Latent, potent forces against Africa’s prosperity in continental free trade (3)
Dr. Oyeleye, a consultant, journalist and policy analyst, can be reached via:
September 7, 2020943 views0 comments
ACCRA, THE CAPITAL OF GHANA, now houses the headquarters of the African Continental Free Trade Area (AfCFTA). In morally equivocal and ambivalent trade diplomacy, Ghana is currently officially trying to enjoy the best possible of two mutually exclusive worlds. In one breath, it attempts to champion a continental trade area; in another, however, it perpetrates an intolerable practice of social and economic exclusion targeted at another neighbouring country on economic grounds. It appears Ghana is yet to open, let alone read and understand, the rule book of AfCFTA – the regional body it now hosts. Since Ghana has elected to be the focal point for AfCFTA, the country must purge itself of the malaise of intolerance for non-citizens in its domestic business environment perpetrated under whatever fears or apprehensions.
Only recently, the smouldering discontent of Ghanaian small business owners was ignited over the growing presence of Nigerian counterparts in Ghana. This happened in a manner reminiscent of Thomas Friedman’s book with the allegorical title of “The Lexus and the Olive Tree,” in which tensions between globalisation and considerations for history, culture, geography, tradition and community were expressed. Undoubtedly, Ghana – a sovereign nation – has all it takes to decide on what is allowed and what is not within its territories and political boundaries. But that is how far the argument logically goes. Beyond a point, however, it ceases to be tenable, particularly when the country is at the forefront of initiatives that would require a softened approach to the handling of sovereignty issues.
Like most African countries, the gulf between the business setting and the government officials who represent Ghana in trade matters is discernible from the events that unfolded in the past couple of years. Earlier on, in an accelerating tit-for-tat trade war, the Ghana Union of Traders Association (GUTA) shut and barred nearly 70 Nigerian-owned businesses as a retaliatory measure against Nigeria’s closure of its border to imports and exports. More recently, however, the Ghanaian Ministry of Trades could no longer hide its involvement. Enforcing the Ghana Investment Promotion Council regulations, the Ministry insisted that traders of Nigerian origin must pay the required taxes and other fees imposed on them by the authorities. The intervention of the presidents of Ghana and Nigeria through the Economic Community of West African States (ECOWAS) did not help matters. It is happening to Nigeria now. It could happen to any other country in any region some other time. It will be interesting to know how much the Indian, Lebanese or Chinese traders are paying for owning and operating businesses in Ghana.
It may be argued that Nigeria first set a contradictory precedent in unilaterally closing its land border with neighbouring Benin and Niger Republics in violation of existing regional protocols and in a seeming bid to protect home economy while its citizens flood other neighbouring countries, including Ghana. The downside of such a decision now is to make the Nigerian citizens vulnerable to external pressures as their shops risk being forcibly locked up by the Ghanaian security officials if they fail to pay the $1 million registration fee imposed on them within the stipulated time. Ghana and Nigeria need to understand that a trade war can lead to other forms of war, including real hostilities and trench battles, which need to be avoided. For instance, the rhetorics from Ghana in recent times are rather disturbing. The move, thought to be in retaliation for Nigeria’s border closure, is bare-face and naked protectionism. No argument. The Nigeria-Ghana trade spat may actually be one of the first few major crises that Wamkele Mene will have to deal with at the AfCFTA’s permanent office in Accra.
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Although the ECOWAS has appealed to the Nigerian government to reopen its borders, Nigeria’s Customs Comptroller-General, Hameed Ali, seems to have other ideas informing the continued closure. Ali explained that “what we are trying to do now by this border closure is to get Nigerians to consume what we produce and produce what we consume because that’s the only way that our economy would grow.” Whether there is any substantial increase in local production to warrant that decision is debatable, though. The decision goes contrary to favourable trade provisions set out by the ECOWAS that promotes movement and trade across the region’s borders. Many Nigerians who share the same sentiments with Ali have long complained that other ECOWAS member states have been taking advantage of the regional body’s free trade and movement agreement to dump illegal and sub-standard goods in Nigeria. But, recently, ECOWAS has started declining Nigerian products possibly in retaliation to the country’s border closure. The closure of the Nigerian borders with Benin and Niger has been described by the speaker of the Parliament, Moustapha Cisse Lo, as “a hindrance to the achievement of the Community’s main objective, which is to achieve the creation of a prosperous, borderless West African region where peace and harmony prevail.” Nigeria, as a signatory to sub-regional trade treaties, needs to pay heed, evolve strategies and deploy safety valves to facilitate positive and meaningful participation in the sub-regional and regional trade groupings.
