Time to activate Africa’s idle magnetic force (3)
Dr. Oyeleye, a consultant, journalist and policy analyst, can be reached via:
July 20, 2020806 views0 comments
Following the conclusion of the two-part article of urgency on the Nile Dam brouhaha, last week, Dr. Oyeleye this week returns to his discourse on activating the idle force in Africa. Enjoy the piece.
DIVINERS WHO MADE FORECASTS that the future of the world would depend on Africa, particularly on the area of spare arable land for agriculture and food production, obviously have a point. Those who point out that Africa has a burgeoning youthful population in modern times are right too. One should hasten to add, however, that their predictions didn’t really require any crystal ball or any extraordinary medium as historical, anecdotal and contemporary evidences suggest. Although these evidences point in the direction of their predictions, they have so far fallen short in certain areas, one of which is to link Africa’s cause with the global food and trade strategy by helping to utilise the abundant natural and human resources available. The development of the future economy globally depends enormously on Africa – not only for food production, but also for the supply of industrial raw materials and critical inputs as the economic building blocks of the emerging future economies.
The outbreak of Coronavirus pandemic has taught the world a bitter lesson on how fragile the global supply chain is and how susceptible the global economy could be to the supply chain disruption, particularly when such disruptions give no premonition or room for adjustment. Questions are being asked as to whether globalisation was coming to a sudden and disappointing end or was just suffering a temporary setback, with the likelihood of a rebound sooner than later. All of these are happening just months into the take-off of the African Continental Free Trade Agreement (AfCFTA), which became a year-old this month. Even in the event of a rebound of globalisation, things are not going to be the same as pre-COVID-19 era. The clear message there, for the nascent AfCFTA that got off to a tempestuous start, is that the pilots of the agreement should be ready to navigate through a turbulent journey with a lot of social, political, economic and health-related headwinds.
The complacency and armchair assumptions upon which AfCFTA’s operational template was framed will need to be rejigged, modified, amended and adapted to new realities – in what some have chosen to call “new normal.” The nature of partnership, type of trade arrangements, expected volume of trade, actors within the trade relations framework and built-in mechanisms to facilitate trade will all have to be revisited in the light of new realities. For a continent that is largely dependent on commodity exports, this reset becomes very important. It remains to be seen how African countries expect to bridge the social, economic and digital distances between themselves in a build-up to intra-continental trade relations. Where physical distance becomes a disadvantage in the aftermath of global supply chain disruption, traditional destinations for exports of African origins will suffer great setback, even if it is transitory.
This concern is amplified by the fact that over 80 per cent of Africa’s international trade is with other continents. A balance of less than 20 per cent has defined the intra-African trade for some time. Africa’s disproportionate reliance on other continents presents real challenge and dilemma for trade promoters in Africa. Either as exporters or importers, African countries have bargaining predicaments. They also have to grapple with externalities within the global trade system. The continent is faced with the difficulty of adjusting to events within the multilateral and bilateral frameworks that are undergoing changes in Europe, Asia, Americas, Middle East or the Pacific.
Those exporters who had their trade relations with the Qatar upset three years ago, for instance, while the Gulf region’s blockade against Qatar persisted would heave a sigh of relief with the decision of the International Court of Justice (ICJ) on the blockade last week Tuesday. How things change so quickly and reversals occur in unpredictable ways could be explained by this ICJ’s decision which might pave way for the International Civil Aviation Authority (ICAO) to deliver a final ruling on the air blockade next year. The air, land and sea blockade was imposed on Qatar by four Arab countries, namely: Bahrain, Egypt, Saudi Arabia and the United Arab Emirates. The tensions within the Gulf region, especially with the standoff between Iran and Saudi Arabia, and the security challenges they pose for the maritime industry present peculiar uncertainties for commodity exports into the region.
Brexit, now a reality, will require a lot of rethink by exporters who hitherto used the United Kingdom (UK) as their entry point into the European Union (EU) market. New trade alliances will now have to be articulated with the UK while the operational principles underlying their trade relations with the EU – involving the UK – will now have to be adjusted. There has been a sustained trade asymmetry in Africa’s international trade over decades, with the balance of trade more in favour of Africa’s trading partners. The lop-sidedness cannot be entirely blamed on the trade partners as Africa has failed to take full advantage of the opportunities in such trade relations. Even before the coming of AfCFTA, Africa had the golden opportunities of tapping into the US market through the African Growth and Opportunities Act (AGOA) that had to be revised, reviewed and updated in the past two decades. Only a few African countries and a handful of commodities benefitted so far from this arrangement.
