should have been pursuing aggressive industrialisation in response to their Doha disappointment. Africa, as a continent, thus remains in a quandary within this context.

Circumstantially, is it not a truism that the West will be unsettled if Africa begins to manufacture or process its vast raw materials into finished products? This will most likely change the configuration of the global trading system. Why is China’s Forum on China-Africa Cooperation (FOCAC), Japan’s Tokyo International Conference on African Development (TICAD, America’s Corporate Council on Africa (CCA), and –lately – Russia’s Sochi conference on Africa gathering such momentum among those industrialised countries if Africa does not have strategic importance? The international conspiracies can be very easily validated by the facts that the global value chain is skewed in favour of the industrialised countries, a configuration they will be most reluctant to reset. Although it has been made to appear as if global trade has been transformed from mere opportunistic transactions to a rule-based system, Africa has held the short end of the stick and remained at a disadvantage for far too long. The long and winding negotiations over many years between the EU and the African, Caribbean and Pacific (ACP) countries, a group of countries with preferential trading relations with the EU under the former Lomé Treaty, later called the Cotonou Agreement, were founded on this premise, in which case the carefully calibrated tariff bands placed on commodity exports into the EU became seemingly innocuous trade barriers that made it prohibitive to even venture to add value, thus leaving the ACP countries with the non-viable option of perpetual export of raw, unprocessed commodities at low prices. The Economic Partnership Agreement (EPA) was such a thorny aspect of the EU-ACP trade relations that Nigeria resisted for years.

No country or continent ever develops without manufacturing. Producing raw materials alone for export will not take Africa further economically. A fall in manufacturing production affects economies negatively. Africa has suffered much of this. The share for Africa as a whole in global trade was around 5.5 percent in 1960, plummeting now to around 2.5 percent. From the trend there are indications that for every decade, Africa’s overall share in world trade of goods and services has been declining by approximately 0.5 percent. Agreed that so many different variables have come into play over the years and there has been absolute rise in the quantum of trade, the picture still remains unpleasant.

United Nations Conference on Trade and Development (UNCTAD), in a 2019 Economic Development in Africa Report: Made in Africa: Rules of origin for enhanced intra-African trade, showed that total trade from Africa to the rest of the world averaged $760 billion in current prices in the period between 2015 and 2017, compared with $481 billion from Oceania, $4,109 billion from Europe, $5,140 billion from America and $6,801 billion from Asia. The share of exports from Africa to the rest of the world ranged from 80 percent to 90 percent from 2000 to 2017. The only other region with a higher export dependence on the rest of the world is Oceania.

Africa has a lot to offer in the global energy transition. Solar energy is highly feasible in many parts of Africa, particularly the Sahel, and North Africa where abundance of sunshine energy can be captured on solar farms. The same holds true for wind energy, in which case, a wide expanse of wind farms have the potential to be supplied for use or sold on grid to the EU. It has been recognised by some realists in the West that if Africa does things differently, the living standard of Europe, North America and Asia is very likely to fall. The age-long economic ruse called specialisation of raw material production and export as a route to developing countries’ prosperity is now losing both traction and relevance. African countries themselves could be said to be responsible for much of what causes them to be short-changed in the international markets. A prosperous Africa will translate to a prosperous world. And this is desperately needed. Think of the percentage of EU economic refugees from Africa.

Think again of the disruptive effects on economies and politics of the destination countries, how much the budget for immigration control and rehabilitation programmes where applicable. It is a hot issue in EU politics. If the African Union cannot or does not put these on the front burner, then what is it existing for? The AU can as well be closed down and everybody goes home to micromanage the individual countries’ affairs, separately, without a rallying point. Without any clear-cut collaborative strategies, African countries may continue to lament over its predicaments without anything specifically done to change the situation for the better as none of those countries taking advantage of Africa’s weaknesses can love Africa more than Africans.

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