Some experts have interpreted the border closures of Nigeria as a setback to the Africa’s integration efforts, likely to upset the AfCFTA, which has the potential to become the world’s largest free trade zone, possibly exceeding the World Trade Organisation, established in 1995. Dr Obiora Madu, chief executive officer of Multi-mix Academy, a Nigerian export-orientated institution, disclosed that Nigerian exports within the ECOWAS region are decreasing due to the border closure. Whatever the strategy was, Nigeria seems not to have weighed the implications on wider note, and in the light of current realities, while shutting down the borders. Even when borders are open and accessible, a bulk of intra-African trade by land is informal cross-border trade (ICBT). Statistically, its magnitude appears considerable. The value of informal trade for certain products and countries, according to some studies, may meet or even outstrip the value of formal trade – a reason why this category of trade needs to be brought to the limelight and mainstream. One example, in a 2014 publication, estimates that $2.9 million per month is traded informally at a single border point between Zambia and Malawi while formal trade at the same border point is estimated at $1.6 million per month. A study published in 2010 estimates that in 2006, the value of informal exports from Uganda to its neighbouring countries stood at around 83 per cent of the value of official exports to these countries over the same period.
Diplomatic rows emanating from cross-border trade need urgent and effective attention. The argument could be stretched to include movement of people and their rights to live in other countries. But these have been fraught with unpleasant consequences that are beginning to stretch the patience of people in affected countries to the limits. Cases of xenophobia are escalating and threatening the peace between countries. Ghana’s maltreatment of Nigerian businessmen has become a diplomatic fiasco, as Ghana’s President Nana Akuffo-Addo reportedly acknowledged the need for Nigeria to protect its citizens. Elsewhere in Africa, concerns have been raised. The South African government had to temporarily close its diplomatic missions in Nigeria in the immediate aftermath of reprisal attacks by Nigerians targeting South African-owned businesses operating in Nigeria. This was in retaliation to xenophobic attacks carried out against Africans, especially Nigerians, working in South Africa, with protesters calling for an end to the operation of South African commercial enterprises in Nigeria – cutting across retail outlets, health, entertainment, telecom and GSM service providers – in a violence described by South Africa’s Foreign Minister, Naledi Pandor, as an embarrassment for her country. Reports of the violence overshadowed the World Economic Forum (WEF) on Africa taking place in Cape Town within that period as Nigeria threatened to boycott the event in protest against the violence.
For a continent leaning towards regional integration and frantically seeking to encourage intra-continental trade, these xenophobic attacks trigger concerns across the continent. Among other countries protesting, Air Tanzania, the country’s national carrier, suspended flights to Johannesburg because of the violence. South Africa’s nearly 28 per cent unemployment rate, the highest in 11 years, was partly held responsible for the unrest and resistance, leading many locals to erroneously blame foreigners for taking their jobs. This is similar, in some striking ways, with the case in Ghana that is gradually tending towards violence. Impatience and ignorance were underlying factors for local lorry drivers’ nationwide strike in South Africa over allegations of employment of foreign drivers that sparked off attacks on foreign-owned shops. AfCFTA requires movement of people in addition to movement of goods. African trade cannot be successfully conducted without people’s movement. If Ghana’s aggression against Nigerians was informed by fears of take-over of certain sensitive areas of their businesses, the South Africa’s fears appear much wider and underlying factors stronger, although shared also among those in business circles.
More worrisome, however, is when intellectuals instigate oppositions against non-citizens who have come into other countries to live and do business. Operationally, the private sector stakeholders are expected to drive the implementation of the AfCFTA protocols; national governments are expected to provide enabling environments. It means therefore that movement of people and services must be allowed unhindered. Trouble arises when ‘non-economists’ and ‘non-trade experts’ are at the forefront of socio-economic conversations. A seemingly innocuous article written early in 2019 by XN Iraki, a Kenyan academic of the University of Nairobi, in Kenyan Digest – a local publication – can be unsettling. The content may have to be handled with great tact and diplomatic acumen as it has the potential to do harm. In the write up wherein he asked if Nigeria should be Kenya’s role model, his posturing and profiling of Nigerians in Kenya, probably done as an academic exercise, could become a malignant tool in the hands of erratic politicians and irate street men. Iraki, in that write up, had referred to Nigerians in Kenya as dominating the Kenyan business landscape through commercial banks, movies, e-commerce, telecoms and what was subtly described as seeking citizenship through the backdoor. According to Iraki: “Lately,” he wrote, “Nigerians are known for marrying our famous girls like music stars. It is not clear why our girls find Nigerian men irresistible.”
Those championing the AfCFTA ideals need to turn Iraki’s philosophy inside out, upside down and flush it down the drain. In an increasingly integrating Africa, Iraki’s views – if popularised and embraced – could throw spanners into the works of regional integration. They could upset the apple cart. They could spawn hate and promote intolerance or xenophobia. They could scuttle multilateralism and inclusiveness while helping to solidify nationalism, thus putting the anticipated success and gains of AfCFTA on hold. It is hoped that Kenya’s promising economy will not lend itself to Iraki’s school of thought, wherein visitors and non-citizens will begin to be discriminated against and where their businesses will become the objects of attack. Promoters of AfCFTA therefore need to move faster than, and overtake the, conspiracy theorists and doomsday prophets that could derail their ideals. They should devote more time, energy and resources to advocacy and public enlightenment campaigns that will get their messages far and near. Now that AfCFTA has become operational in its permanent headquarters office, a continent-wide strategy to entrench its presence and diminish negative energy and misinformation will need to be articulated and implemented without any delay.