The asymmetry of trade between Africa and elsewhere is not restricted to the volume of trade; it is also defined by the values, quality of items of trade, legal dimensions, conditions for accessing the export destinations and the reliability on the supply side. The Africa Caribbean Pacific – European Union (ACP-EU) trade arrangement has been through years of talk-shops with less than commensurate achievements to the benefit of parties involved. The ACP-EU development cooperation, which entered its 63rd year in 2020, started between the EU and the countries of the African, Caribbean and Pacific (ACP) group of states sequel to the 1957 Treaty of Rome, which first established a collective European development policy. The treaty granted associated status to 31 overseas collectivities and territories (OCTs) and provided for the creation of a European Development Fund (EDF) intended to grant technical and financial assistance to the countries which were still under European rule at the time.
Rounds of conferences, summits and talks followed on the African soil, the continent having a greater population than the other partners in the arrangement. Within the Yaoundé Agreement, the first cycle of the EDF, designed for a period of five years, took effect in 1959. At the expiration of the Yaoundé II Agreement in 1974, a successor framework came on board. The Lomé Convention, a new treaty – signed in Togo and named after its capital – as a new preferential trade agreement rather than an extension of the old one, was considered necessary because of the unacceptable results of the previous arrangement and the vagaries in the European political framework. The Cotonou Agreement, which came much later, was signed in June 2000 in Cotonou by 78 ACP countries (with the exception of Cuba) and the then-15 member states of the EU. It entered into force in 2003 and was subsequently revised in 2005 and 2010. The changing relationship between the EU and the ACP group in the 1990s, the subsequent erosion of the historical ties which strengthened earlier agreements, the dwindling of the ACP countries’ importance to the EU – especially as EU membership increased – and the new trend of politicisation of development cooperation all meant that the relevance of the ACP-EU would diminish.
The Economic Partnership Agreement (EPA), an offshoot of the ACP-EU framework, set out in 2000 to build a new trade partnership for development, was meant to help overcome the earlier failures of the Cotonou Agreement and its predecessors to help ACP countries diversify their exports. Hopes of the protracted discussions on EPA – earlier acceded to by some countries – to have a regional foothold suffered a disappointing setback with the refusal of Nigeria to sign because of misgivings it had expressed over time. It was recognised that the EU couldn’t finalise the West African EPA without Nigeria – a country reckoned in 2016 as contributing 72 per cent of West Africa’s GDP and 52 per cent of its population. It was not until 2018 that it became clearer that Nigeria was determined not to sign the Economic Partnership Agreement (EPA) for West Africa, especially when Nigeria’s President unequivocally disclosed it to the visiting EU Ambassador, Ketil Iversen Karlsen.
For the EU and ECOWAS, that was not good news. In particular, Côte d’Ivoire and Ghana – optimistic that the West African EPA will be finalised – had assented to EPA since 2007, expecting to keep the entry at zero customs duty for their exports to the EU market. Cocoa is a common export commodity for Ghana and Côte d’Ivoire, while Ghana prides itself in processed tuna and pine apple and Côte d’Ivoire exports banana. The two countries have implemented interim EPAs (iEPAs) since the end of 2016. A regional EPA becomes impossible without Nigeria’s assent. This means a perpetuation of the iEPAs of Côte d’Ivoire and Ghana and throwing spanners in the works of the process of regional integration which has remained sluggish since the creation of ECOWAS in 1975.
If foreign-mediated regional trade agreements involving Africa have proceeded and progressed at such a languid speed, it remains to be seen how Africa hopes to fare under a wider and more complex multilateral framework. China was able to raise its global trade profile and wealth on the platform of the World Trade Organisation (WTO) since its accession in 2001, operating as a single country. That has not been easy for Africa, a continent of 54 different countries with diverse interests, different governments, duplicated, burdensome and sometimes conflicting legal procedures as well as unequal levels of developments, all of which pose their peculiar challenges in matters involving common goods.
There have been talks of aid-for-trade, a multi-stakeholder initiative seeking to mobilise resources in response to the trade-related needs and supply-side constraints identified by low-income and poor countries. How Africa benefits from this paradigm shift is a matter of great interest. What is missing here is the absence of robust strategies to empower Africa through strategic human capital development in global trade politics in ways that could strengthen Africa’s hands and make it responsive to sudden opportunities rather than reacting belatedly. The transactional relationship between China and Africa – to the latter’s disadvantage – is all too obvious. Considering the advantage of proximity in global trade, how does Africa take advantage of the recent developments and fill a void, especially now that Europe inclines away from China on disagreements over trade?
One of Africa’s setbacks in foreign trades was typified by the difference at the ACP-EU’s EPA. If history is therefore a good guide, Africa’s prospects in the multilateral trade arrangement still remain as dicey as ever. A lot of issues – historical, social, economic, political and developmental – will need to be examined and those nuanced implications will need to be addressed frontally if Africa is to be a force to reckon with in the post-COVID-19 global trade.